Guerra King Secures Preliminary Injunction Enjoining FINRA Arbitration


Guerra King announced today that the Honorable John Shelby, United States District Judge for the District of Utah, issued a preliminary injunction enjoining claimants in a FINRA arbitration (the “FINRA Claimants”) from pursuing claims against its client, Orchard Securities LLC (“Orchard Securities”). Orchard Securities served as a managing broker-dealer for one of several tenants-in-common (“TIC”) offerings at issue in the underlying arbitration. Guerra King argued that no agreement existed compelling Orchard Securities to arbitrate the claims asserted by the FINRA Claimants and that the FINRA Claimants were not “customers” of Orchard Securities. In its position as managing broker-dealer, Orchard Securities enlisted third party broker-dealers to offer the TIC interests to their respective customers. The TIC interest in question was sold to the FINRA Claimants by one of these selling group broker-dealers, which was identified in documents as the FINRA Claimants’ broker-dealer. The FINRA Claimants did not maintain any accounts or enter into any contracts with Orchard Securities, nor did they directly purchase any investments, products, or services from Orchard Securities.

The Court found that the limited contacts between Orchard Securities and the FINRA Claimants were not sufficient to establish that FINRA Claimants were “customers” of Orchard Securities under FINRA Rule 12200 and thus entitled to arbitrate their dispute. Having found that the FINRA Claimants were not customers of Orchard Securities, the Court determined that there was no agreement between Orchard Securities and the FINRA Claimants and that Orchard Securities would be irreparably harmed if forced to participate in the FINRA Arbitration.

Guerra King is a top-tier Tampa, Florida law firm whose nationwide practice focuses on complex litigation, securities and other regulatory matters, and white-collar defense. The firm regularly counsels broker-dealers and investment advisers with respect to compliance, operational, and regulatory matters.

Representing Orchard Securities were Guerra King attorneys Burton W. Wiand, Elaine M. Rice, and Jordan D. Maglich. For more information, please contact Burton W. Wiand at 813-347-5100 or A copy of the Court’s Order can be found here.