Wednesday, 27 May 2015
Last updated 8 hours ago
Mar 13 2012 | 8:11pm ET
Goldman Sachs has appealed a large arbitration award it was ordered to pay creditors of fraudulent hedge fund Bayou Group two years ago.
The Wall Street giant yesterday asked the U.S. Court of Appeals for the Second Circuit in Manhattan to vacate to $20.6 million award, the largest arbitration award ever levied against a securities firm. In its appeal, Goldman called the award "unreasoned and patently indefensible."
It is the second time that Goldman has sought to have the Financial Industry Regulatory Authority award tossed by the courts. But a lower court judge, Jed Rakoff, in 2010 rejected that bid, arguing that Goldman had "voluntarily" agreed to arbitration and "must suffer the consequences."
While much of Rakoff's opinion was a screed against arbitration—"Arbitration is touted as a quick and cheap alternative to litigation," 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"—he did reject Goldman's contention that the arbitrator "manifestly disregarded the law."
Bayou's unsecured creditors alleged that Goldman Sachs Execution and Clearing, which cleared trades for Bayou, showed "either gross negligence or a willful choice to ignore signs of fraud." Bayou collapsed five years ago, costing investors more than $400 million.
Mar 20 2015 | 12:45pm ET
StreetWise Partners, a non-profit organization that works with low-income individuals to help them overcome employment barriers, raised over $275,000 at the 2015 Raising the Ante Charity Poker Tournament and Casino Event last Wednesday evening at Capitale. Here are some photos from the event. Read more…