Jean Schmitz Leonard Schmitz v. Carlos J. Zilveti, III Nicholas S. Meris Prudential-Bache Securities Inc., AKA Prudential Securities, Inc.

FACTS AND PRIOR PROCEEDINGS

Pursuant to a contract, Jean and Leonard Schmitz (“Appellants”) and Zilveti, Meris, and Prudential-Baehe Securities, Inc. (“Pru-Bache”) (collectively “Appellees”) submitted a dispute to arbitration before the National Association of Securities Dealers (“NASD”). Under the submission agreements, the dispute was to be arbitrated in accordance with the NASD’s A Code of Arbitration Procedure (1990) (“NASD Code”). Three arbitrators were chosen: John R. Conrad, Carolyn J. Yamasaki, and Richard G. MacMillan. Conrad, a lawyer, was chosen as chairperson of the arbitration panel.

The NASD Code requires each arbitrator to “disclose to the Director of Arbitration any circumstances which might preclude such arbitrator from rendering an objective and impartial determination.” NASD Code § 23(a). Specifically, an arbitrator must disclose (1) “[a]ny direct or indirect financial or personal interest in the outcome”; (2) “any ... financial, business, professional, family, or social relationships that are likely to affect impartiality or might reasonably create an appearance of partiality or bias”; and (3) any personal relationships with any party, its counsel,…