(Reuters) - An appeals court has upheld a $1.45 million arbitration award in favor of retired NBA basketball player Horace Grant, according to an unpublished decision from the United States Court of Appeals for the Ninth Circuit, in California.
The court rejected claims from Grant's former brokerage, Morgan Keegan, that arbitrators in the case might have been biased, prejudged the outcome or exceeded power.
"We're pleased that the 9th circuit saw Morgan Keegan's frivolous attempt to delay payment to Horace Grant," said Andrew Stoltmann, the Chicago-based lawyer who represents Grant. "This has been a long odyssey."
Grant has spent more than four years trying to collect on losses stemming from a group of Morgan Keegan bond funds, which declined in value in 2007 and 2008. Grant filed a claim against Morgan Keegan over his losses in 2008. A Financial Industry Regulatory Authority arbitration panel sided with Grant and awarded him $1.46 million in 2009 - $1.45 million in compensatory damages and $10,000 for costs.
Arbitration decisions are typically binding, but courts can overturn them in certain cases, such as arbitrator bias.
Morgan Keegan, a unit of Raymond James Financial quickly appealed, going to the U.S. District Court for the Central District of California to have the award thrown out. The brokerage lost and appealed that decision, leading to a hearing on October 11 before the appeals court.
The brokerage has faced more than 1,000 customer arbitration cases, has paid a $200 million civil regulatory fine and a star manager at the firm was banned from the securities industry. Morgan Keegan promoted the group of bond funds as safe, even though they had invested in risky mortgage-backed securities. The funds later lost as much as 80 percent as the subprime market imploded.
Grant, 47, played in the NBA for 17 years and won three titles with Chicago Bulls teams featuring Michael Jordan and one with the Los Angeles Lakers. He bought most of the troubled funds through his Morgan Keegan brokerage account in 2004. At the time, the brokerage owned the sports agency that represented Grant.
It is the second loss on appeals this week for Morgan Keegan, which was sold to Raymond James by Regions Financial Corp over the summer. The U.S. Court of Appeals for the 5th Circuit ruled that a district court's decision to throw out a $9.2 million securities arbitration ruling in favor of a group of investors in the troubled bond funds, was made in error, according to an opinion released on Tuesday.
A spokesman for Raymond James declined to immediately comment. A spokesman for Regions Financial, which retains financial responsibility for the bond fund cases, declined comment. A Morgan Keegan spokeswoman could not immediately be reached for comment.