Wallace v. Buttar
Petitioners David Jacaruso, Joseph Scotti, and Michael E. Wallace moved to vacate an arbitration award issued in favor of respondents Daljit S. Buttar and Par-amit Buttar. The Buttars cross-moved to confirm the award. The arbitration, conducted by the National Association of Securities Dealers, Inc. (NASD), found the petitioners liable for misrepresentation, unauthorized trading, and fraud, and also as 'Control Persons,' jointly and severally liable for compensatory and punitive damages. The District Court, applying standards of 'manifest disregard of the law' and 'manifest disregard of the facts,' found that the arbitrators manifestly disregarded the law by imposing respondeat superior liability on the petitioners for actions of a broker and by finding fraud liability without evidence of intent. Furthermore, the court found the arbitrators manifestly disregarded the law and facts regarding control person liability. Consequently, the court granted the petitioners' motion to vacate the arbitration award and denied the respondents' cross-motion to confirm it.