Finra appeals loss in Schwab arbitration case

Self-regulator wants to restore client ability to file class actions

Feb 26, 2013 @ 5:19 pm

By Dan Jamieson

Finra is appealing a hearing panel decision it lost last week that upheld Charles Schwab & Co. Inc.'s use of arbitration agreements that force customers to bring all disputes into Finra-run arbitration forums.

Financial Industry Regulatory Authority Inc. spokeswoman Michelle Ong said the appeal was filed today with its internal appeal board, the National Adjudicatory Council.

The self-regulator brought charges against Schwab a year ago, claiming that Schwab's arbitration agreement violated Finra rules ensuring that customers can pursue class action claims in lieu of arbitration. In a ruling last Thursday, the hearing panel said the Federal Arbitration Act prevents Finra from enforcing those rules.

The ruling, if ultimately upheld, will end class claims for investors who have signed arbitration agreements like Schwab's, because Finra's arbitration forum will not accept class actions.

News of the appeal was reported earlier by Reuters.


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