I don't believe that seeking Finra arbitration will prove to be a winning strategy for the four new defendants - TDAmeritrade, Scottrade, NFS and Etrade. COR is the 'aggrieved' party and has not wanted to arbitrate this case since it began nearly a year ago. Finra immediately investigated the CRGP case with a U-3 halt and is likely not interested in arbitrating the case as it would mean making a ruling on the potential level of 'glitches' within the DTCC. The 4 brokerages as the 'aggreiver' parties might be interested in forcing COR to arbitrate with them? How ironic, as the outcome of the arbitration is to decide how much the brokers owe COR.
If the defendants in Nebraska are in a position of weakness for some reason, their lawyers would likely just recommend paying up the $4 million. The TA doesn't have the money and has no choice but to defend itself, but for these 4 large brokerage houses $4 million paid collectively is the easy out. The question I have is would that be enough to make the case go away? COR has pressed forward with their somewhat scattershot litigation strategy yet seem focused on getting a volume of data on record before Judge Strom. Are they seeking something more than $4 million?
Finally, I just don't see Finra trying to pull rank with Judge Strom and the federal court system, especially now that we're a year out. If anything, Finra is probably more than happy that this issue can be resolved elsewhere as it doesn't want to have to make a ruling that might make the DTCC look bad.
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On the other hand, from Finra's own manual: 13200. Required Arbitration
(a) Generally
Except as otherwise provided in the Code, a dispute must be arbitrated under the Code if the dispute arises out of the business activities of a member or an associated person and is between or among members.
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So is Finra stuck with its own rule? If I had to guess, Judge Strom and Finra have already had a little chat, and a decision has been made to keep this in federal court. Additionally, I don't think the defendants are going to be able to pay their way out of the case either. It may not even be an option. This case has all the markings of going the distance, or at least an extensive settlement that involves something more than just money, or just $4 million anyway.
AI
