RMJ SECURITIES CORP v. FITZGERALD (1997)

Supreme Court, Appellate Division, First Department, New York.

RMJ SECURITIES CORP., Plaintiff-Respondent, v. Cantor FITZGERALD, L.P., et al., Defendants-Appellants.

Decided: March 18, 1997

Before SULLIVAN, J.P., and MILONAS, ROSENBERGER and RUBIN, JJ.

Christy & Viener (John Cambria, of counsel), New York City, for plaintiff-respondent. Wilson, Elser, Moskowitz, Edelman & Dicker (Edward J. Boyle and Richard E. Lerner, of counsel), New York City, for defendants-appellants.

Order, Supreme Court, New York County (Leland DeGrasse, J.), entered on or about July 1, 1996, which, in an action between government securities dealers for unfair competition, denied defendants' motion to compel arbitration, unanimously affirmed, with costs.

There is no merit to defendants' contention that rules of the National Association of Securities Dealers (NASD), in which the parties are members, require arbitration of this dispute. Government securities dealers are exempt from the Securities Exchange Act of 1934 (15 U.S.C. 78c[a][12][A][i]; [42] ) and its amendments (15 U.S.C. 78o-3[f] ), under which the NASD's rule-making authority is derived, and the record shows that NASD has never imposed its arbitration code on government securities dealers. We would also note that NASD's rule-making authority is restricted to prohibiting fraudulent practices against the investing public and discipline (see, Harden v. Raffensperger, Hughes & Co., 65 F.3d 1392, 1397), matters not implicated in the instant dispute. We have considered defendants' remaining claims and find them to be without merit.

MEMORANDUM DECISION.

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