Securities law and arbitration

Abstract

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.