Arbitration & Mediation

"Introducing Broker" Not Party or Third Party Beneficiary Entitled to Arbitration

By Christopher B. Hopkins, Esq.

The Third DCA issued a fairly obvious and non-groundbreaking decision in Francisco F. Galvez Lopez v. Atlas Financial Group, LLC (Ramirez, Rothenberg, and Schwartz) -- although the case may hold the interest of those in investments and/or parties seeking to employ "third party beneficiary" status as a means to invoke arbitration as a non-party to the arbitration agreement.

An individual investor (the plaintiff) claimed that the defendant investment advisor mismanaged account #1. The documents relating to that account do not include an arbitration clause.

The individual investor had also opened account #2 with another institution (a "clearing broker") where the defendant-advisor was the "introducing broker." That account included an arbitration clause; the defendant-advisor signed as the "introducing broker" but was not deemed a party to the contract because of its limited role.

The defendant convinced the trial court that the arbitration clause relating to account #2 applied to account #1. The Third DCA was not so convinced, pointing to an old Fifth Circuit case and the instant facts, circumstances, and wording of the arbitration agreement in account #1.

Full post as published by Florida Arbitration Law on February 15, 2010 (boomark / email).