# Amicus Curiae Brief — Shearson Lehman/American Express Inc. v. Bird

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_0909%3A4

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1989
- **Citation:** 493 U.S. 884

## Text

tJ
No. 89-231

ate) Supreme Court, U.S.

IN THE | os oe

|
\

Supreme Court of the United States

JOSEPH F. SFANIOL, JR.
CLERK

OCTOBER TERM, 1989

————

>

SHEARSON LEHMAN/AMERICAN EXPRESS INC.

and RAYMOND R. CLEMENTS, op
Petitioners,

—_—V.—

FRANK L. BIRD, Trustee of the FRANK L. BIRD
PROFIT SHARING TRUST, FRANK L. BIRD, Individually,

J ;
scat Sak ae Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE SECOND CIRCUIT

MOTION FOR LEAVE TO FILE BRIEF AMICI CURIAE
AND BRIEF OF AMICT CURIAE IN SUPPORT OF THE
PETITION FOR A WRIT OF CERTIORARI

JAMES K. MANNING

Counsel of record; and

PAUL WINDELS III

ELIZABETH STORCH

BROWN & WOOD

One World Trade Center

New York, New York 10048

(212) 839-5300

Attorneys for Securities Industry
Association, The Advest Group, Inc.,
J.C. Bradford & Co., Dain Bosworth
Incorporated, D.A. Davidson & Co., Inc.,
Dean Witter Reynolds Inc., A.G. Edwards
& Sons, Inc., Goldman, Sachs & Co.,
J.J.B. Hilliard, W.L. Lyons, Inc.,
Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Piper, Jaffray & Hopwood
Incorporated, Prescott, Ball & Turben,
Inc., Prudential-Bache Securities Inc.,
and Wheat, First Securities, Inc.,
as Amici Curiae

= “oS

“7

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989
No. 89-231

>
SHEARSON LEHMAN/AMERICAN EXPRESS INC. and
RAYMOND R. CLEMENTS,
Petitioners,

—_—vV.—

FRANK L. BIRD, Trustee of the FRANK L. BIRD
PROFIT SHARING TRUST, FRANK L. BIRD, Individually,
and JOAN SHEA,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE SECOND CIRCUIT

>

MOTION OF THE SECURITIES INDUSTRY
ASSOCIATION, THE ADVEST GROUP, INC.,
J.C. BRADFORD & CO., DAIN BOSWORTH
INCORPORATED, D.A. DAVIDSON & CO., INC.,
DEAN WITTER REYNOLDS INC., A.G. EDWARDS
& SONS, INC., GOLDMAN, SACHS & CO., J.J.B.
HILLIARD, W.L. LYONS, INC., MERRILL LYNCH,
PIERCE, FENNER & SMITH INCORPORATED,
PIPER, JAFFRAY & HOPWOOD INCORPORATED,
PRESCOTT, BALL & TURBEN, INC.,
PRUDENTIAL-BACHE SECURITIES INC., AND
WHEAT, FIRST SECURITIES, INC., FOR LEAVE
TO FILE BRIEF AMICI CURIAE

2

The Securities Industry Association (‘‘SIA’’), The Advest
Group, Inc. (‘‘Advest’’), J.C. Bradford & Co. (‘‘Bradford’’),
Dain Bosworth Incorporated (‘‘Dain Bosworth’’), D.A. David-
son & Co., Inc. (‘‘Davidson’’), Dean Witter Reynolds Inc.
(‘Dean Witter’’), A.G. Edwards & Sons, Inc. (‘‘A.G.
Edwards’’), Goldman, Sachs & Co. (‘‘Goldman Sachs’’),
J.J.B. Hilliard, W.L. Lyons, Inc. (‘‘Hilliard Lyons’’), Merrill
Lynch, Pierce, Fenner & Smith Incorporated (‘‘Merrill
Lynch’’), Piper, Jaffray & Hopwood Incorporated (‘‘Piper Jaf-
fray’’), Prescott, Ball & Turben, Inc. (‘‘Prescott’’), Prudential-
Bache Securities Inc. (‘‘Prudential’’), and Wheat, First
Securities Inc. (‘‘Wheat First’’), hereby respectfully move, pur-
suant to Rule 42 of this Court, for leave to file the annexed
brief, as amici curiae in support of the Petitioners, urging this
Court to issue a writ of certiorari to the United States Court of
Appeals for the Second Circuit with respect to its decision and
judgment below in Bird v. Shearson Lehman/American
Express, Inc., 871 F.2d 292 (2d Cir. 1989). The consent of
Shearson Lehman/American Express Inc. and Raymond R.
Clements, the Petitioners, has been obtained. Consent of the
Respondents has been requested but was not granted.

INTEREST OF AMICI CURIAE

SIA is the principal trade association of the securities indus-
try, having as members more than six hundred securities firms
in the United States and Canada. As such, it has a substantial
interest in the extent to which agreements to arbitrate claims
between securities firms and their customers may be enforced.
Because arbitration is an efficient, fair, and economical manner
of resolving disputes, most of SIA’s members have agreed with
many of their customers to arbitrate any controversies arising
between them. Among these members are amici Advest, Brad-
ford, Dain Bosworth, Davidson, Dean Witter, A.G. Edwards,
Goldman Sachs, Hilliard Lyons, Merrill Lynch, Piper Jaffray,
Prescott, Prudential, and Wheat First.

3

Amici curiae have a substantial interest in having this Court
resolve whether agreements to arbitrate claims arising under the
Employee Retirement Income Security Act of 1974, 29 U.S.C.
§ 1001 et seg. (‘‘ERISA’’), are enforceable as valid contracts
under Section 2 of the United States Arbitration Act, 9 U.S.C.
§ 2, as this Court has found with respect to claims arising under
the antitrust laws, the racketeering laws, and the securities laws.
See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
473 U.S. 614 (1985); Shearson/American Express, Inc. v. Mc-
Mahon, 482 U.S. 220 (1987); and Rodriguez De Quijas v.
Shearson/American Express, Inc., U.S. , 109 S.Ct.
1917 (1989). Amici seek to clarify and make uniform the law on
this issue so that the enforceability of arbitration provisions in
agreements with their customers can be predicted and ielied
upon.

This concern is not abstract: a significant portion of amici’s
accounts, such as Individual Retirement Accounts, are subject
to ERISA. The decision below has the anomalous result of ren-
dering the same agreement enforceable as to some accounts and
unenforceable as to others. As a practical matter, it would carve
a major exception to the rule this Court set down in Rodriguez
and McMahon: that arbitration clauses in brokerage agree-
ments are enforceable under the Arbitration Act.

SIA has also filed amicus briefs with this Court on the
enforceability of agreements to arbitrate in Dean Witter Rey-
nolds Inc. v. Byrd, 470 U.S. 213 (1985), Shearson/American
Express, Inc. v. McMahon, 482 U.S. 220 (1987), Dain
Bosworth Incorporated v. Johnson, No. 88-284, and Rodriguez
De Quijas v. Shearson/American Express, Inc., _.._ U.S.
___, 109 S.Ct. 1917 (1989).

