Securities Law and Arbitration: The Enforceability of Predispute Arbitration Clauses in Broker-Customer Agreements
28 Pages Posted: 27 Oct 2009 Last revised: 12 Nov 2009
Date Written: October 27, 1990
This article explores the alternative dispute resolution technique of arbitration as it is deployed in broker-customer securities disputes. Historically such disputes were resolved in judicial forums, but increasingly courts are compelled to turn over these cases to arbitration associations. In the typical scenario involving broker-customer securities arbitration the customer has lost money on some investment and later files suit in an Article III court attempting to recoup losses. The broker seeks a stay of this litigation as well as an order compelling arbitration per the predispute arbitration agreement the customer had initially executed upon opening the brokerage account. The author offers a detailed analysis of decisions in this area, as well as a number of solutions for both customers as well as brokers.
Suggested Citation: Suggested Citation