FULL TEXT FINRA Decision On
Charles Schwab Arbitration Agreement
With Analysis By Bill Singer
Around October 1, 2011, Charles Schwab & Co. amended its Customer Account Agreement to include this waiver:
Waiver of Class Action or Representative Action
Neither you nor Schwab shall be entitled to arbitrate any claims as a class action or representative action, and the arbitrator(s) shall have no authority to consolidate more than one parties' [sic] claims or to proceed on a representative or class action basis.
You and Schwab agree that any actions between us and/or Related Third Parites shall be brought solely in our individual capacities. You and Schwab hereby waive any right to bring a class action or any type of representative action against each other or any Related Third Parties in court. You and Schwab waive any right to participate as a class member, or in any other capacity, in any class action or representative action brought by any other person, entity or agency against Schwab or you.
The FINRA Department of Enforcement filed a Complaint charging Respondent Schwab with violating FINRA rules concerning language or conditions that firms may place in customer agreements. FINRA alleged three causes of action (the first two largely dealing with the class action language and the third with arbitrators' ability to consolidate claims).
Read veteran Wall Street regulatory attorney Bill Singer's extensive analysis.
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