an alleged conspiracy, stemming from an extra-marital affair between Claimant's bank account officer and Claimant's husband, to defraud Claimant through unauthorized transactions in Claimant's account.
On or about January 19, 2018, Respondent filed a Motion to Dismiss pursuant to Rule 12203 of the Code of Arbitration Procedure asserting, among other things, that FINRA lacked jurisdiction because Claimant was not a customer of Respondent but rather a customer of Safra National Bank of New York (the "Bank"), the parent company for Respondent and a national bank not subject to FINRA regulation and jurisdiction. Respondent further stated that Claimant had not made any allegations about the Bank's account officer at issue in her capacity as an associated person of Respondent. In her January 22, 2018, Opposition to Respondent's FINRA Rule 12203 Motion, Claimant argued, among other things, that the Statement of Claim contained allegations regarding Respondent's duties and failures to supervise the Bank's account officer who was also a registered representative with Respondent. In its January 24, 2018, Reply in Support of Motion to Dismiss, Respondent asserted, among other things, that if FINRA failed to dismiss Claimant's claim, the result would be a vast and unprecedented expansion of FINRA jurisdiction unsupported by law, rule or contract based on the premise that FINRA may adjudicate claims concerning the internal affairs of a national bank if the banker whose activities are challenged is also a registered representative associated with a broker-dealer, even if the broker-dealer had no relationship of any kind with the claimant or the challenged activity. On February 23, 2018, the Director of Arbitration issued a preliminary ruling reaffirming FINRA's Office of Dispute Resolution as the proper forum for this action.
On or about May 1, 2018, Respondent filed a Motion to Dismiss pursuant to Rule 12206(b) of the Code, in which it reasserted, among other things, that Claimant was never a customer of Respondent and therefore did not have an agreement to arbitrate her claims in the FINRA forum. In its May 25, 2018, Opposition to Motion to Dismiss, Claimant argues, among other things, that Respondent had a duty and failed to supervise its associated person, that Respondent signed the FINRA Uniform Submission Agreement and that the Director of Arbitration previously reaffirmed FINRA Office of Dispute Resolution as the proper forum. On June 1, 2018, Respondent filed a Notice of Withdrawal of Motion to Dismiss and advised that it filed suit in the United States District Court for the Southern District of New York to seek an injunction of this arbitration proceeding.
SIDE BAR: In dismissing Safra's federal-court Complaint and closing the case before it, the United States District Court for the Southern District of New York stated in part in its Order of Dismissal dated July 9, 2018, http://brokeandbroker.com/PDF/SafraSDNY180709.pdfSafra Securities LLC and its associate broker Valarie Trauer (who is alleged to have defrauded Ms. Spinola Gonzalez, her client at Safra National Bank of New York) are both FINRA members and subject to FINRA rules. FINRA arbitrators have Jurisdiction to determine on the facts whether Safra Securities LLC's business includes responsibility for Ms. Trauer's actions with respect to Ms. Spinola Gonzalez.The Clerk will dismiss the complaint and close the case. . .
The Safra Parties claimed, in their complaint before the district court, that Safra Securities did not freely assent to the Submission Agreement it signed. Their complaint alleges that the FINRA case administrator "insisted that [Safra Securities] agree to submit the matter to FINRA without reservation," and that Safra Securities filed the agreement "strictly as a result of the threats and blatant coercion of the FINRA case administrator." App. 9. But Safra Securities never explains why it could not have maintained its objections to FINRA's jurisdiction, refused to sign the Submission Agreement, and proceeded to the district court, as it later did. The Safra Parties have thus failed plausibly to plead any indicia of coercion by FINRA that could rise to the level of duress and render the Submission Agreement voidable. In short, the allegations do not undermine our conclusion that Safra Securities agreed to arbitrate Spinola's claims under the legal standards articulated above.