SECURITIES-CONSOLIDATION-JUDICIAL AUTHORITY-FEDERAL ARBITRATION ACTNEW YORK
Consolidation of seven arbitration proceedings was appropriate not only to maintain efficiency in time and cost, but also to reduce the possibility of conflicting awards based on the same alleged pattern of activity.
As a requirement to opening a brokerage customer account, Drexel had its customers sign a brokerage agreement containing an arbitration clause. Several disputes arose, and Drexel's customers sought to compel consolidation of seven arbitrations. The basis for each dispute involved charges of fraudulent transactions by one of Drexel's agents in violation of federal securities laws and of the Racketeer Influenced and Corrupt Organizations Act (RICO) .
Drexel opposed the investors' petition for consolidation and sought to hold seven separate arbitration proceedings. After considering whether it had the authority to order the American Arbitration Association (AAA) to consolidate the claims, and, if so, whether consolidation was indicated in this case, the court granted the customers' application for consolidation.