In Goldman, Sachs & Co. v. Golden Empire Schools Financing Authority, Nos. 13-797-cv, 13-2247-cv (2d Cir. Aug. 21, 2014) (click here for a copy of the decision), the Second Circuit found that a forum selection clause in a broker-dealer agreement trumped FINRA’s mandatory arbitration rule.
The broker-dealer agreement contained a broadly-worded forum selection clause providing that all actions arising out of the agreement “shall be brought” in federal court in the County of New York. On the other hand, FINRA rules generally state that members must arbitrate a dispute if arbitration is requested by the customer. The Second Circuit reasoned that the contract at issue contained a merger clause stating that the contract contained the entire agreement between the parties, and the broad, all-inclusive, mandatory forum selection clause superseded the background FINRA arbitration rule.
The Second Circuit noted that the Ninth Circuit recently reached a similar result in Goldman, Sachs & Co. v. City of Reno, 747 F.3d 733 (9th Cir. 2014), but the Fourth Circuit has reached the opposite conclusion and held that a forum selection clause does not supersede the FINRA rule. UBS Fin. Servs., Inc. v. Carilion Clinic, 706 F.3d 319 (4th Cir. 2013).