Principal Securities, Inc. v. Sanjeev Agarwal, 23 F.4th 1080

PSI is a FINRA member; John Krohn was a PSI-associated financial advisor from 1996–2016 and co-owned K4 Enterprises which held 50% of KemX (d/b/a KemX Global).
Dr. Sanjeev Agarwal and his wife (the Agarwals) own Technochem International, which held 25% of KemX; Dr. Agarwal served as KemX president and participated in management and hiring decisions.
Technochem lent KemX millions (recorded as debt); KemX later sold in 2019 with substantial indebtedness to Technochem—Agarwals allege multimillion-dollar losses from these ventures.
Agarwals also invested in Spotlight Innovation, a separate venture in which Krohn had ~38% ownership; they made several investments/loans to Spotlight between 2016–2017.
Krohn executed a FINRA acceptance, waiver, and consent (AWC) resolving violations for undisclosed outside business activities and private securities transactions; FINRA accepted the AWC in 2018.
The Agarwals filed a FINRA arbitration alleging PSI failed to supervise Krohn and seeking ~$10 million; the district court enjoined the FINRA arbitration, finding the Agarwals were business partners (not FINRA "customers"); the Eighth Circuit affirmed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Agarwals are FINRA "customers" under Rule 12200 entitled to compel arbitration	Agarwals: their dealings with Krohn arose from or involved securities and PSI’s supervisory failures, so they are customers	PSI: Agarwals were business partners in arms-length ventures with Krohn, not customers receiving brokerage services	Agarwals are not customers; they were business partners and cannot compel FINRA arbitration
Whether Agarwals’ Spotlight purchases converted the partnership into a customer–broker relationship	Agarwals: purchases/convertible note show reliance on Krohn and a brokerage-type relationship	PSI: a single investment/loan to Spotlight did not show Krohn provided investment advice or brokerage services; decisions were independent	Spotlight transactions insufficient to create a customer relationship
Whether the court erred in entering an injunction enjoining FINRA arbitration (i.e., whether "wrongful arbitration" is a cause of action)	Agarwals did not properly raise a jurisdictional challenge to the injunction or a cause-of-action defense on appeal	PSI/Lower court: injunction appropriate because arbitration cannot be compelled where no arbitration agreement or FINRA "customer" status exists	Issue waived by Agarwals; Eighth Circuit declined to reach the cause-of-action jurisdictional question and affirmed the injunction

Home Instead, Inc. v. Forance, 721 F.3d 494 (8th Cir. 2013) (standard of review for preliminary injunction)
Laredo Ridge Wind, LLC v. Neb. Pub. Power Dist., 11 F.4th 645 (8th Cir. 2021) (abuse-of-discretion framework)
Klay v. United Healthgroup, Inc., 376 F.3d 1092 (11th Cir. 2004) ("wrongful arbitration" is not an independent cause of action)
Meierhenry Sargent LLP v. Williams, 992 F.3d 661 (8th Cir. 2021) (discussion of limits on causes of action to enjoin arbitration)
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) (arbitration arises from contract—parties cannot be compelled to arbitrate disputes they did not agree to submit)
Luis v. RBC Cap. Mkts, LLC, 984 F.3d 575 (8th Cir. 2020) (describing FINRA and its enforcement role)
Fleet Boston Robertson Stephens, Inc. v. Innovex, Inc., 264 F.3d 770 (8th Cir. 2001) ("customer" means one in a business relationship with a member related directly to investment or brokerage services)
Steel Co. v. Citizens for Better Env’t, 523 U.S. 83 (1998) (absence of a cause of action does not implicate subject-matter jurisdiction)
Brnovich v. Democratic Nat’l Comm., 141 S. Ct. 2321 (2021) (court may decline to decide cause-of-action issues not raised by parties)