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Rich v. Philip Spartis, Amy Elias and Salomon Smith Barney - 3/21/2006

Case Summary: In a March 21, 2006 decision, the Honorable Denise L. Cote of the United States District Court for the Southern District of New York granted a Liddle & Robinson Motion to Vacate an NASD Arbitration Award entered in favor of Elizabeth and Donald Rich against Liddle & Robinson clients Philip L. Spartis and Amy J. Elias. While the Court noted that "an arbitration panel's decision is entitled to great deference," it agreed with Liddle & Robinson that a panel exceeds its power when it issues an award arising from claims concerning a security which is the subject of a class action settlement, bar order, and releases. The Riches sought damages from Salomon Smith Barney, Mr. Spartis and Ms. Elias arising from the alleged mishandling of their WorldCom employee stock options. During the arbitration, Liddle & Robinson advised the Louisville, Kentucky arbitration panel of the fact that the Riches failed to opt out of the WorldCom class action litigation, and thus had released all their claims against Salomon Smith Barney, Mr. Spartis and Ms. Elias. The Panel ignored this information and, instead of dismissing the Riches' WorldCom claims, issued a $448,000 decision in the Riches' favor on them. The Court ruled that for the Panel "to go ahead and 'decide' the matter anyway is ill-advised and clearly beyond any power the arbitrators have." The Court thus took the unusual step of vacating the Riches' Award.

Jeffrey L. Liddle

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Judge: Denise L. Cote

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