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Malak v. Bear Sterns Securities Corp.
Citation: 111 F. App'x 642Docket: No. 04-1141-CV
Court: Court of Appeals for the Second Circuit; October 29, 2004; Federal Appellate Court
Raouf Malak appeals a January 29, 2004 order from the United States District Court for the Southern District of New York, which denied his petition to compel arbitration against Bear Stearns Securities Corp. and related entities. Malak argues that the district court incorrectly concluded his dispute with Bear Stearns was not subject to arbitration under NASD Dispute Resolution Code Rule 10301(a). To compel arbitration, Malak needed to establish that he was a "customer" of Bear Stearns and that his claims were connected to Bear Stearns' activities. The court referenced John Hancock Life Ins. Co. v. Wilson, which clarifies that when investors pool their funds and delegate investment authority to a third party, that third party is typically considered the broker's customer, not the investors. Malak acknowledged that he pooled his investments in a fund managed by a third party who had full control over his investments, thus making her the customer of Bear Stearns under Rule 10301(a). Consequently, the district court's judgment is affirmed.