Arbitrating With The Advisor

Q: On an investment fund recommended by my dealer, I suffered losses.  I commenced an arbitration proceeding.  There, I assert claims against my dealer and a sister company that served as investment adviser for the fund, but with which I have no agreement to arbitrate.  The advisor is seeking to be dropped from this arbitration.

I say that the advisor is bound to arbitrate.  The pre-investment arbitration agreement between the dealer and me makes reference to affiliates of the dealer.  Surely, the advisor is affiliated!  They were marketing themselves as coordinated entities.  Can’t we say that the dealer was acting as agent of the advisor?

A: There is a distinction between signatories who are willing to arbitrate and non-signatories who are not.  Arbitration is a matter of contract.  No one can be required to submit a dispute to arbitration, unless he or she is already bound by some contract.  To succeed, you will need to offer specific evidence tending to show that, when the arbitration agreement was signed, this dealer was acting on behalf of the advisor.

By: Scott Baron,
Attorney at Law Advertorial

The law responds to changed conditions; exceptions and variations abound. Here, the information is general; always seek out competent counsel. This article shall not be construed as legal advice.

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