MacAulay

In this consolidated appeal, we hold that an introducing broker has standing, as a third party beneficiary, to enforce an arbitration agreement entered into between a clearing broker and a stock investor. Mert Norlander, Troy Norlander, and Sufro & Co. Incorporated appeal from an order denying their motion to stay proceedings and arbitrate fraud actions brought by their clients and respondents, Helen Neve and Kenneth E. Macaulay. (Code Civ. Proc., § 1294, subd. (a).) We reverse.

Sufro is a securities broker and provides brokerage services to private investors. As an introducing broker, it takes client orders and executes the transactions through a clearing broker. “In industry parlance, an introducing broker [here, Sufro] is the firm whose account executives deal with customers, i.e., solicit orders and offer recommendations. A clearing broker, on the other hand, has no client contact, but places and executes orders with the exchange at the direction of the introducing broker.” (Van Luven v. Rooney, Pace Inc. (1987) 195 Cal.App.3d 1201, 1203 [ 241 Cal.Rptr. 248 ].)

In January 1986 Neve met with Mert Norlander, a Sufro employee, and opened an investment account at…