If you’re not an attorney who does securities litigation, you probably want to skip this post.
I’m representing my dad tomorrow in an NASD Securities arbitration, and could use some help with the following questions:
(1) Respondents have six witnesses, four of whom they want to testify by telephone. They have provided no reason why these witnesses should not appear live (though they do work 500 miles away from the site of the hearing), and neither my dad nor I have ever heard of three of them (they were not identified in the witness list). Respondents have provided no affidavits or any other information about their testimony. I’d like to object to their testimony, given that the arbitrators won’t be able to judge their credibility easily by telephone. Is it too late (they gave me their witness list over thirty days ago)? Are telephone witnesses standard, or even permitted outside of extraordinary circumstances, in arbitration?
(2) I’m looking for a precedent stating that the Respondent’s “ten day rule” (“Reports of execution of orders and statement of your accounts shall be conclusive if not object to, in writing, within ten days,” “This statement shall be deemed correct unless [the Company] is notified in writing within 10 days of receipt”) do not apply to allegations of misrepresentations, breaches of fiduciary duty, breach of contract, and the like, specifically with regard to statements made stating that particular stocks “couldn’t go lower.” Respondents cite Goldberg v. Kidder Peabody & Co., Inc., 991 F. Supp. 215, 219 (S.D.N.Y. 1997), which they claim holds that my father needed to object within ten days of receiving his first statement in which such a stock did go lower. In my view, this case only applies if a broker actually promised to make up for losses in a stock, which is not the allegation here. The arbitrators denied a motion to dismiss on this basis, but invited Respondents to reargue this point at the end of the hearing.
Responses may be sent to dbernste at gmu dot edu. Thanks.
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