Today, the Second Circuit followed an April 2014 decision by the Ninth Circuit in Goldman Sachs & Co. v. Reno (described here) — and rejected an opposite holding by the Fourth Circuit — and held that a forum selection clause in a contract supersedes a broker-dealer’s obligation to arbitrate disputes with a customer under FINRA Rule 12200. The Court of Appeals, in a single opinion, resolved two cases: Goldman Sachs & Co. v. Golden Empire Sch. Fin. Auth., No. 13-797-cv (2d Cir. Aug. 21, 2014) and Citigroup Global Mkts. Inc. v. N.C. E. Mun. Power Agency, No. 13-2247-cv (2d Cir. Aug. 21, 2014). The respective forum selection clauses at issue required “all actions and proceedings” related to the transactions between the parties be brought in court.
FINRA’s Rule 12200 has been the source of much litigation recently, as broker-dealers have tried to elude their obligations to arbitrate with customers, by asking courts to construe the word “customer” narrowly. To aid lower courts, the Second Circuit recently adopted a bright-line definition of “customer.”. See here.
