Under MSRB rules, which statement about arbitration is NOT correct?

• A. A customer initiating a claim against a broker-dealer must be resolved by arbitration
• B. A broker-dealer against a customer who has previously signed an arbitration agreement must be resolved by arbitration
• C. A broker-dealer against a customer who has not signed an arbitration agreement cannot be forced to arbitration
• D. A broker-dealer against another broker-dealer must be resolved by arbitration

Answer: (C)

Arbitration is the standard path for resolving disputes involving broker-dealers and customers in the municipal securities world, and it can apply even when the customer didn’t personally sign an arbitration agreement. The key idea is that there must be a valid arbitration agreement binding the parties. If a customer has signed an arbitration clause, or if the customer has effectively consented by opening an account or continuing the relationship after an arbitration clause was added, the dispute can be sent to arbitration. In many MSRB contexts, a customer initiating a claim against a broker-dealer is resolved by arbitration, and a broker-dealer against a customer who has signed an arbitration agreement is arbitrable, and disputes between broker-dealers are arbitrable as well. The statement that a broker-dealer cannot be forced to arbitration against a customer who has not signed an arbitration agreement is not correct because arbitration can be required when a binding arbitration clause exists in the contract or through implied consent by conduct.