Amici curiae firmly believe that the Court of Appeals erred
below. The Court of Appeals, notwithstanding the congressio-
nal policy favoring arbitration contained in the United States
Arbitration Act, 9 U.S.C. § 1 et seq. voided an agreement to
arbitrate future claims brought under ERISA as a waiver of
substantive rights under that statute. It did so even though this
Court has often held that such an agreement does not affect
substantive rights under the antitrust laws, Mitsubishi Motors
Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985),
the securities laws, Rodriguez De Quijas v. Shearson/American

Express, Inc., U.S. , 109 S.Ct. 1917 (1989) and
Shearson/American Express, Inc. v. McMahon, 482 U.S. 220
(1987) and the federal racketeering statute, McMahon.

Amici move for leave to file this brief in order to put facts
relating to arbitration practice in the securities industry before
the Court. See proposed brief, infra, at 7-12. These facts, amici
respectfully submit, will assist the Court in deciding whether to
grant a writ of certiorari. They bear out this Court’s approval
of securities industry arbitration—and thus its conclusion that
an agreement to arbitrate claims does not waive substantive
rights. By the same token, they refute the Court of Appeals’
negative assumptions about arbitration and thus undercut the
basis of its decision.

WHEREFORE, the Securities Industry Association, The Advest
Group, Inc., J.C. Bradford & Co., Dain Bosworth Incorpo-
rated, D.A. Davidson & Co., Inc., Dean Witter Reynolds Inc.,
A.G. Edwards & Sons, Inc., Goldman, Sachs & Co., J.J.B. Hil-
liard, W.L. Lyons, Inc., Merrill Lynch, Pierce, Fenner & Smith
incorporated, Piper, Jaffray & Hopwood Incorporated, Pres-
cott, Ball & Turben, Inc., Prudential-Bache Securities Inc., and
Wheat, First Securities, Inc., respectfully move this Court that
leave be granted them to file the brief as amici curiae in support
of the petition for a writ of certiorari.

Dated: September 6, 1989

Respectfully submitted,

/s/ James K. Manning

JAMES K. MANNING
Counsel of Record; and
PAUL WINDELS II]
ELIZABETH STORCH

BROWN & WOOD

One World Trade Center

New York, New York 10048

(212) 839-5300

Attorneys for Amici Curiae

TABLE OF CONTENTS

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Reasons for Granting a Writ of Certiorari........

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ARGUMENT

i.

II.

Ill.

The United States Arbitration Act Mandates
that Arbitration be Recognized as an Efficient
and Widely Accepted Means of Resolving
Broker-Customer Disputes in the Securities
DE oc cece beamapadeasedcrrecaokr nines

The Court Below Misapplied the Standard for
Finding an Implied Repeal of the United States
PO FE a co ca vundunscésssswnecssesas

The Circuits Stand in Conflict as to the Arbitra-
ee OG SE GD ocean dc ncnecnsuadvenes

CRAG od ake cc nndnnt sbskensseehetssabauaan

APPENDIX

Sixth Report of the Securities Industry Confer-
ence on Arbitration Statistical Report (August
RO) CIE occ ccdcuaeasakcceaxseeses

SUPPLEMENTAL LODGING OF AMICI CURIAE

New York Stock Exchange, Inc., Arbitration
ROG ccecckhevveswnueeuueeses eee sceeeses

PAGE

Al

TABLE OF AUTHORITIES

Cases: PAGE

Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974) .14, 15

Allen v. McCurry, 449 U.S. 90 (1980)................ 13
Arnulfo P. Sulit, Inc. v. Dean Witter Reynolds, Inc., 847
eee See ee Gals. PENS 05 0 kc och eucececheastas 4, 14, 16

Barrentine v. Arkansas-Best Freight System, Inc., 450
iy FEE CRED nV idesancectaheusecasuduceesuelen 14, 15

Bird v. Shearson Lehman/American Express, Inc., 871
ames Gee GO Gals ROUEP ccccectausavens’ 2, 4, 6, 7, 11, 14n

Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985) 3

Kaiser Steel Corp. v. Mullins, 455 U.S. 72 (1982)...... 13
Kulukundis Shipping Co. v. Amtorg Trading Corp., 126

FP 3, g fe SB, SRR R er cee eee 5
McDonald v. City of West Branch, 466 U.S. 284

Wiku:o-6¥505 bSSd G00 604s eRe kL ERR R EUR ooEt 14, 15
McMahon v. Shearson/American Express, 788 F.2d 94

(2d Cir. 1986), rev’d, 482 U.S. 220 (1987) .........
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,

Pg Se tae GO CRORE kc bcnescucaceccauvencces passim
Morton v. Mancari, 417 U.S. 535 (1974). ............. 13
Moses H. Cone Memorial Hospital v. Mercury Constr.

Gas Sew Gate: S CRDRON ccc ccakctcceasdtucucwaaus 4,5
Rodriguez De Quijas v. Shearson/American Express,

Inc., U.S. ___, 109 S. Ct. 1917 (1989) ...... 2, 3, 4,

5, 6, 15, 16

Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974) .... 6

iil

PAGE
Shearson/American Express, Inc. v. McMahon, 482
U.S. 220 (1987) .......cecceccceeceeces 2, 3, 4, 5, 6, 7, 16
Southland Corp. v. Keating, 465 U.S. 1 (1984) «2.2000. 4,6
Taggert Corp. v. Efros, 475 F. Supp. 124 (S.D. Tex.
DID). oop ccccccccccccrccccccassnccsssessssvesess 6
Statutes:
Employee Retirement Income Security Act of 1974
Section 1001 ef seq., 29 U.S Lv. § 1001 ef seq....----. 2
Section 1144(d), 29 U.S.C. § 1144(d)...---- eee ee: 13n
Labor-Management Relations Act of 1947
Section 301, 29 U.S.C. § 185.......-eee eee ee renee 14
Racketeering Influenced and Corrupt Organization Act
Sections 18 U.S.C. §§ 1961-68. .....---- eee ee creer 7
Securities Exchange Act of 1934
Section 78 ef seq., 15 U.S.C. § 78 ef Seg. ..--++++++> 14
Section 19, 15 U.S.C. § 788....-..--- sere cere eeeee s
Section 27, 15 U.S.C. § 78aa......--- eee cree seen 14
United States Arbitration Act
Section 1 ef seq., 29 U.S.C. § 1 ef Seg... -----+++05> 3
Section 2, 9 U.S.C. § 2.....-- cece eeeeeeceeeeeees 2
Rules:
American Stock Exchange, Inc., Arbitration Rules, 2
Am. Stock Ex. Guide (CCH) 44 9540-95513... 2000 7n, 8n
10n, lin

