The U.S. District Court of the Southern District of New York has upheld a $14 million award that a New York Stock Exchange arbitration panel awarded to three former Merrill Lynch brokers who lost their jobs for allegedly timing mutual funds, Dow Jones reports. The three, Christopher Chung, William Savino and Kevin Brunnock, were fired in October 2003.
Merrill Lynch sought to have the reward rejected. For what the panel deemed to be defamatory action, the panel awarded the trio $12.5 million for lost wages and pain and suffering. Nonetheless, NYSE regulators are still investigating the three for helping a hedge fund improperly trade mutual funds.
“An arbitration award may be vacated only if procured by corruption or fraud, if the arbitrators exhibited evident partiality, were guilty of misconduct or exceeded their power,” said U.S. District Judge Loretta Preska. “Because none of these exceptions to confirmation has been established, the court must confirm the award.” Indeed, the courts seldom reverse arbitration awards.
Preska also said that Merrill’s policy on market timing was “vague and unworkable.”