A. Lamar BYRD, Appellee, v. DEAN WITTER REYNOLDS, INC., a Delaware Corporation, Appellant

Dean Witter appeals the denial of its motion for an order severing Byrd’s pendent state-law claims, compelling their arbitration, and staying such arbitration until after resolution of his federal securities claim. We have jurisdiction because the denial of the stay is an interlocutory order refusing an injunction under 28 U.S.C. § 1292 (a)(1). We affirm.

Byrd alleges that he sold his dental practice and invested the $160,000 proceeds through Gale, Dean Witter’s employee. Between September 1981 and March 1982 the value of the account declined by more than $100,000 due to allegedly improper handling by Gale. During this period Byrd alleges that Gale represented that the account was making a profit. The broker-client contract contained an agreement to arbitrate disputes arising out of the management of the account.

The United States Arbitration Act, 9 U.S.C. § 1 , et seq., provides that arbitration agreements are to be given effect. A federal court must stay an action if an issue involved is subject to a written arbitration agreement, 9 U.S.C. § 3 . Notwithstanding the statute and the contractual agreement to arbitrate, because of the protective intent of the federal securities…