Code of Arbitration Procedure of the National Associa-
tion of Securities Dealers, Inc., N.A.S.D. Manual
(CCH) 44 3701-3746 .... 02+ ee eee ee eeeee 7n, 8n, 10n, lin

iv

PAGE
Constitution of the New York Stock Exchange, Inc., Art.
XI, 2 N.Y.S.E. Guide (CCH) 44 1501-1503 ......... 8n
New York Stock Exchange, Inc., Arbitration Rules 600-
Gee sdndesnvenbstalusdcnansussvessds 7n, 8n, 9n, 10n, lln
Uniform Code of Arbitration §§ 1-31, reprinted in Sixth
Report of the Securities Industry Conference on Arbi-
IS Me osc odukecc cus ducee% 7n, 10n, lin
Articles:
C. Katsoris, The Arbitration of a Public Securities Dis-
pute, 53 Fordham L. Rev. 279 (1984) ............. 11, lin
Miscellaneous:
American Stock Exchange, Inc., Panel of Arbitrators
1988-89, 1 Am. Stock Ex. Guide (CCH) 158-60 ..... 9
Annual Report of the Director of the Administrative
Office of tiie United States Courts 1988 ............ 12n
Brief of the SEC as amicus curiae in Shearson/American
Express, Inc. v. McMahon, No. 86-44.............. ®
Brief of the SIA as amicus curiae in Dain Bosworth
Incorporated v. Johnson, No. 88-284 .............. 3

H.R. Conf. Rep. No. 1280, 93d Cong., 2d Sess. 327,
reprinted in 1974 U.S. Code Cong. & Admin. News.
PUL sitakighoeadedesetnnadeudonsuce eben dsl. 14

New York Stock Exchange Response to the SEC Request
for Review of Predispute Arbitration Agreements,
October 14, 1988, reprinted in P. Hoblin, Jr., Securi-
ties Arbitration Procedures Strategies Cases (2d Supp.

BRIER Bee By Agron Ra Se Bh A ne a 12n
SEC Exchange Act Release No. 16390 (Nov. 30, 1979),
DD Malis BPMN ROOD CHOTED occ ccdccccscecnccuace ®

Sixth Report of the Securities Industry Conference on
Arbitration Statistical Report (August 1989) ........ lin

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989
No. 89-231

>

SHEARSON LEHMAN/AMERICAN EXPRESS INC.
and RAYMOND R. CLEMENTS,
Petitioners,

al

FRANK L. BIRD, Trustee of the FRANK L. BIRD
PROFIT SHARING TRUST, FRANK L. BiRD, Individually,
and JOAN SHEA,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE SECOND CIRCUIT

—|\_—---

BRIEF OF AMICI CURIAE IN SUPPORT OF THE
PETITION FOR A WRIT OF CERTIORARI

PRELIMINARY STATEMENT

The Securities Industry Association (‘‘SIA’’), The Advest
Group, Inc. (‘‘Advest’’), J.C. Bradford & Co. (‘‘Bradford’’),
Dain Bosworth Incorporated (‘‘Dain Bosworth’), D.A. David-
son & Co., Inc. (‘‘Davidson’’), Dean Witter Reynolds Inc.
(‘Dean Witter’), A.G. Edwards & Sons, Inc. (“‘A.G.
Edwards’’), Goldman, Sachs & Co. (‘‘Goldman Sachs’’),
J.J.B. Hilliard, W.L. Lyons, Inc. (‘‘Hilliard Lyons’’), Merrill
Lynch, Pierce, Fenner & Smith Incorporated (‘‘Merrill

2

Lynch’’), Piper, Jaffray & Hopwood Incorporated (‘‘Piper Jaf-
fray’’), Prescott, Ball & Turben, Inc. (‘‘Prescott’’), Prudential-
Bache Securities Inc. (‘‘Prudential’’), and Wheat, First
Securities, Inc. (‘‘Wheat First’’) submit this brief as amici
curiae in support of the Petitioners, and urge this Court to issue
a writ of certiorari to the United States Court of Appeals for the
Second Circuit with respect to its decision and judgment below
in Bird v. Shearson Lehman/American Express, Inc., 871 F.2d
292 (2d Cir. 1989).

INTEREST OF AMICI CURIAE

SIA is the principal trade association of the securities indus-
try, having as members more than six hundred securities firms
in the United States and Canada. As such, it has a substantial
interest in the extent to which agreements to arbitrate claims
between securities firms and their customers may be enforced.
Because arbitration is an efficient, fair, and economical manner
of resoiving disputes, most of SIA’s members have agreed with
many of their customers to arbitrate any controversies arising
between them. Among these members are amici Advest, Brad-
ford, Dain Bosworth, Davidson, Dean Witter, A.G. Edwards,
Goldman Sachs, Hilliard Lyons, Merrill Lynch, Piper Jaffray,
Prescott, Prudential, and Wheat First.

Amici curiae therefore have a substantial interest in having
this Court resolve whether agreements to arbitrate claims aris-
ing under the Employee Retirement Income Security Act of
1974, 29 U.S.C. § 1001 et seq., (“‘ERISA’’) are enforceable as
valid contracts under Section 2 of the United States Arbitration
Act, 9 U.S.C. § 2, as this Court has found with respect to
claims arising under the antitrust laws, the racketeering laws,
and the securities laws. See Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614 (1985); Shearson/
American Express v. McMahon, 482 U.S. 220 (1987); and
Rodriguez De Quijas v. Shearson/American Express, Inc.,
pe YF , 109 S.Ct. 1917 (1989). Amici seek to clarify
and make uniform the law on this issue so that the enforceabil-

os natant vacemeiumasaaa inimitable

3

ity of arbitration provisions in agreements with their customers
can be predicted and relied upon.

This concern is not abstract: a significant portion of amici’s
accounts, such as Individual Retirement Accounts, are subject
to ERISA. The decision below has the anomalous result of ren-
dering the same agreement enforceable as to some accounts and
unenforceable as to others. As a practical matter, it would carve
a major exception to the rule this Court set down in Rodriguez
and McMahon: that arbitration clauses in brokerage agree-
ments are enforceable under the Arbitration Act.

SIA has also filed amicus briefs with this Court on the
enforceability of agreements to arbitrate in Dean Witter Rey-
nolds Inc. v. Byrd, 470 U.S. 213 (1985), Shearson/American
Express, Inc. v. McMahon, 482 U.S. 220 (1987), Dain
Bosworth Incorporated v. Johnson, No. 88-284, and Rodriguez
De Quijas v. Shearson/American Express, Inc., ____ U.S.
___, 109 S.Ct. 1917 (1989).

