United States District Court, S.D. New York
JERZY MENDELKA, NDV INVESTMENT COMPANY and J.M. PROPERTY SP. Z.O.O. SP.K., Petitioners,
PENSON FINANCIAL SERVICES, INC. and PENSON WORLDWIDE, INC., Respondents.
MEMORANDUM AND ORDER
KEVIN CASTEL UNITED STATES DISTRICT JUDGE.
Mendelka, NDV Investment Company (“NDV”) and J.M.
Property SP. Z.O.O. Sp.K. (“JM”) have filed a
petition to vacate an arbitration award issued by the
Financial Industry Regulatory Authority
(“FINRA”). (Docket # 1.) Defendants Penson
Financial Services, Inc. and Penson Worldwide, Inc.
(collectively, “Penson”) oppose the petition, and
move to confirm the Award. (Docket # 11.) None of the three
petitioners is represented by counsel, including the two
reasons explained, the petition to vacate the Award is denied
and Penson's motion to confirm the Award is granted. The
two non-natural persons, NDV and JM, may proceed only by an
attorney admitted to practice in this Court. Because these
entities have not appeared by an attorney, the Petition is
dismissed as to them on the additional ground that they
failed to prosecute this action.
to Jerzy Mendelka 3-31-2017
facts relating to the underlying dispute are described only
in Penson's memorandum of law without citation to any
evidentiary support. Penson describes a dispute over events
that took place from 2008 to 2011, during which time
NDV's securities broker, Roman Sledziejowski of Trade
Wall Street (“TWS”), transferred approximately
$15 million from NDV's accounts at Penson without
NDV's authorization. (Penson Mem. at 1-2.) The Petition
describes NDV and JM as “Jerzy Mendelka's companies
. . . .” (Pet. ¶ 1.) Though the description is
somewhat vague, it appears to be undisputed that
Sledziejowski and TWS transferred the petitioners' funds
out of Penson without petitioners' authorization.
(See Penson Mem. at 1-2.) Petitioners appear to
contend that Penson wrongly permitted Sledziejowski and/or
TWS to do so. (Pet. Opp. Mem. ¶¶ 6-8.)
filed for bankruptcy in January 2011. In re Penson
Worldwide, Inc., 13-10061 (LSS) (Del. Bankr.). JM and
NDV filed proofs of claim in bankruptcy proceedings, and
after unsuccessful mediation sessions, the bankruptcy court
released the parties from the automatic bankruptcy stay in
order to adjudicate their dispute through a FINRA
arbitration. (Penson Mem. at 2.)
three petitioners filed a Statement of Claim with FINRA on
January 30, 2013, seeking recovery from Penson for the
purportedly unauthorized transfers. (Hanchet Dec. ¶ 11.)
As summarized in the Award, petitioners brought claims of
“respondeat superior, violation of FINRA rules,
misrepresentation, fraud, omission of facts, breach of
fiduciary duty and negligence.” (Hanchet Dec. Ex. 2 at
Petition is largely directed to the arbitrators' failure
to issue a written explanation of the Award's reasoning.
Under FINRA Rule 12514(d), “[a]t least 20 days before
the first scheduled hearing date, all parties must submit to
the panel any joint request for an explained decision under
Rule 12904(g).” (Hanchet Dec. Ex. 8.) FINRA Rule
12904(g), in turn, requires that the “[p]arties must
make any request for an explained decision no later than the
time for the prehearing exchange of documents and witness
lists under Rule 12514(d).” (Hanchet Dec. Ex. 9.) The
“prehearing exchange” between petitioners and
Penson concluded on April 2, 2016, at which time no party
requested an explained decision from the arbitrators.
(Hanchet Dec. ¶¶ 17-18.)
arbitration was conducted before a three-arbitrator panel
from April 26 to April 29, 2016. (Hanchet Dec. ¶ 20.)
After the record was closed, petitioners requested an
explained decision from the panel. (Hanchet Dec. Ex. 1 at
859-60.) The panel's chair stated that “[n]o one
has requested a reasoned answer” and that the time to
do so was “at the time of the initial pre-hearing
conference.” (Id.) The panel's chairperson
then stated that it could provide a reasoned decision if the
parties wished to pay $400, and petitioner Mendelka stated
that “[w]e'll pay” for a decision
20, 2016, the panel issued an Award that denied all of
petitioners' claims. (Hanchet Dec. Ex. 2.) The Award did
not include a written explanation of its reasoning.
(Id.) It was five pages in length, not including
signature pages. (Id.) It recounted the procedural
history of the dispute, listed the parties' submissions
and summarized the claims and relief requested.
(Id.) As to the merits, the Award stated as follows:
After considering the pleadings, the testimony and evidence
presented at the hearing, Claimant's post-hearing
submission, the Panel has decided in full and final
resolution of the issues submitted for determination as
1. Claimants' claims against Apex are dismissed in their
entirety with prejudice.
2. Claimants' claims against Penson are denied in their
3. Penson's request for attorneys' fees is denied.
4. Any and all relief not specifically addressed herein,
including punitive and treble ...