Clients and Your Arbitration Clause
If Clients Are Vulnerable, Your Arbitration Clause May Be Too
By Craig Zafis
Financial professionals take heed of a procedural trap into which an unwitting adviser may step when dealing with seniors or others perceived to be “vulnerable.” In the context of the adviser/customer relationship, vulnerability can include “…advanced age, youth, lack of education, ill health and mental weakness.” Couple this real or perceived vulnerability with the fiduciary duty owed to customers by all investment advisers and by brokers in many states and a crack in the rock of a solid arbitration clause may result. In fact, based on recent case law, a customer may successfully avoid FINRA arbitration (despite signing an arbitration agreement), and force a dispute into costly litigation in court.