REASONS FOR GRANTING A WRIT OF CERTIORARI

At issue here is whether the lower courts have license to infer
congressional intent to overrule the United States Arbitration
Act, 9 U.S.C. § 1 et seg. (the ‘‘Arbitration Act’’), without any
direct evidence that Congress intended to do so. Although this
Court has repeatedly held in no uncertain terms that predispute
agreements to arbitrate claims arising under federal statutes are
enforceable under the Arbitration Act absent a showing of spe-
cific congressional intent to repeal the effect of the Arbitration
Act with respect to such claims, see Mitsubishi Motors Corp. v.
Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985), Shearson/
American Express v. McMahon, 482 U.S. 220 (1987), Rodri-
guez De Quijas v. Shearson/American Express, Inc., U.S.
, 109 S.Ct. 1917 (1989), the Court of Appeals below
refused to enforce a predispute agreement to arbitrate claims
arising under ERISA, without even purporting to find any
direct expression of congressional intent to overrule the Arbi-
tration Act.

4

SUMMARY OF ARGUMENT

The opinion of the United States Court of Appeals for the
Second Circuit below, Bird v. Shearson Lehman/American
Express, Inc., 871 F.2d 292 (2d Cir. 1989), held that predispute
agreements to arbitrate ERISA claims are unenforceable, in
spite of the Arbitration Act’s mandate that an agreement to
arbitrate is as enforceable as any other valid contract. The deci-
sion below rested upon two erroneous premises: (1) a conclu-
sion, indefensible in light of this Court’s recent Arbitration Act
decisions, that arbitration of ERISA claims is inconsistent with
that statute’s ‘‘remedial’’ purposes, and (2) a misapplication of
the test for determining whether Congress repealed the Arbitra-
tion Act by implication with respect to ERISA claims. See Mit-
subishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473
U.S. 614 (1985); Southland Corp. v. Keating, 465 U.S. 1 (1984);
Moses H. Cone Memorial Hospital v. Mercury Constr. Corp.,
460 U.S. 1 (1983). As to the former premise, it assumes that the
enforcement of agreements to arbitrate ERISA claims dilutes
the substantive provisions of that Act, a view consistently
rejected by this Court in analogous contexts. As to the latter
premise, the Court of Appeals, being unable to find statutory
language conflicting with the Arbitration Act or legislative his-
tory demonstrating congressional intent to repeal the Arbitra-
tion Act, in effect overruled the substantive, congressional
policies embodied in the Arbitration Act solely on the basis of
its own conception of public policy.

A writ of certiorari is also appropriate here because a split in
the Circuits exists. In contrast to the result here, the Court of
Appeals for the Eighth Circuit has analyzed the issue in the
manner set forth by this Court in Mitsubishi, McMahon, and
Rodriguez and has held that predispute agreements to arbitrate
are enforceable with respect to ERISA claims. Arnulfo P. Sulit,
Inc. v. Dean Witter Reynolds, Inc., 847 F.2d 475 (8th Cir.
1988).

Such results as the Court of Appeals for the Second Circuit
reached below can only lead lower courts to stray from the rule
laid down by this Court: that the Arbitration Act is valid except

~ ——

5

where Congress has expressed its intention, either in statutory
language or legislative history, to repeal it. Amici respectfully
submit that the petition for certiorari should be granted in order
to prevent inconsistent treatment among the lower courts that
are trying to define the scope and validity of the Arbitration
Act.

POINT I

THE UNITED STATES ARBITRATION ACT MANDATES
THAT ARBITRATION BE RECOGNIZED AS AN
EFFICIENT AND WIDELY ACCEPTED MEANS OF
RESOLVING BROKER-CUSTOMER DISPUTES IN THE
SECURITIES INDUSTRY

The United States Arbitration Act provides that an agree-
ment to arbitrate in a contract involving interstate commerce is
valid to the same extent as any other contract. When Congress
passed the Arbitration Act in 1925, it established a clear federal
policy favoring the use of arbitration to resolve disputes. That
policy marked a decisive shift from the hostility to arbitration
then prevalent in the courts.

In its recent decisions, this Court has found occasion to rec-
ognize the policy behind the Arbitration Act. In Mitsubishi
Motors Corp. v. Soler Chrysler-Plymouth, Inc., the Court
observed:

[W]e are well past the time when judicial suspicion of the
desirability of arbitration and the competence of arbitral
tribunals inhibited the development of arbitration as an
alternative means of dispute resolution.

473 U.S. at 626-27. Accord Rodriguez De Quijas v. Shearson/
American Express, Inc., 109 S.Ct. at 1920 (‘‘ ‘the old judicial
hostility to arbitrations’. . . has been steadily eroded over the
years’’) (quoting Kulukundis Shipping Co. v. Amtorg Trading
Corp., 126 F.2d 978, 985 (2d Cir. 1942) (Frank, J.)); Moses H.
Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. at
24 (the Arbitration Act ‘‘is a congressional declaration of a lib-

6

eral federal policy favoring arbitration . . . [and] questions of
arbitrability must be addressed with a healthy regard for the
federal policy favoring arbitration’’); Southland Corp. v. Keat-
ing, 465 U.S. at 10 (in enacting the Arbitration Act, ‘‘Congress
declared a national] policy favoring arbitration. . . [that] man-
dated the enforcement of arbitration agreements’’); Scherk v.
Alberto-Culver Co., 417 U.S. 506, 510-11 (1974).

The Court of Appeals’ refusal to enforce predispute agree-
ments to arbitrate ERISA claims rested in large part on its con-
ception of ERISA as a remedial statute. In the words of the
Court of Appeals:

The federal courts have consistently interpreted ERISA as
a remedial statute designed to ‘‘curb the funding and dis-
closure abuses of employee pension and welfare benefit
plans by establishing minimum federal standards.”’

871 F.2d at 296-97 (quoting Taggert Corp. v. Efros, 475 F.
Supp. 124 (S.D. Tex. 1979). Yet ERISA’s remedial purpose can
have no bearing as to whether agreements to arbitrate ERISA
claims are enforceable under the Arbitration Act, unless it is
assumed that arbitration of ERISA claims semehow dilutes the
substantive rights conferred by that statute.

This Court has rejected the predicate of the decision below,
the notion that an agreement to arbitrate controversies under a
federal statute affects the substantive provisions of that statute:

By agreeing to arbitrate a statutory claim, a party does not
forgo the substantive rights afforded by the statute; it only
submits to their resolution in an arbitral, rather than a
judicial, forum. It trades the procedures and opportunity
for review of the courtroom for the simplicity, informal-
ity, and expedition of arbitration.

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.
473 U.S. at 628; accord, Rodriguez De Quijas v. Shearson/
American Express, Inc., U.S. , 109 S.Ct. at 1920-21;
Shearson/American Express, Inc. v. McMahon, 482 U.S. at
232. In these cases, the Court enforced agreements to arbitrate
claims arising under three of the most fundamentally remedial

bodies of federal statutory law: the antitrust laws (Mitsubishi),
the securities laws (McMahon and Rodriguez), and the Racke-
teering Influenced and Corrupt Organization Act, 18 U.S.C.
§§ 1961-68 (McMahon). Indeed, the Court of Appeals’ conten-
tion that the enforcement of agreements to arbitrate ERISA
claims is inconsistent with ERISA’s remedial purpose not only
flies in the face of the decision of this Court, it echoes the Court
of Appeals’ since reversed conclusion in McMahon v.
Shearson/American Express, 788 F.2d 94, 98 (2d Cir. 1986),
rev’d, 482 U.S. 220 (1987), as to ‘‘the inappropriateness of the
United States Arbitration Act when strong public policy consid-
erations are involved.’’’

