UBS Financial Services, Incorporated v. Carilion Clinic, 2013 U.S. App. LEXIS 1884

Carilion, a Virginia not-for-profit healthcare provider, issued over $308 million in municipal bonds to renovate and expand.
UBS and Citi advised on structure, underwrote bonds, and managed auction-rate bond auctions and related swaps.
In 2008 the auction-rate market collapsed; Carilion refinanced and faced large financial losses.
Carilion filed FINRA arbitration against UBS and Citi under FINRA Rule 12200, alleging misrepresentations and breaches.
UBS and Citi sought to enjoin arbitration, arguing Carilion was not a FINRA ‘customer’ and that a forum clause compelled litigation in New York federal court.
District court denied injunctive relief; the district court’s decision was appealed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Carilion is a FINRA Rule 12200 customer.	Carilion is a broad FINRA customer, not limited to investors.	Carilion is not a customer; FINRA Rule 12200 targets investors in brokerage accounts.	Carilion is a FINRA customer entitled to arbitration.
Whether FINRA arbitration can be displaced by a forum-clause.	Forum clause does not supersede FINRA arbitration; arbitration remains available.	Forum clause supersedes arbitration and requires federal court litigation.	Forum clause does not supersede or waive arbitration.

West Virginia University Hospitals, Inc. v. UBS Financial Services, Inc., 660 F.3d 643 (4th Cir. 2011) (customer includes non-brokers who purchase services from a FINRA member)
Fleet Boston Robertson Stephens, Inc. v. Innovex, Inc., 264 F.3d 770 (8th Cir. 2001) (limits broad definition of ‘customer’ under NASD Rules)
Washington Square Securities, Inc. v. Aune, 385 F.3d 432 (4th Cir. 2004) (investors conceded customers; discusses arbitration preference)
Smith Barney, Inc. v. Critical Health Sys. of N.C., Inc., 212 F.3d 858 (4th Cir. 2000) (supersession by more specific agreement; arbitration rights)