Court Opinion

ID: 7000077
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:40:28.912451+00
Date Added: 2024-06-11T16:09:52.882699
License: Public Domain

KATZMANN, Circuit Judge,
concurring:
John Hancock and Signator ably present an argument that, as a policy matter, has considerable force: because the record does not show the requisite indicia of customer relationship between them and the Investors, they should not be responsible for defending the Investors’ claims before an NASD arbitration panel rather than in court. In other words, the Investors must be customers of Hancock and not simply of an associated person in order to be covered by NASD Rule 10301(a). Today the Court holds that, by a plain meaning analysis of Rule 10301(a), or in the alternative, by construing any ambiguity in favor of arbitration as the rules of construction require, the district court properly compelled arbitration of the Investors’ claims. I believe that Rule 10301 is susceptible of more than one interpretation, but agree with the Court that the relevant presumption requires resolution of the ambiguity in favor of arbitration. No extrinsic evidence has been presented that, for example, the drafters of NASD Rule 10301(a) intended that an investor must be a customer of the member — and not just a customer of an associated person of the member — in order to force the member to arbitrate. In the absence of such support, this Court is left with the words of the Rule: “[a]ny dispute, claim, or controversy ... between a customer and a member and/or associated person arising in connection with the business of such member or in connection with the activities of such associated persons shall be arbitrated under this Code ... upon the demand of the customer.” We are constrained by the rules of construction which we must apply to the language before us. We are without authority to venture beyond our province, and must leave the very legitimate policy issues identified by the appellants to those charged with developing and approving NASD policy. See 15 U.S.C. § 78s(b)(l)(requiring “self-regulatory organization[s]” such as the NASD to submit proposed policy changes to the Securities and Exchange Commission for public notice, comment and approval); 17 C.F.R. § 240.19b^4 (governing filings with respect to proposed rule changes by self-regulatory organizations).