The established structure of arbitration in the securities
industry, which this Court has recognized in McMahon and
Rodriguez, refutes the Court of Appeals’ assumption that the
enforcement of contracts to arbitrate ERISA disputes will
dilute the protection of ERISA beneficiaries. Securities
exchanges and the National Association of Securities Dealers,
Inc. (the ‘‘N.A.S.D.’’), under the supervision of the Securities
and Exchange Commission (the ‘‘Commission’’), provide arbi-
tration facilities for disputes between member firms and their
public customers.” The current procedures have evolved since
1872, when the New York Stock Exchange, Inc., first adopted
arbitration procedures for customer disputes. The N.A.S.D.
has maintained arbitration facilities for more than forty years.

1 As Judge Cardamone stated in dissent below:

Simply labeling ERISA as ‘‘remedial’’ is insufficient, it seems to
me, to rebut the heavy presumption in favor of freedom of contract
to arbitrate, particularly as the High Court has sustained the valid-
ity of compulsory arbitration agreements under other ‘‘remedial’’
statutes.

871 F.2d at 299-300.

2 See, e.g., 2 Am. Stock Ex. Guide (CCH) {9542 (Rule 602);
N.A.S.D. Manual (CCH) 4 3701; N.Y.S.E. Rule 600 (a copy of the
New York Stock Exchange, Inc. Arbitration Rules is contained in the
Supplemental Lodging of Amici Curiae); Uniform Code of Arbitration
§ 1, reprinted in Sixth Report of the Securities Industry Conference on
Arbitration (August 1989).

The exchanges and the N.A.S.D. also have permanent arbitra-
tion staffs. Their rules and constitutions contain detailed codes
of arbitration procedures.’

Moreover, the Commission has approved the implementation
and operation of this arbitral system, see Exchange Act Release
No. 16390, (Nov. 30, 1979), 18 S.E.C. Docket 1197 (1979), and
retains jurisdiction to monitor the fairness of arbitration pro-
ceedings. See Section 19 of the Securities Exchange Act of 1934,
15 U.S.C. § 78s. As the Commission itself argued to this Court
in McMahon, ina brief signed by its General Counsel and Solic-
itor:

[T]he Commission has had the power to ensure that arbi-
tration procedures prescribed by the [Self-Regulatory
Organizations] are adequate to enforce the rights of cus-
tomers against brokerage firms that are members of SROs.
In these circumstances, the suspicion of arbitration on
which Wilko rested is inappropriate, and an agreement to
arbitrate accordingly should not be deemed a waiver of
rights under the Exchange Act.

Shearson/American Express, Inc. v. McMahon, No. 86-44,
Brief of the Securities and Exchange Commission as amicus
curiae at 13.

That the Securities Industry Conference on Arbitration
(‘‘SICA’’) and the Commission worked together to add further
improvements to SRO arbitration codes in the year following
the McMahon decision proves that the Commission can and
will exercise its oversight authority and that SROs will respond
in a constructive manner. During the Summer of 1988, the
Commission invited SICA and the stock exchanges to review
and possibly revise their arbitration rules in certain respects.
SICA and the stock exchanges considered the matter and

3 See, e.g., Constitution of the New York Stock Exchange, Inc., Art.
XI, 2 N.Y.S.E. Guide (CCH) 4§ 1501-1503; Rules 600-638 of the New
York Stock Exchange, Inc.; Code of Arbitration Procedure of the
National Association of Securities Dealers, Inc., N.A.S.D. Manual
(CCH) 44 3701-3746; Arbitration Rules of the American Stock
Exchange, Inc., 2 Am. Stock Ex. Guide (CCH) 4§ 9540-9551J.

9

drafted amendments to their arbitration rules, which were
adopted on May 10, 1989.

As changed, the rules require that any arbitration clause in a
broker-customer agreement be highlighted and in plain lan-
guage. In addition, the arbitration clause must disclose to the
customer that he is thereby foregoing a jury trial in any lawsuit
against his broker and agreeing to limits on discovery and
appellate review.* The contract must also disclose the presence
of the arbitration clause immediately before the customer’s sig-
nature line.° The amendments further require that discovery
requests be responded to within 30 days and provide for a pre-
hearing conference before an arbitration panel to resolve dis-
covery disputes.° Retired securities industry personnel (as well
as professionals who do substantial business with securities
firms) cannot serve as public arbitrators, and all who serve as
arbitrators must provide their employment history for the prior
ten years to the parties.’ A record, either stenographic or taped,
must be kept of all arbitration proceedings, and, lastly, arbitra-
tion awards must be made public and state the issue involved,
the amount claimed, and the amount actually awarded.®

The long established competence of securities industry arbi-
trators to adjudicate disputes should dispel any suspicion of the
arbitral process in that industry. The stock exchanges and the
N.A.S.D. keep permanent lists of arbitrators. These lists com-
prise senior securities industry personnel, as well as attorneys
and other professionals from outside the industry, who are well
versed in the field. See, e.g., Panel of Arbitrators 1988-89, 1
Am. Stock Ex. Guide (CCH) 158-60; N.A.S.D. Manual (CCH)
4 3702. Most have previously served as arbitrators and are
therefore well acquainted with arbitration procedures and cus-
toms. This, this Court’s observation in Mitsubishi that ‘‘adapt-

See N.Y.S.E. Rule 637(1).
See N.Y.S.E. Rule 637(2).
See N.Y.S.E. Rule 619(a)(2), (d).
See N.Y.S.E. Rules 608 and 610.
See N.Y.S.E. Rules 623 and 627.

on TK A DS

10

ability and access to expertise are hallmarks of arbitration,’’
473 U.S. at 633, hits the mark with respect to the securities
industry.

The arbitration rules of the N.A.S.D. and the various stock
exchanges further ensure that arbitration practice in the securi-
ties industry will be efficient and impartial. For example, these
rules require a majority of ‘‘public’’ arbitrators (i.e., unaffili-
ated with member firms) in disputes between public customers
and member firms unless the customer requests otherwise.’
Arbitrators are required to disclose any business affiliation with
any parties before them, and may be disqualified for cause for
even the appearance of a conflict of interest. '° Each party in an
arbitration has at least one peremptory challenge, as well as
unlimited challenges for cause.’

The arbitration itself provides for a full and fair hearing. The
parties have the right to be present at the hearing, to be repre-
sented by counsel, to cross-examine witnesses, and to have a
transcript of the hearing taken. They may subpoena witnesses
and documents just as in a court proceeding, and may also com-
pel the presence of any employee of a member of the sponsoring
institution at a hearing, regardless of whether that employee
would be within the subpoena power of the courts for the state
where the hearing is held.'* Moreover, arbitrators serve, and
witnesses testify, under oath.’? The fairness of these rules and

9 See, e.g., 2 Am. Stock Ex. Guide (CCH) 4 9542 (Rule 602);
N.A.S.D. Manual (CCH) § 3719; N.Y.S.E. Rule 607; Uniform Code
of Arbitration § 8.

