Judge dismisses Schwab suit to halt FINRA action

Posted on: May 31st, 2012 by Steve Larson

U.S. District Judge Elizabeth Laporte in San Francisco, California, rejected as premature Charles Schwab & Co.’s challenge to the Financial Industry Regulatory Authority’s (FINRA) ban on class action waivers. Charles Schwab & Co., Inc. v. Financial Industry Regulatory Authority, No. 3:12-CV-00518 (N.D. Cal., Hon Elizabeth D. LaPorte).  Judge LaPorte dismissed the case on jurisdictional grounds, finding Schwab had failed to exhaust its administrative remedies before filing suit against FINRA. The federal action followed a disciplinary action filed by FINRA against Schwab on February 1, 2012, alleging that Schwab had violated FINRA rules by seeking to impose mandatory arbitration on Schwab brokerage customers. Schwab countered that such mandatory arbitration clauses were lawful and enforceable in light of the Supreme Court’s decision in AT&T Mobility v. Concepcion.  You can see a copy of the opinion at this link: Charles Schwab v. FINRA – Order Granting Defendant’s Motion to Dismiss