After conducting expedited discovery, Milbank well positioned to enjoin FINRA arbitration on behalf of Citigroup
Milbank is lead U.S. litigation counsel for Citigroup Global Markets Inc., in connection with a claim brought by Saudi nationals Abdullah and Ghazi Abbar and their related investment vehicles. In August 2011, the Abbars and their investment vehicles filed a request for arbitration before the Financial Industry Regulatory Authority against CGMI, a FINRA member. They claimed that they lost over $350 million between 2006 and 2008 due to alleged misconduct by CGMI with respect to the structuring, monitoring, and handling of certain investments.
In October 2011, CGMI filed an action in the United States District Court for the Southern District of New York in which it sought to permanently enjoin the FINRA arbitration on the grounds that the dispute is not arbitrable. To bring a claim before FINRA, a claimant must be a "customer" of a FINRA member within the meaning of the FINRA arbitration code. CGMI contends that the Abbars and their vehicles were not "customers" of CGMI. Rather, they were "customers" of various European Citibank affiliates that are not FINRA members.
During the past year we conducted expedited discovery on the arbitrability issue, which included several depositions of U.S. and foreign nationals. At the close of discovery, the court ordered a two-week bench trial, currently scheduled for early 2013.
Milbank represents Knight Capital in widely-reported SEC investigation
Milbank is representing the global financial services firm Knight Capital Group, Inc. and its affiliated broker-dealer, Knight Capital Americas LLC, in an investigation by the Securities and Exchange Commission. The SEC's investigation arises out of a trading error at Knight that occurred on August 1, 2012 and resulted in a $440 million dollar loss for the firm. The investigation includes, among other things, whether Knight was in compliance with the SEC's Market Access Rule 15c3-5, which requires broker-dealers that trade securities on an exchange or alternative trading system to have risk management controls and supervisory procedures reasonably designed to manage the financial and regulatory risks of their market access. The Market Access Rule first became effective in July 2011; however, the SEC has yet to make a significant ruling on the parameters of the Rule's requirements which are at issue in the investigation.
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