10 =See, e.g., 2 Am. Stock Ex. Guide (CCH) 4 9542(f)-9542A (Rules
602(f) and 603); N.A.S.D. Manual (CCH) § 3723; N.Y.S.E. Rule 610;
Uniform Code of Arbitration § 11.

11 See, e.g., 2 Am. Stock Ex. Guide (CCH) 4 9542(f} (Rule 602(f));
N.A.S.D. Manual (CCH) 4 3722; N.Y.S.E. Rule 609; Uniform Code
of Arbitration § 10.

12 See, e.g., 2 Am. Stock Ex. Guide (CCH) § 9545A, 9548-49, 9551A
(Rules 607, 610-11, 614); N.Y.S.E. Rules 614-15, 619, 623; Uniform
Code of Arbitration 4§ 15-16, 20.

13. See, e.g., 2 Am. Stock Ex. Guide (CCH) ¢ 9551B (Rule 615);
N.Y.S.E. Rule 624; Uniform Code of Arbitration § 25.

1]

procedures is borne out by the results of arbitrations conducted
under them. For the years 1980-1988, 51% of public customer
cases that went to arbitration before one of the stock exchanges
or the N.A.S.D. and were decided—rather than being settled—
awarded damages to the customer.“

Moreover, the arbitration process significantly reduces dis-
covery expenses and minimizes delay in reaching a hearing. See
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473
U.S. at 628; C. Katsoris, The Arbitration of a Public Securities
Dispute, 53 Fordham L. Rev. 279, 286-87 (1984). For example,
state laws generally provide subpoena power to arbitrators and
counsel, and parties are encouraged to produce documents ‘‘to
the fullest extent possible without resort to the issuance of the
subpoena process.’’ '° Arbitrators may also direct the appear-
ance of persons associated with member organizations or the
production of records of these organizations without using the
subpoena process.'© That most stock exchanges and the
N.A.S.D. offer a streamlined arbitration procedure for smaller
claims also enables customers to resolve small disputes without
incurring great expense.’’ Arbitration also offers an expeditious
result. According to a survey conducted by the accounting firm
of Deloitte Haskins & Sells (‘‘DH&S’’) at the request of the
New York Stock Exchange, Inc., the average arbitration pro-
ceeding took almost six maaths less, from filing of the com-

14. See Sixth Report of the Securities Industry Conference on Arbitra-
tion Statistical Report (August 1989) excerpts of which are reproduced
in the Appendix to this Brief.

15 See, e.g., 2 Am. Stock Ex. Guide (CCH) $9548 (Rule 619);
N.A.S.D. Manual (CCH) 4 3732; N.Y.S.E. Rule 619(f); Uniform
Code of Arbitration § 20; C. Katsoris, supra, at 286.

16 See, e.g., 2 Am. Stock Ex. Guide (CCH) $9549 (Rule 611);
N.A.S.D. Manual (CCH) § 3733; N.Y.S.E. Rule 619(g); Uniform
Code of Arbitration § 20.

17 See, e.g., 2 Am. Stock Ex. Guide (CCH) § 9551H (Rule 621);
N.A.S.D. Manual (CCH) § 3710; N.Y.S.E. Rule 601; Uniform Code
of Arbitration § 2.

12

plaint to the ultimate judgment, than the average litigation.’* In
addition, according to statistics complied by the Securities
Industry Conference on Arbitration, nearly 6,101 securities
industry arbitrations were filed with stock exchanges and the
N.A.S.D. in 1988, and 3,740 arbitrations in the securities indus-
try were resolved during that year.'? The 1988 figures represent
more than four times the number of arbitrations filed in 1982.”

Finally, the excessive caseload in the federal district courts
makes it all the more important that arbitrable claims between
securities firms and their customers proceed to arbitration. Fil-
ings of ERISA claims increased by 625 to 6,704 filings in 1988.”
Since the average caseload per United States District Judge in
1988 was 493 cases,” permitting agreements to arbitrate all
ERISA claims would effectively create up to 13 new federal dis-
trict judgeships, which could help to relieve the federal courts
of their overloaded dockets.

POINT Il

THE COURT BELOW MISAPPLIED THE STANDARD
FOR FINDING AN IMPLIED REPEAL OF THE UNITED
STATES ARBITRATION ACT

In reaching its decision below, the Court of Appeals con-
cluded that Congress intended to repeal the Arbitration Act
with respect to ERISA claims. Yet because it divined congres-

18 New York Stock Exchange Response to the Securities and Exchange
Commission Request for Review of Predispute Arbitration Agree-
ments, October 14, 1988, reprinted in P. Hoblin, Jr., Securities Arbi-
tration Procedures Strategies Cases (2d Supp. 1989). DH&S used a
sample of 243 cases (66 litigations, 142 arbitrations, and 35 litigations
transferred to arbitration) over a three month time frame.

19 See Appendix.

20 The number of filings rose from 1,340 in 1982 to 6,101 in 1987. See
Appendix.

21 Annual Report of the Director of the Administrative Office of the
United States Courts 1988 at 10 (1988).

22 Annual Report of the Director of the Administrative Office of the
United States Courts at 7, 14 (1988).

13

sional intent without adequate legislative evidence, the court
below reached an incorrect result by misapplication of the stan-
dard set by this Court.

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.
requires that any finding of an implied repeal of the Arbitration
Act be supported by ‘‘congressional intention expressed in
some other statute. . . .”’ 473 U.S. at 627. This is simply a reit-
eration of the traditional standard for finding that a federal
Statute has been repealed by implication by a subsequently
enacted federal statute. Kaiser Steel Corp. v. Mullins, 455 U.S.
72, 88 (1982) (‘* ‘repeals by implication jof a prior statute by a
subsequently enacted one] are disfavored’ ’’) (quoting Allen v.
McCurry, 449 U.S. 90, 99 (1980)); Morton v. Mancari, 417
U.S. 535, 550 (1974) (‘‘In the absence of some affirmative
showing of an intention [by Congress] to repeal, the only per-
missible justification for a repeal by implication is when the ear-
lier and later statutes are irreconcilable’’).

In Mitsubishi, this Court stated:

We must assume that if Congress intended the substantive
protection afforded by a given statute to include protec-
tion against waiver of the right to a judicial forum, that
intention will be deducible from text or legislative history.

473 U.S. at 628.

Under this test, there can be no question that predispute
agreements to arbitrate ERISA claims are enforceable under the
Arbitration Act. ERISA contains no statutory language that
restricts a party’s ability to choose an arbitral forum with
respect to claims brought thereunder.” Nor is there any evi-
dence in the legislative history of ERISA that Congress
intended to repeal the Arbitration Act with respect to ERISA

23 Quite to the contrary, Section 1144(d) of the ERISA provides:
Nothing in this subchapter shall be construed to alter, amend, mod-
ify, invalidate, impair, or supersede any law of the United States
(except as provided in Sections 1031 and 1137(b) of this title) or any
rule or regulation issued under any such law.

