Egan v. Trower

Background

Michael Egan petitioned under Section 9 of the Federal Arbitration Act to confirm a Financial Industry Regulatory Authority (FINRA) arbitration award and obtain an order directing removal of information from his record in FINRA’s Central Registration Depository (CRD). The CRD is a database maintained by FINRA for entities in the United States securities industry.

Samuel Trower originally brought the FINRA arbitration as power of attorney for Peter Josten and later amended the caption after Josten’s death to identify Trower as executor of Josten’s estate. The arbitration asserted claims against LPL Financial, LLC and Moors & Cabot, Inc. arising from Zero-Premium Pre-Paid Forward Contracts and alleged investment-related misconduct. Egan, who worked at Moors & Cabot as a managing director, was identified in the arbitration as one of the registered representatives allegedly responsible for the contracts and losses. The arbitration complaint appeared in Egan’s CRD records.

The parties settled Trower’s claims before the arbitration hearing. The matter remained open so Egan could pursue expungement of his CRD record. At a February 25, 2020 hearing, Egan testified before a three-arbitrator panel. Trower did not participate or object, and LPL also did not object. On April 3, 2020, the panel granted Egan’s expungement request. It found that the allegations were factually impossible or clearly erroneous, that Egan was not involved in the alleged investment-related sales-practice violations, and that the allegations were false.

Court’s Standard

The Federal Arbitration Act provides a streamlined process for confirming arbitration awards. A court’s review is severely limited, and confirmation is normally required unless the award is vacated, modified, or corrected. When a confirmation petition is unopposed, courts in the Southern District of New York treat it like a motion for summary judgment based on the petitioner’s submissions. Summary judgment is appropriate when there is no genuine dispute about a material fact and the moving party is entitled to judgment as a matter of law.

Ruling

The court confirmed the award. It found no material facts in dispute because Trower had not challenged the facts supporting Egan’s petition. The court also found that the arbitration panel had provided a colorable justification for its decision and that Trower had not sought to vacate, modify, or correct the award.

The court granted Egan’s petition to confirm the award. It ordered that all references to the arbitration be expunged from Egan’s CRD registration records, directed the Clerk of Court to enter judgment, and closed the case. Judge Naomi Reice Buchwald issued the order.