New York Court Defers to Arbitration Panel Decision for Fund Investor
A New York Court affirmed an arbitration panel’s decision to require restitution to an investor in a Madoff feeder. The investor brought the claim for restitution to an arbitration panel pursuant to the terms of the Limited Partnership Agreement. The arbitration panel awarded the investor restitution based primarily on the fund’s failure to disclose that all assets were invested with Madoff. The arbitration panel rejected the argument that the investor was foreclosed because he was not a qualified purchaser, as he represented in the subscription agreement. The court criticized the fund manager for failing to explain the representation or conduct any due diligence. The court explained that the review of an arbitration decision is “extremely limited” and may only be made when there is a “manifest disregard of the law.” The Court went on to explain that arbitrators may come to equitable decisions based on the facts presented.