A New Class-Action Battle

March 16, 2012 – In The News
The Wall Street Journal

Ernie Badway commented on the dispute between Charles Schwab and the Financial Industry Regulatory Authority (Finra) over whether or not investors should be allowed to bring class-action lawsuits against brokerages.

Schwab recently added a class-action waiver to its customer agreements in September, citing an April U.S. Supreme Court decision that allowed companies to limit class-action lawsuits with arbitration causes.

Finra then began a disciplinary proceeding to penalize Schwab for violating the rules, and in response, Schwab sued Finra in an attempt to get courts to determine that its waiver couldn't be barred by the regulator.

Changes in brokerage agreements are rare, which made Schwab's move surprising to many attorneys in the securities industry, said Badway.

"It's an agreement that's fairly standard across brokerages and doesn't change often," he said.

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