Broker-Dealer Litigation - Greenberg Traurig LLP

ecause it overlapped with and was precluded by the FINRA arbitration, or, in the alternative, to
stay the litigation pending the arbitration. The court agreed, holding that the claims in the instant
action were within the scope of the arbitration agreement contained in the Uniform Submission
Agreement, which plaintiff signed when initiating the FINRA arbitration. The court based its
reasoning in large part on FINRA Rule 12209, which states that “[d]uring an arbitration, no party
may bring any suit, legal action, or proceeding against any other party that concerns or that
would resolve any of the matters raised in the arbitration.” The court ruled that the claims in
both the FINRA arbitration and this action “concern and relate” to one another, and that the
factual allegations in both actions are “essentially identical.” The court granted defendants’
motion to dismiss.
Shammami v. Allos, 2011 WL 4805931 (E.D. Mich. Oct. 11, 2011).
Defendants provided plaintiff with investment advice and managed his assets. Plaintiff
alleged wrongful trading of securities in his investment accounts. The court held that it was
clear, however, that plaintiff agreed to arbitrate such disputes with defendants as the arbitration
agreement plaintiff signed referred broadly to “controversies,” and that the case at bar fell within
that scope. The court therefore ordered a stay of the proceedings as to one defendant, and
dismissed as to others.
Morgan Keegan & Co. v. Jindra, 2011 U.S. Dist LEXIS 135464 (W.D. Wash. Nov. 22, 2011).
Defendants attempted to arbitrate claims against plaintiff before FINRA. Plaintiff
brought this action for a temporary restraining order and preliminary injunction preventing the
arbitration on the basis that it had no agreement with defendants, and defendants were not its
customers. Defendants utilized a broker who was not associated with plaintiff, but the broker
alleged that he relied heavily on communications distributed by plaintiff. The court held that it
was clear that there was no arbitration agreement between defendants and plaintiff, and therefore
defendants’ ability to arbitrate rested on whether or not they were a “customer” under applicable
FINRA rules. The court held that neither defendants nor their broker had such a relationship
with plaintiff as to infer a customer status, and therefore plaintiff was not subject to arbitration.
The court concluded that a preliminary injunction enjoining defendants from arbitration was
warranted.
Branch v. Sicker, 2011 U.S. Dist. LEXIS 19392 (N.D. Ga. Feb. 28, 2011).
Plaintiffs purchased securities in business entities that were created by defendants. One
of these entities later filed for bankruptcy, which plaintiffs alleged was a result of defendants’
risky business deals that ran contrary to the safe investments defendants had represented.
Plaintiffs brought this suit as a result and defendants moved to dismiss for improper jurisdiction
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