The opinion of the court was delivered by: CHARLES RONALD NORGLE, SR.
On April 23, 1992, a three-member arbitration panel (the "Panel") of the National Futures Association ("NFA") awarded defendant Michael Baghdoian ("Baghdoian") $ 303,009 (the "Award") in response to Baghdoian's claim against plaintiff First Commercial Financial Group, Inc. ("First Commercial"). Pursuant to 28 U.S.C. § 636(b)(1), the court referred First Commercial's complaint to vacate the Award and Baghdoian's motion to confirm the Award to Magistrate Judge Edward A. Bobrick. The Magistrate Judge, after review of the record, issued on December 1, 1992 a 12-page Report and Recommendation (the "Report"). For the following reasons, the Report is adopted.
First Commercial is a registered Futures Commission Merchant ("FCM") engaged in the business of purchasing and selling commodities futures contracts on behalf of public customers, some of whom are contacted through an introducing broker. International Futures Strategists ("IFS") was registered as such an introducing broker pursuant to the Commodity Exchange Act (the "CEA"), 7 U.S.C. § 1 et seq. In September, 1989, a branch manager of IFS contacted Baghdoian and represented that he had access to a system, developed through market research at First Commercial and IFS, for trading Standard & Poors 500 contracts. Baghdoian was told that this trading system predicted daily market movements and produced large profits, and after being assured that any initial funds invested would be secure, Baghdoian agreed to open an account with First Commercial.
During his first month of trading, Baghdoian sustained significant losses to his account with First Commercial. On Friday, October 13, 1989, Baghdoian's account realized a loss of approximately $ 650,000. After making several payments to First Commercial to reduce the deficit on his account, Baghdoian filed a demand for arbitration before the NFA, which is a self-regulatory organization authorized to oversee members such as First Commercial and to resolve disputes through arbitration.
Subsequent to the Panel's issuance of the Award, First Commercial filed a complaint to vacate the Award in the Circuit Court of Cook County, Illinois. The complaint to vacate alleged that the Panel exceeded its authority in administering the arbitration process and that the award was irrational and rewrote the contract between the parties. Baghdoian removed First Commercial's complaint to this court and subsequently filed a motion to confirm the arbitration award, claiming that the panel's decision was proper and correct.
Magistrate Judge Bobrick recommended that the court grant Baghdoian's motion to confirm the arbitration award and dismiss First Commercial's complaint to vacate. Both parties have filed objections to the Report, First Commercial objecting to the dismissal of its complaint and Baghdoian objecting to the omission of an award of prejudgment interest. The court has completely reviewed the Report and the arguments of counsel on a de novo standard. 28 U.S.C. § 636(b)(1).
(a) Where the award was procured by corruption, fraud, or undue means.
(b) Where there was evident partiality or corruption in the arbitrators, or either of them.
(c) Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced.
(d) Where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the ...