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Securities Arbitration Panel Orders Citigroup to Pay $10.75 Million Award

Thursday, August, 8, 2013

A Financial Industry Regulatory Authority (FINRA) arbitration panel issued information on July 30 that they had determined that Citigroup was responsible for payments in the amount of $10.75 million to a former customer as a result of investment losses in Royal Bank of Scotland Group PLC.  RBSC PLC was bailed out in the financial crash that occurred in 2008.  The award didn’t stop there, either.  A former Citigroup broker, Edward Mulcahy, was ordered to pay $250,000 to the investor, John Leopoldo Fiorilla.  In the majority of arbitrated cases, the reasons for the decision are not outlined, and this was true in this case as well. 


FINRA manages an arbitration unit that considers disputes regarding investors and the brokerages they work with.  The case had initially been filed by Fiorilla in 2010 looking for $19.5 million in damages.  His allegations included claims that Citigroup was grossly negligent and had failed in their operations to supervise the behavior of the broker.  Mulcahy had left the lender back in 2009, spending a few years with Morgan Stanley before retiring. 


FINRA regularly works with arbitrators and mediators to resolve disputes across the securities industry.  The organization actually operates the largest dispute resolution forum in the industry, resolving numerous disputes between investors, brokers and brokerage firms.


FINRA notes that a number of cases in the securities industry are eligible for arbitration.  For disputes involving investors, the cases may involve an individual or entity registered with FINRA.  The claim should be filed within 6 years of the time the dispute occurs.  For disputes involving industry parties, FINRA hears from individuals or entities registered with FINRA, like cases between brokers, between brokerage firms, and the case also must be filed within 6 years of the dispute start date.  It also states that many cases eligible for arbitration are also eligible for mediation if the parties wish to pursue that route.