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Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Thursday, July 5, 2012

Second Circuit Affirms $20.5 Million Arbitration Award Against Ponzi Scheme's Clearing Firm

The Second Circuit summarily affirmed a district court's confirmation of a $20.5 million arbitration award against Goldman Sachs Execution & Clearing L.P.  The claimants, the unsecured creditors committee of Bayou Group, LLC, asserted that the clearing firm had "red flags" to alert them that Bayou was in fact a Ponzi scheme.  Goldman Sachs unsuccessfully argued that the award was "in manifest disregard of the law."  The Second Circuit, noting that the manifest disregard standard is, by design, exceedingly difficult to satisfy, agreed with district court that Goldman had not satisfied it.  Goldman Sachs Execution & Clearing, L.P. v. Official Unsecured Creditors' Committee of Bayou Group LLC (2d Cir. July 3, 2012).

http://lawprofessors.typepad.com/securities/2012/07/second-circuit-affirms-205-million-arbitration-award-against-ponzi-schemes-clearing-firm.html

Judicial Opinions, Securities Arbitration | Permalink

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