J.P. Morgan Securities LLC (a U.S. broker-dealer and a subsidiary of JPMorgan Chase & Co.) sought more than $6.4 million from a customer following a short sale of stock in a public company’s initial public offering. In the resulting California-seated FINRA arbitration, the firm alleged fraud and breach of contract. Angus Ni, a New York-based attorney and co-founder of Morrow Ni LLP, led the customer’s defense team alongside Serena Yang and Jing He.
Angus Ni’s securities arbitration work forms part of Morrow Ni LLP’s broader practice in commercial disputes and securities litigation. Operating under the Moni Law brand, the firm represents individuals and businesses in contested proceedings and advises publicly listed companies on securities litigation exposure. Its transnational work includes representing Chinese clients and handling U.S. proceedings in California, Washington, and New York concerning judgments from China and Hong Kong and awards issued by Chinese arbitration institutions. In the J.P. Morgan arbitration, the firm defended an individual customer, challenging at a six-day evidentiary hearing whether the customer should bear the full loss claimed or whether the brokerage’s later decisions had increased it.
How Angus Ni’s Team Examined J.P. Morgan’s Decisions
The transaction involved an unlocated short sale, meaning the required arrangements to locate shares available for borrowing had not been established before the sale. A short seller generally sells shares with the intention of purchasing equivalent shares later to close the position; if the price rises in the meantime, that purchase becomes more expensive. Regulation SHO contains requirements concerning the location of stock for delivery and the closing of certain failed deliveries. Those requirements provided an important framework for the argument about when the position should have been closed.
Angus Ni and his colleagues questioned J.P. Morgan Securities witnesses about the firm’s knowledge of the position and its available responses. This established that a Regulation SHO-compliant close-out would have cost $279,250 at the relevant point. The figure provided a concrete benchmark for the damages discussion, rather than leaving the panel with only the firm’s much larger demand.
J.P. Morgan did not close the position at that point. It remained open until a substantial price spike, when the firm eventually closed it at a much higher cost. The defense linked that difference to the firm’s later decisions, distinguishing the earlier close-out opportunity from losses incurred while the position was kept open.
What the FINRA Panel Decided
The FINRA defense led by Angus Ni addressed two claims: fraud and breach of contract. FINRA, the Financial Industry Regulatory Authority, is a private, not-for-profit organization that oversees U.S. broker-dealers and provides an arbitration forum for disputes between brokerage firms and their customers. The fraud allegation concerned the customer’s conduct, while the contract claim required a separate determination of the customer’s financial obligations. Those issues could be evaluated independently even though they arose from the same short-sale transaction.
In a broker-versus-customer arbitration, the account agreement can shape the amount a securities firm seeks to recover. Morrow Ni noted in its report that customer agreements commonly require payment of account debits arising from close-outs or margin calls. In this matter, the defense’s focus on the earlier compliant close-out gave the panel a way to assess that contractual exposure alongside the trading chronology.
According to Morrow Ni’s account of the award, the FINRA panel rejected J.P. Morgan’s fraud claims in full and limited the customer’s contractual liability to $279,250, the earlier close-out cost. The panel directed each side to bear its own fees. It attributed the additional claimed losses to the direct and foreseeable consequences of the securities firm’s own decisions. The customer therefore remained responsible for a defined amount of contractual damages despite the rejection of the fraud allegations.
Angus Ni’s Securities Litigation Experience
Before co-founding Morrow Ni LLP, Angus Ni practiced at Bernstein Litowitz Berger & Grossmann LLP, prosecuting securities class actions on behalf of hedge fund and pension fund investors. The cases involved U.S.-listed corporations across different industries and jurisdictions. His work included domestic and international discovery in matters concerning investor claims.
In the J.P. Morgan arbitration, Angus Ni’s team defended a customer against claims brought by a financial institution, a different role from his earlier work prosecuting securities class actions for investors. The defense therefore assessed the brokerage firm’s evidence and how it calculated the amount demanded, rather than building a claim against a publicly listed company.
At Morrow Ni LLP, Angus Ni’s securities litigation experience also includes advising publicly listed companies, including China-based businesses listed on U.S. exchanges, about litigation risk. That company-side work differs from the FINRA defense of an individual customer facing fraud and contract allegations brought by a brokerage firm.
Earlier in his career, Angus Ni participated in international arbitration and corporate investigations at Debevoise & Plimpton LLP. His arbitration work included proceedings before International Chamber of Commerce (ICC) and International Centre for Settlement of Investment Disputes (ICSID) tribunals. ICC arbitration generally addresses commercial disputes, while ICSID proceedings concern qualifying investment disputes involving states. He also worked on large-scale corporate investigations spanning multiple countries.
About Angus Ni
Angus Ni is a New York-based attorney and co-founder of Morrow Ni LLP, operating under the Moni Law brand. With more than a decade of legal experience, he handles commercial litigation, securities disputes and transnational matters involving individuals and businesses. Fluent in Mandarin, he earned a J.D. with honors from the University of Chicago Law School and a B.A. with High Distinction from the University of Toronto. The firm’s profile of Angus Ni provides further information about his professional work and background.
