NASD Rule 10101 Forces Arbitration Between Two Brokers – From the Securities Law Home Page

   

]]> Home | Message Board Home Search Arbitration Investors Brokers Finance Law Compliance Archives Dispute Between Two Brokers is Subject to Arbitration, Even Without Written Agreement
Court Compels Arbitration Based on NASD Rule 10101

Scott (Relator Zachary C.), In Re, 2003 WL 557009 (Tex. App., 2/27/03). Arbitrability * Arbitration Agreement (Form U-4) * FAA (§4 “Motion to Compel”) * SRO Rules (NASD Rules 10101, 10201 & 10216) * Breadth of Agreement.

Disputes, solely between associated persons, are arbitrable under Rule 10101. Scott and Truelson, both associated persons with Prudential, entered into a partnership to share commissions, with Scott ultimately to take over Truelson’s book upon his retirement. The partnership agreement did not contain an arbitration clause. Truelson filed an action for breach of the partnership agreement and the district court denied Scott’s motion to compel arbitration. The Court of Appeals “conditionally” granted Scott’s petition for Writ of Mandamus.

In applying a two-step analysis, the Court first concludes that the Federal Arbitration Act applies, noting that the subject matter of the partnership agreement involves interstate commerce and that both associated persons signed Forms U-4. The question whether the particular dispute was arbitrable is next addressed, the Court concluding that NASD Rule 10101(b) is ambiguous and susceptible to more than one reasonable interpretation. Nevertheless, the Court holds that, if an agreement is governed by the FAA, any doubts concerning the scope of the arbitrable issues should be resolved in favor of arbitration. (SLC Ref. No. 2003-11-02)

  

]]>


Shop at Amazon.com

 


Copyright 2003 Securities Arbitration Commentator, Inc. P.O. Box 112, Maplewood, NJ 07040; t: 973-761-5880 f: 973-761-1504. Materials denoted with a SAC Reference No. (e.g. SAC Ref. No. 99-01-001) are on hand at SAC and may be obtained by calling the Securities Arbitration Commentator, or by email to help@sacarbitration.com. The Securities Arbitration Commentator is the leading publication for securities arbitration news and information, and maintains the most complete database of arbitration awards availalble anywhere. For more information regarding their services, visit their website at www.sacarbitration.com


Nothing herein is intended as legal or financial advice. The law is different in different jurisdictions, and the facts of a particular matter can change the application of the law. Please consult an attorney or your financial advisor before acting upon the information contained in this article. 


Return to The Securities Law Home Page 

Visit Beam & Astarita, LLC, securities arbitration, regulation and litigation attorneys

]]> ]]>

Securities Attorney at Sallah Astarita & Cox | 212-509-6544 | mja@sallahlaw.com | Website | + posts

Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.

He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.