I. INTRODUCTION

This is an action by a customer against his securities broker for damages resulting from alleged violations of section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 of the Securities and Exchange Commission Rules. In this appeal by the broker, the issue is whether the claim should be submitted to arbitration under the arbitration provision of the parties’ customer agreement. Relying upon the Supreme Court’s decision in Wilko v. Swan, 346 U.S. 427 , 74 S.Ct. 182 , 98 L.Ed. 168 (1953), and subsequent decisions of this circuit, the district court denied the defendants’ motion to compel arbitration.

The genesis of this appeal is Justice White’s special concurring opinion in Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 , 105 S.Ct. 1238 , 84 L.Ed.2d 158 (1985). Justice White there questioned whether Wilko’s holding, i.e. the non-arbitrability of claims arising under the Securities Act of 1933, applies to claims arising under the Securities Exchange Act of 1934. This is the first of a number of similar cases, involving arbitrability of customer claims against a broker under section 10(b) of the 1934 Act and Rule 10b-5, to reach this court since the Supreme Court’s decision in Byrd .

We affirm the district court’s ruling that claims under section 10(b) of the 1934 Act should be litigated in federal court rather than submitted to arbitration. For the reasons discussed below, we conclude that the language and history of the securities statutes, considered against the background of controlling Supreme Court decisions and circuit court decisions stressing the importance of a federal judicial forum for Rule 10b-5 claims, require us to hold that the judicial forum for such claims cannot be waived by an arbitration agreement between a customer and broker.

II. BACKGROUND

Plaintiff-appellee, Harry Conover, opened a margin account with Dean Witter Reynolds, Inc., in 1960 and signed a form “customer agreement,” which contained the following arbitration provision:

In July, 1983, Conover brought this suit against Dean Witter and the broker who handled Conover’s account, Brenton Ogden. Conover alleged that the defendants “churned” and manipulated his account to generate sales commissions, in violation of section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240 .10b-5.

On May 10, 1985, shortly after the Supreme Court’s decision in Byrd , Dean Witter filed a motion to compel arbitration of Conover’s section 10(b) claim and to stay further proceedings pending completion of that arbitration. The motion stressed Justice White’s concurrence in Byrd , and urged that arbitration provisions of a customer agreement should constitute a waiver by the customer of a judicial forum for section 10(b) claims.

In discussing the waiver issue, Justice White posed a question which the parties had not raised and which the Court did not need to decide in Byrd . Indeed, as Justice White observed, the very “premise of the controversy” in Byrd was that the plaintiff's claims in that case under the 1934 Act were not arbitrable, in spite of the arbitration agreement. Byrd, 105 S.Ct. at 1244 (White, J., concurring).

This assumption of non-arbitrability of section 10(b) claims is one that this court has shared. It is reflected in several Ninth Circuit Court decisions after the Supreme Court’s decision in Wilko , and before its opinion last year in Byrd. See Kehr v. Smith Barney, Harris Upham & Co., 736 F.2d 1283 , 1285 n.1 (9th Cir.1984); Kershaw v. Dean Witter Reynolds, Inc., 734 F.2d 1327, 1328 (9th Cir.1984); De Lancie v. Birr, Wilson & Co., 648 F.2d 1255, 1257 (9th Cir.1981). Commentators also had assumed that Wilko applied to claims arising under Section 10(b) of the 1934 Act. See, e.g., A. Jacobs, The Impact of Rule 10b-5, § 237.02 (1980) (“An agreement to arbitrate future claims under the 1933 Act or the 1934 Act ... is voidable”); S. Jaffe, Broker-Dealers and Securities Markets § 1702 (1977) (Noting, without discussion, that Wilko’s holding applies to claims arising under the 1934 Act); A. Bromberg & L. Lowenfels, 2 Securities Fraud & Commodities Fraud § 5.16 (410) (1985) (same).

Although this circuit did not directly decide the issue, at least five other circuits in the period before Byrd did decide it, and they held squarely that 1934 claims are not arbitrable. Mansbach v. Prescott, Ball & Turben, 598 F.2d 1017, 1030 (6th Cir.1979); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Moore, 590 F.2d 823, 827-29 (10th Cir.1978); Weissbuch v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 558 F.2d 831, 833-36 (7th Cir.1977); Allegaert v. Perot, 548 F.2d 432, 437 (2d Cir.), cert. denied, 432 U.S. 910 , 97 S.Ct. 2959 , 53 L.Ed.2d 1084 (1977); Sawyer v. Raymond, James & Associates, Inc., 642 F.2d 791, 792 (5th Cir.1981). See also Surman v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 733 F.2d 59, 61 (8th Cir.1984); Belke v. Merrill Lynch, Pierce, Fenner & Smith, 693 F.2d 1023, 1025-26 (11th Cir.1982); Ayres v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 538 F.2d 532, 537 (3d Cir.), cert. denied, 429 U.S. 1010 , 97 S.Ct. 542 , 50 L.Ed.2d 619 (1976).

