November 24, 2004

The lessons to be learned from a recently concluded NASD arbitration, addressing what has been characterized as “one of the worst brokerage scams in history,” were shared by Partner Howard S. Suskin at a November 18 meeting of the CBA Securities Law Committee.  Mr. Suskin was part of a panel presenting on the topic of “Arbitrating Complex Securities Law Claims.”

Mr. Suskin’s arbitration involved a stockbroker who stole more than $50 million from wealthy Midwest families, including Mr. Suskin’s clients.  The broker was able to maintain this ruse for over a decade, and at three brokerage firms, chiefly by generating false account statements.

“Families who reasonably believed that they had literally tens of millions of dollars in fact had nothing,” Mr. Suskin said.

According to Mr. Suskin, there are two practical tips that should be considered in the context of the recent arbitration.  “Number one,” he said, “is absolutely know the NASD rules and what your rights are.”

For example, Mr. Suskin emphasized, “Just because you go to arbitration, does not mean you give up your discovery rights and have to litigate blind.”  By pressing the other side for documents in his case, and because of their failure to comply, Mr. Suskin said he was able to persuade the arbitrators to issue substantial remedial measures.

Second, Mr. Suskin stressed the importance of giving the arbitrators well-deserved deference and respect.  “These arbitrators are doing a tremendous public service,” he said, “and even though you’re not in a courtroom, you have to act like it’s a courtroom.  That means not only conducting yourself in a civil way…but in a serious way.”

As Mr. Suskin explained: “Whichever side is perceived as being the side that is wasting time will risk being viewed unfavorably by the arbitrators.

Mr. Suskin concluded by encouraging attorneys to serve as arbitrators themselves.  “You learn so much by sitting on the other side of the table about what works during arbitration and what doesn’t work.”  He indicated that this experience can impact positively an attorney’s conduct, use of exhibits and style of presentation.

The discussion panel also included presentations by NASD Dispute Resolution staff attorneys Sandra Blanco and Mark Nowicki, and attorney Peter A. Cantwell of Cantwell & Cantwell.