Crotser vs. Smith Barney & Co., Inc., NO 228226 (Mich. App., 4/30/02) Appealability * Scope of Agreement * Arbitration Agreement * Competing Agreements. A futures account agreement does not encompass claims relating to separate consulting services provided by the FCM. Plaintiff entered into an agreement with a predecessor firm (Hutton) […]
Arbitration
Securities arbitration refers to the alternative dispute resolution process to resolve claims between broker firms and their customers and employees. FINRA operates the largest arbitration forum in the United States for the resolution of these disputes.
While no one can be forced to give up their rights to a trial in court, virtually all agreements between investors and their stockbrokers include mandatory arbitration agreements, and every registered stockbroker is required to arbitrate their disputes with their customers and firms.
Our site has been providing information regarding securities arbitration since 1995, starting with Overview of the Securities Arbitration Process. We update the site on a regular basis and invite you to explore our commentary and links and to ask questions.
Prefer to talk by phone? Call Mark Astarita at 212-509-6544 with any questions regarding securities law, enforcement and arbitration.
Court Compels Arbitration Without Direct Account Relationship With Customer
If selling broker is associated person, and claimant is his customer, BD compelled to arbitrate BMA Financial Services, Inc. v. Guin, 2001 U.S. Dist. LEXIS 18556 (W.D. La., 9/27/01): In the absence of a direct account relationship, a court will compel a firm to arbitration, if the selling broker is […]
Broad Arbitration Agreement Covers All Accounts by Owner
White v. Salomon Smith Barney, Inc., 2001 Cal. App. LEXIS 2844 (Cal. App., 1Dist., 11/30/01) A broad arbitration provision covering one account of a client may be construed to cover disputes arising in other accounts. The Whites opened ten brokerage accounts with SSB and subsequently brought suit against SSB with […]
Clearing Firm’s Arbitration Agreement Includes Claims Against Introducing Firm
Hirshenson v. Spaccio, Case No. 5D00-2145 (Fla. App., 11/30/01). Appealability – Arbitrability ? Breadth of Agreement ? Scope of Agreement – State Statutes Interpreted (Fla. Stats. Ch. 517) ? State Law, Applicability of. Customer’s fraud claims against introducing broker, including claims under Florida Securities Act, are subject to arbitration under […]
Arbitration Chairman Selection Time Frame Shortened by NASD
Since no one ever agrees, let’s make the time period 5 days – NASD Staff Under a proposal submitted to the SEC on March 3, NASD will allow only 5 days for parties to agree on the selection of a chairperson, as opposed to the 15-day period in Rule 10308(c)(5). […]
Forcing Customers to Waive Rights Has Consequences
Linden vs. American Express Financial Advisors – since forcing Claimant to give up her rights under California law, court vacates order compelling arbitration. Linden v. American Express Financial Advisors, Inc., No. CIV 205839 (Cal. Super. Ct., Ventura Cty., 9/25/02). Agreement to Arbitrate * Enforceability * Equitable Doctrine (Impossibility; Impracticality; Unconscionability). […]
Arbitrators Cannot Sanction Attorneys
After nearly 4 years, a Court vacates a $700,000 arbitrator sanction against trial counsel CIBC Oppenheimer Corp. v. Friedman, No. B141521 (Cal. App., 2Dist., 2/21/02). Agreement to Arbitrate * Vacatur of Award * State Law, Applicability of * Exceeding Powers * Sanctions (Arbitral) * Breadth of Agreement * State Statutes […]
Awarding Individuals For Corporation’s Damage Results in Vacature of the Award
Spear Leeds & Kellogg v. Bullseye Securities, Inc., No. 5435, 2002 N.Y. App. LEXIS 1563 (N.Y. App. Div., 1Dept., 2/14/02). Award Challenge * Vacatur of Award * Exceeding Powers * Manifest Disregard * Irrationality * Remand to Arbitrators * Rationale of Award. Individual claimants, as a matter of law, […]
Attorney Fee Provision in Note Works Against Brokerage Firm
BELL & STANTON v. PRUDENTIAL SECURITIES, INC., NASD ID #99-04338 (San Diego, 5/21/01): In California, a provision for attorney fees in a promissory note or agreement is deemed reciprocal, so that both sides can claim such entitlement. In this case, it seems that such a provision worked to the detriment […]
Arbitration Briefs – Procedure Fault is Grounds for Appeal
Failure to Follow Procedure May Be Grounds for Vacatur But only if the moving party preserved its objections during the arbitration process BROOK v. PEAK INTL., No. 01-50339 (5th Cir.., 6/13/02). The underlying arbitration, which Mr. Brook lost, concerned an employment dispute over severance benefits. The Employment Agreement between the […]