After the Supreme Court’s opinions in Byrd , at least one circuit, the Second, has reaffirmed its pre-Byrd holding of non-arbitrability, reaching the same conclusion that we reach today. McMahon v. Shearson/American Express, Inc., 788 F.2d 94 (2d Cir.1986). The Second Circuit reasoned that clear circuit precedent, the similarity of ’33 and ’34 Act provisions, and “strong public policy concerns” precluded arbitration of claims under section 10(b).

Because our previous decisions have not addressed the issue squarely, we are free in this case to consider the issue appellants raise. We do so by examining, in light of the questions raised by Justice White, the statutes, their history, and their interpretation by the courts.

III. DISCUSSION

Dean Witter claims that the Arbitration Act, 9 U.S.C. § 1 , et seq., requires arbitration of Conover’s claims against it. The Arbitration Act provides that an arbitration agreement in a contract evidencing a transaction involving commerce or in a maritime transaction “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2 .

As Dean Witter points out, the Supreme Court repeatedly has enforced arbitration agreements in light of the strong federal policy evidenced in the Arbitration Act. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., — U.S. —, 105 S.Ct. 3346, 3355 , 87 L.Ed.2d 444 (1985) (because of the international nature of the contract, the arbitration clause was valid in regard to claims that might not be arbitrable under a domestic agreement); Southland Corp. v. Keating, 465 U.S. 1 , 104 S.Ct. 852 , 79 L.Ed.2d 1 (1984) (a California franchise law which invalidates arbitration agreements violates the supremacy clause); Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24-25 , 103 S.Ct. 927, 941-42 , 74 L.Ed.2d 765 (1983) (“[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration”).

The Arbitration Act, however, obviously does not automatically validate an arbitration agreement in the face of contrary congressional policy. See, e.g. Wilko v. Swan, 346 U.S. 427 , 74 S.Ct. 182 , 98 L.Ed. 168 (1953). In Mitsubishi, the Supreme Court explained why not all controversies implicating statutory rights are suitable for arbitration.

Mitsubishi, 105 S.Ct. at 3355 . Similarly, in Wilko , the Supreme Court recognized the tension between the respective policies of the Arbitration Act and the Securities Act of 1933. It considered the statutory language and purposes of the Acts, and concluded that “the intention of Congress concerning the sale of securities is better carried out by holding invalid such an agreement for arbitration____” 346 U.S. at 438 , 74 S.Ct. at 188 .

Thus, the question in this case is whether congressional policy prohibits arbitration of claims arising under section 10(b) of the Securities Exchange Act of 1934, despite the strong federal policy favoring arbitration. To determine Congress’ intent, we study the text, and both the legislative and judicial history of the 1934 Act, with due regard for the purposes underlying the securities and arbitration statutes.

In determining congressional intent with respect to waiver of a judicial forum we look first to the language of the securities statutes. In Wilko , the Supreme Court found that section 14 of the Securities Act of 1933 was a manifestation of Congress’ intent to prohibit waiver of the right to a judicial forum, even under a written arbitration agreement. Section 14 provides:

15 U.S.C. § 77n. The Wilko Court reasoned that an arbitration agreement required a securities purchaser to waive compliance with section 22, which provides for enforcement of section 12(2) in state or federal court. It concluded that under section 14, such an agreement was void.

The Securities Exchange Act of 1934 contains a waiver provision almost identical to section 14 of the 1933 Act. Section 29(a) provides:

15 U.S.C. § 78cc(a). The 1934 Act restricts enforcement to the federal courts. 15 U.S.C. § 78aa. Thus, to the extent that Wilko rests upon the conclusion that an arbitration agreement is an impermissible waiver of enforcement rights arising pursuant to statute or regulations, the similarity of the Acts’ waiver provisions suggests that Wilko’s result also would apply to claims arising under section 10(b) of the 1934 Act and Rule 10b-5.

