A FINRA arbitration panel in New York granted a motion to dismiss a “customer” arbitration asserting “trading away claims” in favor of a Chicago-based proprietary market maker represented by Drinker Biddle. Claimants alleged that that a former CTC employee’s breach of a contract with them by failing to repay a loan—which Claimants argued was secured by a promissory note and therefore was a “security”—and this was a trading away securities transaction. The panel granted a motion to dismiss after argument concluding that CTC trades in a proprietary capacity as an options market maker for its own account and that the Claimants, who were family friends of the former employee, made loans to help him get started as an entrepreneur with his own business venture (a perfume business) outside of his CTC employment. Therefore, CTC was not associated with the account, security or conduct at issue in this Arbitration and, consequently, the case was appropriately dismissed before the hearing. (FINRA Case ID 18-02402, Ashok Kothari and Yogini Kothari vs. CTC LLC and Ravi Doshi.).

CTC was represented by Sandra D. Grannum and Marsha J. Indych.