Securities Industry Commentator by Bill Singer Esq

August 6, 2018
Research scientist  Fei Yan agreed to settle with the SEC and consented in the United States District Court for the Southern District of New York  to the entry of a judgment permanently enjoining him from violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder, and ordering him liable for disgorgement of $119,429, the payment of which is deemed satisfied by the forfeiture ordered in a parallel criminal case. Yan, who pled guilty in that case, is serving a 15-month sentence of imprisonment. The settlement and pleas were in connection with Yan's insider trading based on confidential information obtained from his wife, an associate at a law firm that worked on the subject deals.
In today's Blog we consider the ramifications of an arbitrator who made disclosures that weren't all provided to the parties in a timely manner. At our most charitable, lets just say that a page went missing and not everything that should have been disclosed to all the parties made it through the disclosure pipeline in one piece. At a point in time after the AAA arbitrator rendered her initial decision but before she published her final decision, the losing party learned about the failure of the arbitration forum to provide all of the pages that would have constituted the full disclosure packet -- and further learned that the arbitrator was involved with other ongoing arbitrations involving the law firm that was defending the respondent (who turned out to win the case). When the losing party challenged the arbitrator's alleged undisclosed conflict in that period before the decision was finalized, the arbitrator rejected the challenge and issued the decision.