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May 29, 2020

Fact Sheet: Make a Bad Arbitration System Even Worse for Investors Or Protect Their Right to Assert Claims for a Broker’s Rule Violations? The Fourth Circuit Will Hear Argument on May 29, 2020

On May 29, 2020, the United States Court of Appeals for the Fourth Circuit will hear oral argument in a case that will determine whether injured investors can recover in arbitration for a broker’s violation of the industry’s own rule book. The answer would seem to be an obvious “yes,” especially when a broker’s arbitration agreement broadly requires “any controversy, dispute, claim, or grievance” to be resolved in arbitration. But a federal district court thought otherwise, holding that violations of the rules governing brokers cannot serve as the basis for an arbitration claim. The court thus threw out an award in favor of investors and set a precedent that threatens to make an already unfair arbitration system even worse. The investors appealed the case, and Better Markets filed an amicus curiae (or “Friend of the Court”) brief in support of the investors, arguing that the district court erred on both legal and policy grounds. Learn more in our fact sheet here or by clicking the button below.

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