Legal: Virginia Supreme Court raises bar for overturning FINRA arbitration awards

Virginia's Supreme Court just made it much harder to overturn a FINRA arbitration loss – here is what that means for you.

If you have ever wondered what it would actually take to throw out a FINRA arbitration award because you thought the arbitrator was biased, a Virginia court just answered that question – and the answer is not encouraging for anyone hoping for a second chance.

On February 26, 2026, the Supreme Court of Virginia drew a firm line on when an arbitration result can be challenged on bias grounds. The short version: you need more than an arbitrator who failed to uncover a past connection he had no recollection of. A lot more.

The story starts in early 2020, when Devin Garofalo and his financial securities company purchased Lions Bridge Financial Advisors from Jayne Di Vincenzo. The deal required Garofalo to put 40% down and cover the rest in quarterly payments. He stopped paying. Di Vincenzo took him to FINRA arbitration, and a three-member panel sided with her – unanimously. The panel found Garofalo in default, ordered compensatory damages, and rejected his counterclaims.

Rather than accept the outcome, Garofalo challenged the award in court. His argument centered on one of the arbitrators, a Norfolk attorney named Michael Glasser. It turned out Glasser had sat on the board of a company whose trust subsidiary had briefly partnered with Di Vincenzo's firm back in 2014 and 2015. That partnership lasted about fifteen months, generated around $8,000 in revenue, and quietly fell apart. Glasser had also chaired a regional bank marketing board where Di Vincenzo had presented twice. While Glasser had disclosed his board membership at the parent company, he did not separately disclose his involvement with that regional board or the specific prior connection between the trust subsidiary and Di Vincenzo's firm.

Sounds like a problem, right? The court did not think so.

Glasser testified that he simply did not remember Di Vincenzo or her firm when he took on the case. The trial court believed him. The Court of Appeals believed him. And the Supreme Court of Virginia believed him too.

In issuing its ruling, the court set out, for the first time, exactly what "evident partiality" – the legal basis for tossing an arbitration award over bias – actually means in Virginia. To succeed, you have to show that any reasonable person, looking at all the facts, would walk away convinced the arbitrator was obviously biased. A vague connection or an incomplete disclosure does not get you there.

There is an important distinction embedded in the ruling that advisors and compliance teams should not miss. FINRA has its own strict rules requiring arbitrators to disclose all ties to any party, no matter how remote they may seem. But those rules and a court's standard are two separate things. Just because an arbitrator may have fallen short of FINRA's disclosure expectations does not automatically mean a court will unwind the award. When you are in front of a judge asking to throw out an arbitration result, it is the court's standard that counts.

For advisors and firms that rely on FINRA arbitration clauses in their contracts, the takeaway is straightforward. Once an arbitration panel rules against you in Virginia, that result is going to be very hard to escape. The court made clear it has no interest in giving losing parties a procedural do-over, and it said so plainly.

The award in Di Vincenzo's favor stands.