MF Global Hit for $544,265: FINRA Arbitrator Finds Brokerage Firm’s Conduct Was “Serious Wrongdoing” That “Violated Industry Standards” and Its Own “Supervisory and Compliance Manual”

MF Global, Inc. v. Sohan Dua (FINRA Arbitration No. 09-01371)

MF Global, Inc. sued Sohan Dua, alleging that he was a sophisticated and experienced investor who had failed to repay a margin loan that MF Global made to him against his portfolio.  After the Law Offices of Montgomery G. Griffin was retained to represent Dr. Dua, the firm filed a counterclaim against MF Global and defended against MF Global’s claim for $644,265. Following months of arbitration, a six-day FINRA arbitration hearing, and three additional months of post-hearing briefing on the issue of potentially awarding attorneys’ fees, the arbitration Panel reduced Dr. Dua’s liability from $644,265 to just $100,000, saving the client $544,265.  MF Global’s request for attorney’s fees was also denied, despite language in the customer agreement providing that Dr. Dua owed the firm those funds, too. In addition, and in a FINRA rarity, the decision of the Panel was not unanimous, instead it was a narrow 2-1 vote. The dissenting Panel member stated in the Award as follows:

I am dissenting on the Award. I absolutely and strongly disagree with the Award. I believe the facts and evidence of the case [do] not support in any way whatsoever the Award that the majority prepared. The Award is neither reasonable nor equitable. The facts and evidence demonstrate serious wrongdoing by MF Global. MF Global showed substantial misconduct. MF Global violated industry standards as well as their own MF Global Futures Supervisory and Compliance Manual. Based on the facts and evidence of the case, I recommend vacating the Award.  (Emphasis added.)