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NASD Code Allows Arbitration of Claim of RICO Violation If Filed in Time
Description Investors filed arbitration claim against Kidder for RICO violations. Kidder sued in federal court to block arbitration, claiming some events occurred outside the six-year window for eligibility for arbitration. Appeals court held that the arbitration would proceed if the court found that the event which gives rise to a claim occurred within the six-year window.
Topic Securities Law
Key Words Arbitration, Broker, NASD, RICO
C A S E   S U M M A R Y
Facts Brandt and others purchased securities through Kidder. The agreement with Kidder stated that "any dispute or claim arising out of or relating to their Kidder accounts" would be subject to arbitration. Brandt filed an arbitration complaint against Kidder alleging, among other things, that Kidder violated RICO. Before action could be taken, Kidder filed suit in federal court "seeking a declaration that the defendants' claims were ineligible for arbitration." Kidder asserts that the "occurrence or event" which gave rise to the claim did not occur within six years of the date Brandt filed the arbitration claim, as required by the NASD Code. The question before the court is whether the six-year window for the arbitration claim had expired.
Decision The case was remended to district court "with instructions to identify the occurrence or event which created a viable RICO claim" for Brandt. "If the occurrence or event which made the claim viable took place more than six years from the date the defendants filed their arbitration complaint, the claim is ineligible for arbitration."
Citation Kidder, Peabody & Co. v. Brandt, ---F.3d--- (1997 WL 782922, 11th Cir.)
131 F.3d 1001 (11th Cir., 1997)

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