The opinion of the court was delivered by: THOMAS GRIESA, Senior District Judge
This is a petition to confirm an arbitration award. Petitioners
Antoinette Marsillo and Carmela Barile seek to confirm an award in
arbitration issued by the National Association of Securities Dealers
("NASD") in their favor against their former broker, Edward Geniton.
Geniton failed to appear at the arbitration proceedings. Geniton
opposes the motion, claiming insufficient notice of the arbitration
proceedings and lack of jurisdiction. Geniton moves for a stay to give
him time to appeal the arbitration award.
Petitioners' motion is granted. The court hereby confirms the NASD
arbitration award. Geniton's application is denied. Facts
When employed as a broker with HSBC Brokerage (USA) Inc. ("HSBC"),
respondent, Edward Geniton, caused losses to petitioners' investments.
Petitioners sought arbitration by the National Association of Securities
Dealers ("NASD"), claiming Geniton had engaged in common law fraud,
fraudulent misrepresentation, breach of contract, breach of fiduciary
duty, breach of supervisory duties and responsibilities, and negligent
conduct. Petitioners were clients of HSBC, who had invested in various
funds, stocks, annuities and life insurance policies, and had,
apparently, been counseled by Geniton.
Geniton was a registered securities broker from November 1993 until his
termination in October 2001, according to Geniton's affidavit. As
required by the NASD regulations, he filed a U4 Form ("Uniform
Application for Securities Industry Registration or Transfer") with the
NASD when he began his employment with HSBC in June of 2000. Portions of
his completed U4 application are attached to the motion as petitioner's
Exhibit F. The U4 Form requires various disclosures, including
disclosures concerning a broker's personal history, contact information,
employment history, current firm and type of business in which he
engages. On the form Geniton listed the following address as his current
residence: 101 Dogwood Drive, Staten Island, N.Y. 10312, Geniton affirmed
that he had lived at this address from June of 1999, that is, for one
year prior to beginning his new employment with HSBC. (Exhibit F).
The U4 form contains an arbitration clause, which provides:
I agree to arbitrate any dispute, claim or
controversy that may arise between me and my firm,
or a customer, or any other person, that is
required to be arbitrated under the rules,
constitutions, or by-laws of the SROs
[Self-Regulatory Organization, including the
NASD] indicated in Item 11 as may be amended from
time to time and that any arbitration award
rendered against me may be entered as a judgment
in any court of competent jurisdiction,
(emphasis in the original).
The form also contains a consent to service of process, which provides:
I consent that the service of process, pleading,
subpoena, or other document in any investigation
or administrative proceeding conducted by the SEC,
CFTC or a jurisdiction or in any civil action in
which the SEC, CFTC or a jurisdiction are
plaintiffs, or the notice of any investigation or
proceeding by any SRO [Self-Regulatory
Organization, including the NASD] against the
applicant, may be made by personal service or by
regular registered or certified mail or confirmed
telegram to me at my most recent business or home
address as reflected in this Form U-4, or any
amendment thereto, by leaving such documents or
notice at such address, or by any other legally
On January 11, 2002 petitioners filed a claim with the NASD, initiating
the arbitration proceeding against Geniton and his firm, HSBC. See
Antoinette Marsillo and Carmela Barile (Claimants) vs. HSBC Brokerage
(USA) Inc. and Edward Geniton (Respondents). NASD Dispute Resolution
Arbitration No. 02-00197. HSBC filed an answer in May of 2002 and subsequently settled
Geniton, however, never responded to any of the notices or
correspondence sent to his Staten Island address at 101 Dogwood Drive by
NASD Dispute Resolution. Attached to petitioners' notice of motion are at
least 10 letters sent or copied to Geniton regarding the developments in
the arbitration proceedings, including notices of appearance.
On January 17, 2002, NASD Dispute Resolution sent Dan Brecher,
petitioners' attorney, a letter stating that petitioners had filed a
claim against Geniton with the NASD. This letter was copied to Geniton's
Staten Island address.
On April 3, 2002, NASD Dispute Resolution sent Geniton a letter stating
that Geniton had been named as a party in NASD DR Case Number 02-00197,
Antoinette Marsillo and Carmela Barile vs. HSBC Brokerage (USA) Inc.
and Edward Geniton. The letter included the Statement of Claim that
petitioners had filed with the NASD. The letter advised Geniton that he
was required to file and serve an answer before May 23, 2002. It also
detailed what steps Geniton was required to take in order to comply with
the NASD Code, and stated that a hearing would be held.
Further letters to Brecher on April 3, 2002, June 10, 2002, June 20, 2002, October 11, 2002, November 6, 2002, December 5, 2002, and
January 16, 2003 concerning the progress of the arbitration proceedings
were all copied to Geniton at the Staten Island address. Undoubtedly,
there were additional letters addressed and sent to Geniton by the NASD
which are not part of the record. On November 25, 2002 a telephonic
pre-hearing was held to schedule the arbitration proceedings. Defendant
HSBC appeared, but Geniton was absent. The December 5, 2002 letter gave
notice that a hearing would be held on January 23, 2003 and includes a
"Case Information Sheet."
At the January 23, 2003 hearing, petitioners presented testimony and
evidence, the content of which is not described in the award letter or in
any of the other submission. Again, Geniton made no appearance.
The hearing resulted in an award for petitioners, dated February 14,
2003. The arbitration panel awarded petitioners compensatory damages
against Geniton in the amount of $139,661.44 (petitioners had ...