FINRA Ruling on Class Action Waivers

Feb 22, 2013

On behalf of Thomas Costello of Costello Law Group

A FINRA arbitration panel has dismissed an action by FINRA regulators to prohibit Charles Schwab Corp. from requiring customers to sign off on agreements which prohibit participation in judicial class actions. While the arbitration panel did find that Charles Schwab Corp.’s use of such language violated FINRA rules, the panel decided that FINRA may not enforce its rules because they are in conflict with the Federal Arbitration Act. This decision may encourage other brokerage firms to utilize similar language further limiting a customer’s right to seek relief from the courts system . Hopefully, FINRA regulators will appeal the panel’s decision to FINRA’s National Adjudicatory Council.


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