Opinion ID: 76765
Heading Depth: 2
Heading Rank: 2

Heading: Member's Business

Text: 26 Rule 10101(c) only applies to disputes arising out of or in connection with the business of any member and 10301(a) only applies to disputes arising in connection with the business of such member. Unlike the Code's broad member and customer requirements, the in connection with element focuses Rules 10101(c) and 10301(a) on particular types of disputes. Otherwise stated, in the universe of member-customer disputes, only a portion will arise in connection with the member's business and only those satisfy the Code's arbitration provisions. King's cause of action, for example, arises from the actions of Micciche in giving advice regarding investments at a time when he was a person associated with IFG, a brokerage firm in the business of providing investment advice through its representatives. King's primary claim, specifically, is that IFG negligently supervised Micciche, resulting in the troubled Evergreen investment. The NASD requires that its members supervise the activities of their associated persons, as part of their business. NASD Code of Conduct Rule 3010. We conclude that King's claim of negligent supervision satisfies the Code's second arbitration condition. See Vestax, 280 F.3d at 1082 (holding that a dispute that arises from a member's lack of supervision over its associated persons arises in connection with its business); John Hancock, 254 F.3d at 58-59 (same); MONY Secs. Corp. v. Bornstein, 250 F.Supp.2d 1352, 1357 (M.D.Fla.2003) (same); Hornor, Townsend & Kent, Inc. v. Hamilton, 218 F.Supp.2d 1369, 1384 (N.D.Ga.2002) (same); First Montauk Secs. Corp. v. Four Mile Ranch Dev. Co., Inc., 65 F.Supp.2d 1371, 1379 (S.D.Fla.1999) (same); see also 1 Thomas H. Oehmke, Commercial Arbitration § 28:14 (2003) (A dispute that arises from a securities brokerage firm's lack of supervision over its brokers arises in connection with its business (for purposes of NASD rules compelling arbitration of disputes).).