29 U.S.C. § 1144(d). Sections 1031 and 1137(b) do not refer to the
Arbitration Act in any way.

14

claims. In the words of the Court of Appeals for the Eighth Cir-
cuit in Arnulfo P. Sulit, Inc. v. Dean Witter Reynolds, Inc. , 847
F.2d 475, 478 (8th Cir. 1988), ‘‘our examination reveals no con-
gressional intent to single out ERISA claims for exemption
from the general federal policy favoring rigorous enforcement
of agreements to arbitrate... .”’

None of the legislative matter cited by the court below can
qualify as evidence of a congressional intent to repeal the Arbi-
tration Act. That Congress bestowed exclusive jurisdiction on
the federal courts to hear ERISA claims does not demonstrate
an intent to repeal the Arbitration Act. To the contrary, this
Court in McMahon held that agreements to arbitrate claims
arising under the Securities Exchange Act of 1934, 15 U.S.C.
§ 78 et seq. (the ‘‘Exchange Act’’), to be enforceable under the
Arbitration Act even though Section 27 of the Exchenge Act, 15
U.S.C. § 78aa, provides for exclusive federal jurisdiction over
Exchange Act claims. If an exclusive federal jurisdiction provi-
sion does not show congressional intent to repeal the Arbitra-
tion Act with respect to Exchange Act claims, it cannot do so
with respect to ERISA claims.

As to the reference in the ERISA conference report to Section
301 of the Labor-Management Relations Act of 1947, 29
U.S.C. § 185, that reference applies only to ‘‘actions to enforce
or clarify benefit rights provided under title I [of ERISA],”’
H.R. Conf. Rep. No. 1280, 93d Cong., 2d Sess. 327, reprinted
in 1974 U.S. Code Cong. & Admin. News at 5034, 5107, and
not to actions for breach of fiduciary duty, like the case at
bar.

Last, the three cases decided by this Court that the Court of
Appeals cited in support of its opinion, Alexander v. Gardner-
Denver Co., 415 U.S. 36 (1974), Barrentine v. Arkansas-Best
Freight System, Inc., 450 U.S. 728 (1981), McDonald v. City of
West Branch, 466 U.S. 284 (1984), have no bearing on this case.
All those cases concerned the enforceability and binding effect

24 The Court of Appeals acknowledged that Section 301 deals with
‘the applicable law for the breach of a collective bargaining agree-
ment.’” 871 F.2d at 298.

15

of agreements to arbitrate contained in collective bargaining
agreements purporting to bind individuals subject to those
agreements, as opposed to a direct agreement among individual
parties to arbitrate controversies. Their holdings depended
upon factors unique to the context of arbitration clauses in col-
lective bargaining agreements. In each case, the litigation of the
employee’s claim was controlled by the union involved, with the
result that the employee lacked control over the proceeding,
unlike the plaintiff here. Alexander v. Gardner-Denver Co.,
415 U.S. at 58 n.19. Indeed, in each case, the Court specifically
noted that the union prosecuting the claim might have a differ-
ent interest than the employee whose claim it was. Alexander v.
Gardner-Denver Co., 415 U.S. at 58 n.19; Barrentine v.
Arkansas-Best Freight System, Inc., 450 U.S. at 742;
McDonald v. City of West Branch, 466 U.S. at 291. Here, by
contrast, where the plaintiff has full control over the prosecu-
tion of his claim, there is no possibility of such a conflict of
interest. Likewise, the fact that arbitrators under collective bar-
gaining agreements often have limited jurisdiction to enforce
the terms of the collective bargaining agreement, and their
expertise tends towards ‘‘the law of the shop, not the law of the
land,’’ see Alexander v. Gardner-Denver Co., 415 U.S. at 57;
McDonald v. City of West Branch, 466 U.S. at 290-91, distin-
guishes them from the situation at bar. Here the arbitrators of
the various stock exchanges have plenary power to resolve any
claims brought before them. In short, there can be no applica-
tion of the rules of Alexander, Barrentine, and McDonald
beyond the issue of the effect of arbitration agreements in col-
lective bargaining cases, and those cases in no way impair the
governance of Rodriguez, McMahon, and Mitsubishi to this
case.

POINT Ill
THE CIRCUITS STAND IN CONFLICT AS TO THE
ARBITRABILITY OF ERISA CLAIMS

A direct conflict now exists among the Courts of Appeal with
respect to whether a predispute agreement to arbitrate claims

16

arising under the Securities Act is enforceable. The decision
below directly conflicts with the decision of the Cour of
Appeals for the Eighth Circuit in Arnulfo P. Sulit, Inc. v. Dean
Witter Reynolds, Inc., 847 F.2d 475 (1988). There, the Court of
Appeals followed the analysis employed by this Court in Mitsu-
bishi, McMahon, and Rodriguez and held that agreements to
arbitrate ERISA claims are enforceable under the Arbitration
Act.

CONCLUSION

For the reasons set forth above, amici curiae the Securities
Industry Association, The Advest Group, Inc., J.C. Bradford
& Co., Dain Bosworth Incorporated, D.A. Davidson & Co.,
Inc., Dean Witter Reynolds Inc., A.G. Edwards & Sons, Inc.,
Goldman, Sachs & Co., J.J.B. Hilliard, W.L. Lyons, Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Piper,
Jaffray & Hopwood Incorporated, Prescott, Ball & Turben,
Inc., Prudential-Bache Securities Inc., and Wheat, First Securi-
ties, Inc., respectfully request that the petition for a writ of cer-
tiorari be granted.

Dated: Septernber 6, 1989

Respectfully submitted,

JAMES K. MANNING
Counsel of record; and
PAUL WINDELS III
ELIZABETH STORCH
BROWN & WOOD

One World Trade Center
New York, New York 10048
(212) 839-5300

Attorneys for Amici Curiae

Of Counsel:

William J. Fitzpatrick, Esq.

Gerard J. Quinn, Esq.
Lee E. Kuckro, Esq.

R. Patrick Shepherd, Esq.
Louis L. Bulba, Esq.

Bruce A. MacKenzie, Esq.
Paul J. Dubow, Esq.

Brian C. Underwood, Esq.

Robert J. Katz
James C. Stone III, Esq.

Philip M. Mandel, Esq.

David E. Rosedahl, Esq.
Robert Shiffra, Esq.
Loren Schechter, Esq.

John Harris, Esq.

17

SECURITIES INDUSTRY
ASSOCIATION

THE ADVEST GROUP, INC.
J.C. BRADFORD & CO.

DAIN BOSWORTH
INCORPORATED

D.A. DAVIDSON & Co., INC.

