FINRA to Spar for Consumer Rights on Wednesday

September 05, 2013

Yesterday, the New York Times published an interesting article regarding discount brokerage firm Charles Schwab & Company’s attempt to lessen (if not effectively eliminate) its exposure to liability for widespread investment related abuses.

More specifically, in 2011, Schwab added a mandatory arbitration clause to its customer agreement that required clients to agree not to pursue or participate in class-action suits.  In response, the Financial Industry Regulatory Authority (“FINRA”) filed a disciplinary action against Schwab, to force them to do away with that provision.  After Schwab successfully challenged FINRA’s decision, the issue was taken up by state security regulators and investor advocacy groups.  One such advocacy group, Public Citizen, started an online petition entitled “Stand Up to Chuck: Demand That Charles Schwab Corporation Stop Denying Its Customers’ Rights.”  That petition collected 17,000 signatures.  To access that petition, please click here.

FINRA’s appeal of the decision in favor of Schwab will go before the association’s adjudicatory panel next Wednesday.  This is a very important issue for investors, and Wexler Wallace will be monitoring it closely.  If Schwab is successful, the rights and protections currently held by investors will be seriously impaired.

To read the article, click here. To read more about Wexler Wallace’s securities and financial regulation cases, please click here.


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