This morning I received an e-mail from Chrystal Loyer of the FINRA Office of Dispute Resolution stating that she was from FINRA’s Case Administration Department and was checking on the status of the motion to vacate an Arbitration Award rendered by the Financial Industry Regulatory Authority in Reeve v. Sky Capital LLC and Ross Mandell FINRA-DR Arb. No. 09-02329.

Mandell, the founder and president of Sky Capital, and a party to at least fifteen (15) disclosed customer initiated investment related Arbitrations alleging fraud in connection with the sale of securities, was convicted, (along with the other Respondents in the underlying FINRA Arbitration), for the violation of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act for fraud in connection with the sale of the securities, totaling approximately $61.9 million to more than 370 investors, while he was the CEO and the registered principal of Sky Capital. United States v. Mandell, et al., 09-cr-662 (S.D.N.Y.); Securities and Exchange Commission v. Mandell, et al., 09-cv-6129 (PAC)(S.D.N.Y. July 8, 2009)(Mandell v. Reeve, et al., Civil Action No. 1:10-cv-6530).

Mandell is presently in federal prison and is expected to be released sometime in February 2025.

As to FINRA’s request and Mandell’s Motion to Vacate the Arbitration Award in October 2011, Judge Sullivan of the United States District Court for the Southern District of New York confirmed the award, and issued an opinion, as to generally why the motion to vacate lacked any merit. Mandell v. Reeve 2011 U.S. Dist. LEXIS 114804 (S.D. N.Y.  Oct. 4, 2011)(Sullivan, J). Mandell appealed to the United States Second Circuit Court of appeals, which in February 2013, affirmed Judge Sullivan’s ruling. Mandell v. Reeve, Civil Action No 11-5238 (2d Cir. Feb. 4, 2013).

Since that time, notwithstanding that Mandell’s Reality Television Series:  Facing Life,  , was never “greenlighted” by Hollywood, Ross Mandell’s wife continues to live in a $4 million Boca Raton Florida mansion. Their two children attend $50,000 per year private schools, and although it is claimed that the couple have no assets, we are waiting for Ross Mandell or one of his shell companies to appear in the Panama Papers.

 

However, what is most interesting, is why now, more than four years later, FINRA is somehow concerned as to the disposition of our arbitration award.

In February 2016, the Public Investors Arbitration Bar Association released a paper, “Unpaid Arbitration Awards – A Problem The Industry Created – A Problem The Industry Must Fix (February 25, 2016).”

According to the Paper, “one out of three cases investors take through to an arbitration hearing and win an award assessing liability and damages goes unpaid … (and) nearly $1 of every $4 awarded to investors in arbitration hearings goes unpaid.”

Just for 2013, PIABA found that of the 225 awards in which some amount of damages was awarded, there were 75 awards issued in 2013 that went unpaid.

According to the Paper, “put into context, 33.3 percent of awards in Claimants’ favor went unpaid in the context of the number of awards issued, leaving just in 2013, $62.1 million of unpaid awards of the total awards to investors of $256,749,289, with the unpaid awards therefore comprising 24.2 percent of the total.”

Some suggest there is a reason why the self-regulatory organization FINRA does not publish data about investors with unpaid arbitration awards.

In any event, on March 3, 2016, FINRA chairman Richard Ketchem testified before the Senate Banking Subcommittee on Insurance, Securities and Investments. When Massachusetts Senator Elizabeth Warren asked Ketchem should there not “be more regulations so that people get paid?” Ketchum responded that he wants to “look into it.” In response to the PIABA paper, a FINRA spokesperson stated “FINRA is ‘actively’ looking at regulatory measures in this area.”

I guess that is why FINRA contacted me this morning to find out what happened to our five year old case and our $1 million unpaid arbitration award.   Perhaps they are “looking into” it.

Guiliano Law Firm

Our practice is limited to the representation of investors. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you.  There is never any charge for a consultation or an evaluation of your claim. For more information, contact us at (877) SEC-ATTY.

 

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