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Court Tosses Charles Schwab Challenge to FINRA

A Federal Court recently dismissed a challenge by Charles Schwab to FINRA’s authority to discipline the company for provisions contained in its agreement with investors. Charles Schwab attempted to include language in its customer agreements which prevented customers from joining a class action lawsuit against the company. FINRA had brought an enforcement action against Schwab with respect to those provisions alleging that the waiver provisions of the agreement violated the organization’s rules. Schwab believed that recent decisions by the United States Supreme Court and the Federal Arbitration Act supported its position.

The Federal Court dismissed the challenge brought by Schwab stating that it had not exhausted its extra-judicial options.