Earlier this year, I blogged about the spat between FINRA and Charles Schwab over Schwab’s class action waiver in its customer agreement’s arbitration provision.  Schwab sought a declaratory judgment from the court that its class action waiver did not violate FINRA’s rules and/or that AT&T Mobility v. Concepcion barred FINRA from enforcing its rule to prohibit a class action waiver.  See here, here, and here.  On May 11, the federal district court in California granted FINRA’s motion to dismiss Schwab’s complaint, on the ground that Schwab failed to exhaust its administrative remedies and thus the court lacked jurisdiction to hear the complaint.   See Charles Schwab & Co., Inc. v. FINRA (N.D. Cal. May 11, 2012).  Notably, the court stated that the interpretation of FINRA’s Rule 2268, which FINRA argues prohibits brokerage firms from including a class action waiver in their arbitration clauses, is an issue “squarely within the expertise of FINRA, as well as the SEC.” 

Round One to FINRA; Round Two pending.