December 2, 2013
On Friday, November 22, 2013, students in the Law School’s Securities Arbitration Clinic participated in a mock arbitration at the New York City office of the Financial Industry Regulatory Authority (FINRA). Arbitrators from FINRA's neutral roster volunteered their time to hear the dispute, running the hearing much like an actual arbitration.
Playing the roles of the lawyers and witnesses, the students endeavored to resolve a broker-client dispute involving a semi-retired divorcee who, on her broker’s recommendation, invested in the mortgage giant Fannie Mae shortly before the 2008 financial collapse. In September 2008, Fannie Mae stock became almost worthless after it was put into government receivership, resulting in an almost complete loss of the client’s investment. At issue in the arbitration were: (1) whether the investment was appropriate for the client; and (2) whether the broker should have been aware of the precarious state of the market just prior to its collapse.
“The level of preparation and the quality of the presentations by each of the students who participated in the program were exceptional," said James M. Hubbert '81, one of the volunteer arbitrators. "In fact, the arguments of each of the teams were so persuasive that in resulted in a split decision of the three member panel of arbitrators. The participants had the opportunity to experience, first hand, the FINRA arbitration process in the actual forum. The only difference between this presentation and an actual FINRA arbitration proceeding was that no check was written as a result of the award.”
The students came to the arbitration well versed in the matter. The clinic’s Director, Christine Lazaro, and Assistant Director, Francis J. Facciolo, introduced the case file to them early in the semester through an interviewing and a counseling exercise in the clinic seminar class. The students continued to explore the case during a class on drafting claims and answers and, towards the end of the semester, through a mock mediation facilitated by guest lecturers and guest mediators from FINRA. Two weeks later, the students traveled to FINRA, and participated in the mock arbitration.
“The cases we handle in the clinic may take three or four semesters from inception to resolution,” Professor Lazaro said. “By utilizing a mock case file, we can give students a holistic experience of securities arbitration. The issues raised in the mock case are similar to issues our students encounter and address in their clinic cases. Our collaboration with FINRA throughout is a tremendous asset. For instance, holding the mock hearing at an authentic hearing location adds a sense of formality which would not exist to the same degree if we held the hearing in a classroom.”
Many thanks to the mediators and arbitrators who volunteered to make this an exceptional learning experience for the St. John’s Law students:
Jeannine Chanes, Law Offices of Jeannine Chanes, P.C.
Richard Chusid, The Chusid Law Firm, LLC
Julie Crotty, Deputy Director of Mediation and Business Strategy, FINRA
James M. Hubbert ’81, Deputy Director of Compliance, Societe Generale
Joan Stearns Johnsen, Mediator and Arbitrator
“This was a wonderful opportunity for students in the Securities Arbitration Clinic,” said Alison Angelo ’14. “All semester we worked on analyzing the essential facts of the mock case, while developing a sense of the causes of actions and legal theories that might play a role in arbitration. At FINRA, we were able to present the case through witness examinations and evidentiary presentations to a panel of highly experienced arbitrators, giving us a real feel for how an actual arbitration hearing at FINRA might unfold. The arbitrators took the time to give us individualized feedback after the mock hearing, and I know that we will keep their advice in mind as we embark on our legal careers.”
The Securities Arbitration Clinic is one of the Law School’s three in-house clinics offered through our not-for-profit legal services organization, the St. Vincent de Paul Legal Program, Inc. Operating out of our state-of-the art Clinical Office, it is staffed by St. John’s Law 2Ls and 3Ls who help represent underserved investors in securities arbitration claims involving misrepresentation, unsuitability, unauthorized trading, excessive trading, and failure to supervise, among other claims before FINRA.