The United States District Court for the Southern District of Florida recently determined that, although investors had signed a brokerage agreement after purchasing certain securities, those investors still needed to arbitrate the matter.

Certain investors had filed a lawsuit against a brokerage company alleging that they had been defrauded regarding certain stock purchases.  These stock purchases occurred before the investors signed a brokerage agreement.  The brokerage company filed a motion to stay the case and compel arbitration.

The investors claimed that since they purchased the securities before they signed the agreement, the agreement did not apply.  However, the court found that the arbitration provision indicated that all disputes needed to be submitted for arbitration and therefore stayed the case and compelled arbitration.

This case should come as no surprise.  Courts are very willing to compel arbitration as a rule given the long standing belief in the American judicial system that arbitration saves court resources.