Hence, several circuits have relied on the similarity between the anti-waiver provisions of the 1934 Act and the 1933 Act in refusing to compel arbitration of section 10(b) claims. See Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Moore, 590 F.2d 823, 827 (10th Cir.1978); Weissbuch v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 558 F.2d 831, 836 (7th Cir.1977); Ayres v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 538 F.2d 532, 536 (3d Cir.), cert. denied, 429 U.S. 1010 , 97 S.Ct. 542 , 50 L.Ed.2d 619 (1976). These courts reasoned that if the anti-waiver provision of the 1933 Act, which is almost identical to section 29(a) of the 1934 Act, renders an arbitration agreement between a brokerage firm and a customer void as to a customer’s section 12(2) claim, then section 29(a) must have the same effect on a predispute agreement that would have required arbitration of a section 10(b) claim. Weissbuch, 558 F.2d at 836 ; Ayres, 538 F.2d at 536 .

Despite the analogous waiver provisions in the 1933 Act and the 1934 Act, appellants contend that Wilko’s reasoning should not be applied to the claim presented in this case, because the 1934 Act lacks an express provision for a private right of action under section 10(b). As Justice White pointed out, the original text of the 1934 Act, standing alone, is not conclusive as to whether a federal judicial forum exists at all for section 10(b) claims, much less as to whether the judicial forum can be waived.

Byrd, 105 S.Ct. at 1244 (White, J., concurring).

We therefore look beyond the original text of the Act to its subsequent history in Congress and the courts. That history tells us, first, that the implied cause of action in federal court under section 10(b) and Rule 10b-5 has become well-established, and its nonwaivable character has become well accepted by the Securities and Exchange Commission, the courts of appeals, and Congress itself. For histories of the origin and growth of section 10(b) actions, see 5A A. Jacobs, Litigation and Practice under Rule 10(b)-5 § 8 (2d ed. 1985); 3 L. Loss, Securities Regulation, 1763-64 and nn. 260-63 (2d ed. 1961) and 6 id. at 3871-73 (Supp.1969). In 1979, the Securities and Exchange Commission issued a Release warning broker-dealers that customers should be made aware that they have a right to a judicial forum to pursue claims under both the 1933 and 1934 Acts, notwithstanding their arbitration agreements. Sec.Exch. Act Release No. 15984 (July 2, 1979), 17 SEC Docket 1167 (1979), 1979 Fed.Sec.L.Rep. (CCH) 1182,122.

The legislative and judicial history tells us, second, that Congress could have eliminated the federal cause of action for section 10(b) in 1975, when it undertook comprehensive revision of the 1933 and 1934 Acts, had it chosen to do so. Congress’ revision, however, left section 10(b) intact.

The history tells us, third, and most important, that in 1975, Congress expressly recognized the non-arbitrable nature of disputes between brokers and customers. In the conference report to the Securities Act Amendment of 1975, Congress emphasized that its amendment to section 28 of the Securities Exchange Act of 1934, which permitted arbitration agreements between brokers and exchanges, did not extend to arbitration agreements between brokers and customers:

H.R.Rep. No. 229, 94th Cong., 1st Sess. 111, reprinted in 1975 U.S.Code Cong. & Ad.News 179, 321, 342.

This legislative history is compelling, as two of our sister circuits have recognized in holding that section 10(b) claims are non-arbitrable. In Ayres v. Merrill, Lynch, Pierce, Fenner & Smith, Inc., the Third Circuit noted this language in the conference report, and concluded, “Congress appears to have accepted the view that Wilko v. Swan applies in the 10b-5 context.” 538 F.2d at 537 ; see also Weissbuch, 558 F.2d at 836 . The Supreme Court has stated in a related context that Congress’ decision to leave section 10(b) intact suggests ratification of a judicial remedy under section 10(b). Herman & MacLean v. Huddle-ston, 459 U.S. 375, 384-86 , 103 S.Ct. 683, 688-89 , 74 L.Ed.2d 548 (1983); see also Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U.S. 353, 379, 381-82 , 102 S.Ct. 1825, 1839, 1840-41 , 72 L.Ed.2d 182 (1982) (finding that Congress’ comprehensive amendments to the Commodities Exchange Act was evidence that Congress intended to preserve the implied remedy under the Act).

