(Bloomberg News) Citigroup Inc., the third-largest U.S. bank by assets, won't have to pay almost $12 million in damages in a case involving actor Larry Hagman after a California court dismissed an arbitration ruling.
Judge Michelle R. Rosenblatt in Los Angeles on February 9 vacated the Financial Industry Regulatory Authority arbitration board's decision because one of the arbitrators didn't disclose he had been involved in a similar lawsuit in 2007, according to court filings. The Finra case was filed in May 2009 and involved the mishandling of investment accounts of Hagman and his wife.
The board ruled in October that New York-based Citigroup must pay $1.1 million in compensatory damages and donate $10 million of punitive damages to charities chosen by Hagman, 79. The bank was also told to pay Hagman, who played the oil tycoon J.R. Ewing in the 1980s television show "Dallas," about $460,000 for attorney fees and other costs.
"We think the result is absurd, and feel very comfortable that the appellate court will reverse it," Philip Aidikoff, a lawyer for Hagman at Aidikoff, Uhl & Bakhtiari, said in an interview. He said he plans to file an appeal "immediately."
"We're pleased with the court's decision," said Alexander Samuelson, a Citigroup spokesman.
Peter Steinbroner, a member of the arbitration board, and his wife had petitioned in bankruptcy court against an investment partner who had allegedly breached his fiduciary duty and caused substantial losses in the Steinbroner's retirement funds, according to the court filing.
Steinbroner said in a Finra form that he hadn't been involved in a dispute involving the same subject matter in the last five years, the filing said. Hagman's case involved the breach of fiduciary duty resulting in losses of $1.35 million.
Steinbroner's 2007 dispute "didn't involve the securities industry, didn't involve asset allocation, which is what this case is about," Aidikoff said.
The Finra case was against the Smith Barney brokerage, which was held within Citigroup Global Markets before Morgan Stanley purchased a controlling stake in a joint venture with Smith Barney last year.