Sorial v. Robinhood Financial, LLC., 1:24-cv-02752

Petitioners Fady and Ramy Sorial, brothers residing in Brooklyn, NY, held accounts with Robinhood Financial LLC, a FINRA member brokerage firm.
In January 2023, the Sorials initiated a FINRA arbitration, alleging Robinhood improperly allowed excessive margin and restricted their trading activity in 2022.
The FINRA arbitration panel issued an award in favor of Robinhood, granting its motion for a directed verdict.
The Sorials, proceeding pro se, filed in federal court to vacate the arbitration award and sought $90 million; Robinhood cross-moved to confirm the award.
Magistrate Judge Tarnofsky issued a Report and Recommendation denying the motion to vacate and granting the cross-motion to confirm, but the Sorials then moved for her recusal, alleging bias due to her husband's law firm representing Robinhood in unrelated matters.

Issue	Petitioners' Argument	Robinhood's Argument	Held
Whether recusal is required due to spouse's law firm having Robinhood as a client	Judge Tarnofsky is biased due to her husband’s and his firm’s relationship with Robinhood	No actual present conflict; relationship is indirect and not tied to this case	Recusal granted to avoid reasonable question of impartiality
Whether the prior Report and Recommendation (R&R) should be vacated	Bias invalidates the R&R	R&R was made on the merits, not bias	R&R vacated due to recusal

Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 847 (1988) (explains goal of § 455(a) is to avoid even appearance of impropriety)
United States v. Carlton, 534 F.3d 97 (2d Cir. 2008) (objective test for recusal: whether a reasonable observer would doubt impartiality)
In re Drexel Burnham Lambert Inc., 861 F.2d 1307 (2d Cir. 1988) (judge best positioned to assess recusal motion implications)