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2ND CIRCUIT CLARIFIES ARBITRATION POLICIES NEW YORK � The Second Circuit U.S. Court of Appeals has clarified the standard under which a lower court can vacate an award made in arbitration. A three-judge panel said many trial courts in the circuit have wrongly applied language in one of its decisions by delving into the facts presented at arbitration. Second Circuit case law does not allow a district court judge to set aside an award based on “manifest disregard of the facts” by an arbitration panel, the court said in an opinion by Judge Rosemary Pooler. “We recognize only the doctrine of manifest disregard of the law, which doctrine holds that an arbitral panel’s legal conclusions will be confirmed in all but those instances where there is no colorable justification for a conclusion,” the panel said in Wallace v. Buttar, 03-7158. The issue arose when Daljit and Paramjit Buttar prevailed in arbitration on a claim against securities trader Robert Winston and three others connected with Montrose Capital Management. The traders were found jointly and severally liable for $1.1 million in compensatory damages and $604,805 in punitive damages for Winston’s trading in the stocks of Skynet and CNF Technologies. � New York Law Journal CITIGROUP SHAREHOLDER SUIT IS DISMISSED NEW YORK � In the latest round of litigation involving Enron and WorldCom, Southern District Judge Laura Swain has dismissed a class action against Citigroup alleging that the financial giant failed to adhere to its risk management policies. It is welcome news for Citigroup, which paid $2.65 billion earlier this year to settle charges arising from claims that its brokerage arm, Salomon Smith Barney, had recommended WorldCom’s stock although it knew of the company’s financial troubles. In re Citigroup, Inc. Securities Litigation, 02 Civ. 5779, one of several cases over Citigroup’s financial relationship with Enron and WorldCom, was brought by Milberg Weiss Bershad & Schulman on behalf of Citigroup’s investors. Its central allegation rested on Citigroup’s risk management policies disclosed in its public findings. The plaintiffs said Citigroup failed to live up to the policies to an extent constituting fraud. Judge Swain, however, saw nothing more than potential mismanagement in the accusations. An allegation of fraud, she held, required references to specific misconduct. Because plaintiffs failed to deliver ample specifics, she dismissed the action. � New York Law Journal

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