Customer Not Beneficiary of Clearing Agreement

Customer Not Beneficiary of Clearing Agreement

Hossain vs. Rauscher Pierce Refsnes

Hossain v. Rauscher Pierce Refsnes, Inc., Case No. 97-1380 (D. Kan., 5/15/00): A customer of an introducing broker is not a third party beneficiary of a clearing agreement between an introducing and clearing broker.

Hossain claimed to be a third-party beneficiary of an agreement between Primeline, a broker-dealer which employed Asif Amenn as a registered representative, and the Defendants.

Amenn, operating a Ponzi scheme, stole money from Plaintiff and was eventually convicted of securities fraud. The Court held, if Plaintiff relied on the clearing agreement to his detriment, it was without liability to Rauscher. In this case, there was no intent to benefit third parties and the agreement states it is not intended to benefit anyone other than the contracting parties. (P. Hoblin) (SAC Ref. No 2000-20-009)

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