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Legal Disarming and Delays in FINRA Financial Arbitration

Monday, October, 15, 2012


Originally, the FINRA financial arbitration titled In the Matter of the FINRA Arbitration Between Thomas E. Farnsworth, Claimant, vs. Adam Sclafani, Respondent (FINRA Arbitration 11-00186, October 1, 2012) was a fairly straightforward complaint of unauthorized trading, misrepresentation of account performance and excessive trading or churning. By the time a decision was made, it stood as an example of how procrastination can quickly put a Respondent on the losing end. By the end, their strategy was defenseless, and became nothing more than a postponement of the inevitable.

The Original Legal Arbitration

As mentioned above, this arbitration was simply about irresponsible trading. The Claimant sought compensation for nearly $62,000 in damages, over $12,000 in interest and just over $43,000 for costs and fees. The Respondent denied these accusations and provided several defenses. This was back in January of 2011.

Then, apparently, Respondent Sclafani's arbitration attorneys dropped the ball.

Claimant's Arbitration Attorneys Dismantle Respondent's Defense

Rolling the clock forward to late November of 2011, the Claimant's legal team moved to bar Sclafani from being able to present evidence in defense at the hearing. This motion was based on the Respondent failing to respond on several necessary points once the proceedings went underway. The Respondent's legal team failed to respond to this motion as well, and the Claimant was granted this motion on February 13, 2012.

Against the Fence in Arbitration, Respondent Fights Back

Now the Respondent begins taking things seriously, but it is too little too late. On February 27, 2012, they requested to postpone the scheduled hearing on the following day. Then, on July 5, 2012, they moved to preclude expert testimony for the Claimant, but were denied the motion. Then on August 14, 2012, team Sclafani moved for permission to testify by telephone and gained that.

It was all delay tactics in a losing battle, however. On October 1, 2012, the award went to the Claimant.