Securities brokerages have long required retail investors to bring their complaints to the arbitration forum run by the Financial Industry Regulatory Authority. But recent cases show that Wall Street embraces an entirely different strategy when dealing with certain investment banking customers: it demands they go to court. A federal appeals court on Friday heard arguments about whether Goldman Sachs Group Inc and Citigroup Inc, both facing claims from clients who issued auction rate securities before the 2008 financial crisis, can force them to resolve those disputes in court instead of by FINRA arbitration. While the case involves institutional investors, the outcome in that and similar cases could ultimately impact retail investors by allowing brokerages to include restrictions in their account opening agreements that would give up rights they have under FINRA's arbitration rules, some lawyers say. The arguments are the latest in a string of such cases playing out around the
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