2nd Circ. Ruling Clears FINRA Arbitration Confusion

Law360, New York (September 15, 2014, 10:18 AM EDT) -- In a case of first impression, the United States Court of Appeals for the Second Circuit in Citigroup Global Markets Inc. v. Abbar, No. 13-2172, (2d Cir. Aug. 1, 2014), established a bright-line definition of "customer" under the Financial Industry Regulatory Authority's mandatory arbitration provision. Absent a written agreement to arbitrate, FINRA Rule 12200 compels FINRA members to arbitrate disputes with "customers," but the rule does not define "customer." It states only that a "customer shall not include a broker or dealer."

In Abbar, the Second Circuit held that a "customer" is "one who, while not a broker or dealer, either...

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