A Los Angeles County judge overturned the $11.6 million award issued last year to actor Larry Hagman and his wife by a FINRA arbitration panel.   The arbitrators ordered Citigroup to pay the Hagmans nearly $12mn in damages and other costs in a case that centered on unsuitable recommendations in Mr. Hagman's family investment accounts.  This decision illustrates to 2 distinct points worth noting. 1.  The Need to Disclose a Potential Conflict of Interest. Judge Michelle Rosenbatt ruled that a member of the arbitration panel had failed to disclose that he had been involved in a similar legal dispute and thus had a potential conflict of interest. Citigroup’s lawyers filed a motion in L.A. Superior Court last November to dismiss the arbitration award, alleging that the chairman of the Finra panel had failed to disclose his potential conflict of interest from a past lawsuit. 2.  Dismissals of Arbitration Awards Are Rare.   Yes, but not impossible.  And, given the record amount awarded to Mr. Hagman, Citi's decision to fight the award made imminent sense.

To refresh your memory ... a Finra panel in October ordered Citigroup to pay Mr. Hagman and his wife $1.1mn in compensatory damages, $10mn in punitive damages, and $460K in legal fees and other costs.  At $11.6 million, this was the largest FINRA arbitration award to an individual investor last year.  The ruling stipuilated that Mr. Hagman donate the $10mn punitive award to charities of his choice.

A Citigroup spokeserson said the firm was "pleased with the court’s decision.”  Of course, this was only Round 2 and, in the inimitable spirit of J.R. Ewing, Mr. Hagman and attorney Philip Aidikoff plan to appeal:  "We think the result is absurd and feel very comfortable that the appellate court will reverse it." Stay tuned for the sequel - Round 3.   [NYT Dealbook, 2/11]