Oppenheimer moves to cancel $36.7 million arbitration decision

Oppenheimer & Co. Inc. earlier this month filed a motion to vacate — or essentially undo — an arbitration award of $36.7 million that the firm lost last month.

The eight investors who won the award originally claimed $6 million in compensatory damages, according to the award, which was issued under the aegis of Finra Dispute Resolution Services, the industry arbitration arm of the Financial Industry Regulatory Authority Inc.

The investors’ claim stems from money invested into a private equity fund, Horizon Private Equity III, run by a former Oppenheimer broker, John Woods, near Atlanta.

Last year, the Securities and Exchange Commission charged Woods with running a $110 million Ponzi scheme.

On Sept. 6, the Finra arbitration panel found in favor of the claimants and awarded them total compensatory damages of approximately $5.7 million, RICO damages of approximately $14.2 million, and punitive damages, attorneys’ fees and costs of approximately $16.8 million.

According to its third-quarter earnings report Friday, Oppenheimer filed a motion Oct. 6 to vacate the award with the Superior Court of DeKalb County, Georgia. The firm’s motion to vacate was based on, among other defects, arbitrator bias, failure to postpone the hearing to permit key witnesses to testify, and manifest disregard of the law, according to the company.

A spokesperson for Oppenheimer did not comment Monday afternoon.

“No arbitrator on the panel knew any of the claimants,” said John Chapman, the attorney for the investors who won the $36.7 million decision. “There were no business, social or personal relationships of any kind.”

It’s extremely rare for a court to overturn Finra arbitration decisions.

According to Oppenheimer’s earnings report, the firm has 28 pending arbitration claims related to investors in the Horizon fund.

Related Topics: Oppenheimer & Co.