Department of Enforcement v. Charles Schwab & Company, Inc.
Board of Governors Financial Industry Regulatory Authority
FINRA No. 2011029760201 (2014)
- Written by Robert Cane, JD
Facts
Charles Schwab & Company, Incorporated (Schwab) (defendant) provided predispute arbitration agreements to its customers. These predispute arbitration agreements included provisions that precluded customers from participating in judicial class actions and precluded arbitrators from consolidating individual claims brought in the Financial Industry Regulatory Authority (FINRA) arbitration forum. FINRA’s Department of Enforcement (plaintiff) commenced an investigation against Schwab after it learned of Schwab’s use of these provisions, which were purportedly against FINRA rules. A FINRA hearing panel initially reviewed Schwab’s alleged violations and found that Schwab had violated FINRA rules by preventing customers from participating in judicial class actions and preventing arbitrators from consolidating claims in FINRA arbitration. However, the hearing panel found that the Federal Arbitration Act preempted FINRA’s rules regarding participation in class actions. FINRA’s Board of Governors independently reviewed the findings of the hearing panel.
Rule of Law
Issue
Holding and Reasoning (Asquith, J.)
What to do next…
Here's why 832,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 46,400 briefs, keyed to 994 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.
