Tuesday, 13 October 2015
Last updated 15 hours ago
Dec 3 2010 | 11:03am ET
When U.S. District Judge Jed Rakoff tossed Goldman Sachs' attempt to vacate a huge arbitration award against it stemming from the Bayou Group hedge fund fraud, he did not mince words.
Rakoff said he rejected Goldman's appeal of the $20.6 million award because, having "voluntarily" entered arbitration, "this wonderful alternative to the rule of reason," the bank "must suffer the consequences."
"Arbitration is touted as a quick and cheap alternative to litigation," Rakoff wrote, although "experience suggests that it can be slow and expensive. But it does have these 'advantages'; unlike courts, arbitrators do not have to give reasons for their decisions, and their decisions are essentially unappealable."
Rakoff ruled last month that Goldman had failed to show that the Financial Industry Regulation Authority arbitration decision "manifestly disregarded the law."
That decision was the largest arbitration award ever levied against a securities firm. The unsecured creditors of Bayou, which collapsed four years ago, costing investors more than $400 million, alleged that Goldman showed "either gross negligence or a willful choice to ignore signs of fraud" in clearing Bayou's trades.
Oct 7 2015 | 4:57am ET
Charity A Leg To Stand On (ALTSO) will hold its 12th Annual Hedge Fund Rocktoberfest – NYC on October 15 and its 4th Annual Rocktoberfest - Chicago on October 22. Read more…