Wallace v. Buttar,
2003 WL 103019 (S.D.N.Y. January 14, 2003)
On January 14, 2003, the United States District Court for the Southern District of New York vacated a NASD arbitration award in a customer dispute which held a president and two directors of a brokerage firm liable for over a million dollars in compensatory and punitive damages.
In the opinion, District Court Judge Robert Sweet specifically found that the NASD arbitrators manifestly disregarded the law and the facts in their findings of fraud and control person liability against the president and the directors.
Factual Background of the Case
The Buttars were customers of the brokerage firm of Montrose Capital Management Ltd. ("Montrose"). Wallace was its president, and Jacaruso and Scotti were directors. Neither the president nor the directors exercised any direct supervisory role over the brokers at the firm. When the Buttars suffered losses of $1,192,171.89 from two investments, they commenced arbitration against the
