The U.S. Court of Appeals for the Seventh Circuit has affirmed an adverse FINRA arbitration award against an E*Trade customer. According to the decision,
During the [arbitration] hearing E*TRADE admitted that it had frozen Azroui’s account after detecting a potential security threat—Azroui had logged on using a computer unfamiliar to E*TRADE. When he asked the firm to unfreeze the account, it mistakenly restored only some of the account’s functionality. Azroui maintained that E*TRADE’s error prevented him from making timely trades that would have netted him at least $165,000. The three-member arbitration panel disagreed and ruled in favor of E*Trade.
In seeking to vacate the award, the customer “accused the arbitrators of failing to ‘listen well’ to the evidence that he had offered against E*Trade.” However, like the district court, the Seventh Circuit rejected the customers contention that the panel was biased, stating: “His evidence of bias is that the panel ruled against him on a record that he believes favored him. But factual or legal errors are never grounds for vacating an arbitration award … and a mere appearance of bias (as Azroui infers from the adverse ruling) is likewise not a valid ground for vacatur…”
Azroui v. E*Trade Securities LLC, Case No. 12 CV 00280 (7th Cir.).