FINRA: Charles Schwab & Co Shouldn't Have Denied Customers The Right To Bring Class Actions

WASHINGTON (AP) — Securities industry regulators said Wednesday they have charged Charles Schwab & Co. with improperly requiring customers to give up their right to bring class-action lawsuits against the discount broker.The Financial Industry Regulatory Authority, the industry's self-policing organization, said Schwab revised its customer account agreement last October to add a requirement for customers to waive their right to bring or participate in class actions against the company. The amended agreements went to nearly 7 million customers, according to FINRA.That was a violation of FINRA rules, the organization said.Schwab disputed that. In a lawsuit filed in federal court in San Francisco, where the company is based, it asked for a ruling that the class-action waiver was valid under recent U.S. Supreme Court decisions."Schwab believes a federal court is in the best position to properly and efficiently resolve this novel dispute, and intends to defend against any disciplinary action brought by FINRA," the company said in a statement.Schwab said it added the waiver provision to all its customer account agreements in September following the Supreme Court's decision in a case involving AT&T Mobility. The high court ruled in that case that the Federal Arbitration Act takes precedence over cases or rules requiring access to class actions, Schwab said.FINRA said Schwab has continued to use the revised agreements in opening more than 50,000 new accounts since October.Its complaint against Schwab triggers a formal proceeding that allows the company to file a response and request a hearing before a FINRA disciplinary panel. In general in such proceedings, possible remedies that could be imposed include fines, restitution and suspension or ban from the securities industry.Shares of parent Charles Schwab Corp. rose 26 cents to end at $11.91 Wednesday.Please follow Clusterstock on Twitter and Facebook.Join the conversation about this story »See Also:A Short List Of People Who Could Replace Treasury Secretary Geithner In A 2nd Obama TermHere's One Perfect Example Of Why Americans Don't Trust Financial ReformBob Diamond Just Talked About Risk And Showed Why He's Speaking A Different Language Than Regulators

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