INTERACTIVE BROKERS, LLC, and KEVIN MICHAEL FISCHER, Plaintiffs-Appellants,
RICHARD W. BARRY, as Receiver for Osiris Fund Limited Partnership, Defendant-Respondent.
October 31, 2018
appeal from Superior Court of New Jersey, Chancery Division,
Hudson County, Docket No. C-000036-18.
H. Marino argued the cause for appellants (Marino, Tortorella
& Boyle, PC, attorneys; Kevin H. Marino, John D.
Tortorella, and Erez J. Davy, on the briefs).
W. Halm, Jr. argued the cause for respondent (Halm Law Group,
LLC, attorneys; Thomas W. Halm, Jr. and Patricia A. Lauch, of
counsel and on the brief).
F. McDonough, Assistant Attorney General, argued the cause
for amicus curiae Chief of the New Jersey Bureau of
Securities (Gurbir S. Grewal, Attorney General, attorney;
Brian F. McDonough, of counsel; Katherine A. Gregory, Deputy
Attorney General, on the brief).
Judges Koblitz, Currier, and Mayer.
matter, arising out of securities law violations, we conclude
that a receiver acting on behalf of a defrauded entity may
initiate arbitration even if the defrauded investors of the
entity will ultimately benefit from any assets recouped in
the New Jersey Attorney General discovered Osiris Fund
Limited Partnership (Osiris), a hedge fund founded by Peter
Zuck, perpetrating a Ponzi scheme which defrauded its
investors of more than $6.5 million, the Attorney General
instituted suit against Zuck and Osiris. Osiris operated
through the securities trading platform of plaintiff
Interactive Brokers, LLC (Interactive), and plaintiff Kevin
Michael Fisher, as an Interactive employee, assisted Osiris
in using Interactive's platform.
consent order, Zuck was determined to have violated
securities laws and defrauded investors, and he was ordered
to pay restitution of $7, 564, 273. Defendant Richard Barry
(the Receiver) was appointed as receiver for Osiris.
In the appointment order, the Receiver was permitted to:
immediately take into possession and take title to all real
and personal property of [Osiris] . . . including . . .
causes of action and all such assets obtained in the future,
and undertake all actions necessary or appropriate to
maintain optimal value of these assets, including liquidation
of any such assets.
carry out these duties, the Chancery court granted the
Receiver "full statutory powers . . . to perform the
receiver's duties, including the powers delineated in
N.J.S.A. 49:3-69(c) and (d) and . . . those set forth in N.J.S.A.
14A:14-1 [to -27] or so far as the provisions thereof are
2017, the Receiver, as the sole claimant acting on behalf of
Osiris, filed a Statement of Claim (Statement) against
plaintiffs and initiated Financial Industry Regulatory
Authority (FINRA) arbitration proceedings. The Statement
listed seven causes of action including: 1) negligence and/or
failure to supervise; 2) breach of implied/express contract,
implied duty of good faith and fair dealing and industry
rules; 3) aiding and abetting breach of ...