DEAN WITTER REYNOLDS
INC.

A.G. EDWARDS & SONS, INC.

GOLDMAN, SACHS & Co.

J.J.B. HILLIARD,
W.L. LYONS, INC.

MERRILL LYNCH, PIERCE,
FENNER & SMITH
INCORPORATED

PIPER, JAFFRAY & HOPWOOD
INCORPORATED

PRESCOTT, BALL & TURBEN,
INC.

PRUDENTIAL-BACHE
SECURITIES INC.

WHEAT, FIRST SECURITIES,
INC.

a =

: © =

ah Sore ‘owl ait oo a

» Ahn Wise, an,

——

APPENDIX

Ri?
yds

1980
1981
1982
1983
1984
1985
1986
1987
1988

Al

Sixth Report of the Securities Industry

Conference on Arbitration Statistical Report

(August 1989)

COMPOSITE ARBITRATION FIGURES

Total
Cases Public
Total Concluded Small Small Customer
Cases Including Claims Claims Cases
Received Settlement Received Concluded Decided
830 686 332 269 410
1,042 980 306 357 532
1,340 1,044 322 292 558
1,731 1,259 416 320 622
2,449 1,762 561 489 736
2,796 2,190 664 520 961
2,838 2,460 657 610 1,017
4,358 2,958 827 641 1,153
6,101 3,740 1,473 930 1,561

Awards

in Favor

of Public
205
264
293
331
366
530
506
636
743

A2

AMERICAN STOCK EXCHANGE, INC.

Total
Cases Public
Total Concluded Small Small Customer Awards
Cases Including Claims Claims Cases in Favor
_ Received Settlement Received Concluded Decided of Public
1980 45 41 18 1] 35 16
1981 39 40 7 11 42 22
198237 31 9 4 16 10
1983 41 42 14 8 10 6
1984 69 53 16 14 45 26
1985 64 58 21 14 41 24
1986 63 60 20 28 31 14
1987 92 74 34 24 41 24
1988 100 63 21 29 27 12

Cases carried over into 1989: 87

A3

BOSTON STOCK EXCHANGE, INC.

Total
Cases Public
Total Concluded Small Small Customer Awards
Cases Including Claims Claims Cases in Favor
Received Settlement Received Concluded Decided of Public
1980 2 2 2 2 2 0
1981 2 2 2 2 0 0
1982 1 1 1 ] 1 ]
1983 2 2 2 2 1
1984 0 0 0 0 0 0
1985 0 0 0 0 0 0
1986 2 2 2 2 2 0
1987 0 0 0 0 0 0
1988 0 0 0 0 0 0

Cases carried over into 1989: 0

A4

CHICAGO BOARD OPTIONS EXCHANGE, INC.

Total
Cases Public
Tota! Concluded Small Small Customer Awards
Cases Including Claims Claims Cases in Favor
.Received Settlement Received Concluded Decided of Public
1980 44 31 11 1] 18 6
1981 4} 32 10 8 12 3
1982 50 38 6 6 14 3
1983 75 45 5 4 13 6
1984 91 56 24 16 4 3
1985 64 38 10 5 0 0
1986 72 44 1 9 12 9
1987 130 93 29 33 22 9
1988 149 89 22 27 48 12

Cases carried over into 1989: 151

AS

MIDWEST STOCK EXCHANGE, INC.

Total
Cases Public
Total Concluded Small Small Customer Awards
Cases Including Claims Claims Cases in Favor
Received Settlement Received Concluded Decided of Public
1980 2 2 1 0 l ]
1981 2 2 0 0 0 0
1982 ] 0 0 0 0 0
1983 2 2 0 0 0 0
1984 l 0 0 0 0 0
1985 ] 0 0 0 0 0
1986 4 0 1 0 0 0
1987 5 3 1 ] ] 1
1988 1 7 0 0 0 0

Cases carried over into 1989: 2

A6

MUNICIPAL SECURITIES RULEMAKING BOARD

Total
Cases Public
Total Concluded Small Small Customer Awards
Cases Including Claims Claims Cases in Favor
Received Settlement Received Concluded Decided of Public
1980 21 21 7 7 3 2
1981 25 25 5 5 7 4
1982 33 16 7 7 13 6
1983 78 40 17 9 14 5
1984) =s-1113 80 20 17 34 21
1985 91 118 31 35 54 31
1986 82 89 30 21 30 15
1987 8106 90 38 34 42 24
1988 115 126 49 52 63 37

Cases carried over into 1989: 59

1980
1981
1982
1983
1984
1985
1986
1987
1988

Cases carried over into 1989: 4,005

Total Concluded Small Small
Cases Including Claims Claims Cases
Received Settlement Received Concluded Decided
318 234 134 113 122
422 422 142 177 242
606 435 157 139 276
768 549 216 147 272
1,108 747 298 244 381
1,490 962 377 250 434
1,587 1,199 390 327 476
2,866 1,625 458 325 642
3,990 2,169 1,084 539 934

A7

NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC.

Total
Cases

Public

Customer Awards

in Favor

of Public
56
118
140
161
196
232
248
364
432

1980
1981
1982
1983
1984
1985
1986
1987
1988

Cases carried over into 1989: 1,269

NEW YORK STOCK EXCHANGE, INC.

Total
Cases

A8

Total Concluded Small
Cases Including Claims

Received Settlement Received Concluded Decided

367 327
477 433
558 473
713 532
1,008 796
1,095 962
965 1,004
1,050 1,000
1,623 1,196

13]
117
109
136
176
198
18]
225
263

Public

Customer Awards

Small

Claims Cases
11¢ 221
134 214
113 214
122 276
183 259
190 424
205 432
204 378
235 440

in Favor
of Public

119
11]
118
137
113
221
210
200
228

1980
1981
1982
1983
1984
1985
1986
1987
1988

A9

PACIFIC STOCK EXCHANGE, INC.

Total
Cases Public
Total Concluded Small Small Customer
Cases Including Claims Claims Cases
Received Settlement Received Concluded Decided
24 28 12 11 4
24 20 17 17 9
31 21 15 1] 10
35 29 17 17 23
45 26 21 11 10
50 40 12 18 20
4] 37 9 13 18
64 58 27 1] 23
99 77 30 40 45

Cases carried over into 1989: 86

Awards
in Favor
of Public

3

Al0

PHILADELPHIA STOCK EXCHANGE, INC.

Total
Cases Public
Total Concluded Small Small Customer Awards
Cases Including Claims Claims Cases in Favor
Received Settlement Received Concluded Decided of Public
1980 7 0 16 4 4 2
1981 10 6 6 3 6 ]
1982 23 iS 18 11 14 8
1983 17 19 9 11 12 5
1984 14 7 6 _ 4 3 0
1985 31 18 15 8 8 2
1986 22 15 10 6 7 2
1987 25 15 15 9 4 1
1988 24 13 4 8 4 2

Cases carried over into 1986: 42

lee >.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_0909%3A4. Public record. Not legal advice.