The policies served by judicial enforcement of section 10(b) and Rule 10b-5 reflect the unsuitability of arbitration for such claims. This can be seen in the many opinions of the Supreme Court and courts of appeals involving section 10(b). The leading opinion in this circuit is Fratt v. Robinson, 203 F.2d 627 (9th Cir.1953). We there held that section 10(b) implies a private right of action, primarily because the deterrent effect of private enforcement of section 10(b) is necessary to accomplish both that section’s purpose and the 1934 Act’s general purpose of establishing “reasonably complete and effective” control over securities transactions. Id. at 632 . In gauging the potential of section 10(b) actions to deter fraudulent practices, we placed particular emphasis on the fact that violations would be redressable in federal court. See id. at 631, 632 . We have reaffirmed our holding in Fratt in Ellis v. Carter, 291 F.2d 270 (9th Cir.1961); Mathe- son v. Armbrust, 284 F.2d 670 (9th Cir.1960), ce rt. denied, 365 U.S. 870 , 81 S.Ct. 904 , 5 L.Ed.2d 860 (1961); and in Errion v. Connell, 236 F.2d 447 (9th Cir.1956). The Fratt rationale views the 1933 and 1934 Acts as a comprehensive scheme to regulate securities, see Fratt, 203 F.2d at 63—32; accord Herman & MacLean v. Huddleston, 459 U.S. 375, 380 , 103 S.Ct. 683, 686 , 74 L.Ed.2d 548 (1983).

Other circuits have adopted Fratt’s reasoning and have similarly stressed the need for judicial control over securities transactions. See Jordan Building Corp. v. Doyle, O’Connor & Co., 401 F.2d 47 , 49 (7th Cir.1968), and Brouk v. Managed Funds, Inc., 286 F.2d 901, 907 (8th Cir.1961) , vacated as moot, 369 U.S. 424 , 82 S.Ct. 878 , 8 L.Ed.2d 6 (1962). The Supreme Court used similar reasoning in Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 730 , 95 S.Ct. 1917, 1922 , 44 L.Ed.2d 539 (1975), and J.I. Case Company v. Borak, 377 U.S. 426, 432 , 84 S.Ct. 1555, 1560 , 12 L.Ed.2d 423 (1964) (private enforcement of Rule 10b-5 may “[provide] a necessary supplement to Commission action”).

The express lesson drawn by the Supreme Court is that the 1933 and 1934 Acts are interrelated components of the federal securities regulation scheme. Ernst & Ernst v. Hochfelder, 425 U.S. 185, 206 , 96 S.Ct. 1375, 1387 , 47 L.Ed.2d 668 (1976). They are to be given “a cumulative construction” which “furthers their broad remedial purposes.” Herman, 459 U.S. at 386 , 103 S.Ct. at 689 . This same rationale also has been influential in deciding other questions of section 10(b) liability and interpreting its remedial purposes broadly. See, e.g., Sargent v. Genesco, Inc., 492 F.2d 750, 760 (5th Cir.1974) (broad privity requirement is necessary to implement the private enforcement remedy); James v. Gerber Products Co., 483 F.2d 944, 950 (6th Cir.1973) (private enforcement should be encouraged to effectuate purpose of § 10(b)). This lesson cannot be reconciled with appellants’ position that a judicial forum is less appropriate for 1934 Act claims than for 1933 Act claims.

This can be demonstrated further by comparing the reasons for non-arbitrability under the 1933 Act, as discussed in Wilko , with the considerations relevant to the 1934 Act and section 10(b). In Wilko , the Supreme Court gave three main reasons for concluding that Congress intended, by the nonwaiver provisions of section 14, to void agreements to arbitrate 1933 Act claims: first, securities customers are subject to overbearing by securities dealers; second, arbitration is not the equivalent of judicial proceedings in securities cases under the 1933 Act, because judicial direction is needed to insure the effectiveness of the protective provisions of the Act; and third, because of the special jurisdictional and procedural protections of the 1933 Act, a securities customer surrenders more by agreeing to arbitrate claims under the Act than would a person who agrees to arbitrate a normal business transaction claim. Wilko, 346 U.S. at 431-33, 435-37 , 74 S.Ct. at 184-186, 186-88 .

All of these considerations favoring non-arbitrability apply with at least equal force to section 10(b) claims like the one before us. First, the bargaining position between dealers and customers is no different with respect to section 10(b) claims than with respect to any other securities claim. Dealers are as likely to “maneuver buyers into a position that might weaken their ability to recover,” Wilko, 346 U.S. at 432 , 74 S.Ct. at 185 , under the 1934 Act as they are under the 1933 Act. In Weissbuch, 558 F.2d at 835 , the Seventh Circuit examined buyers’ disadvantages in purchasing securities before concluding that the customer’s section 10(b) claim should not be arbitrated.

Weissbuch followed on the heels of the Supreme Court’s decision in Scherk v. Alberto-Culver Co., 417 U.S. 506, 94 S.Ct. 2449 , 41 L.Ed.2d 270 (1974) which had held that an agreement to arbitrate section 10(b) claims arising out of an international transaction should be enforced. The issue in Weissbuch was whether to extend Scherk to section 10(b) claims arising under domestic contracts. The Seventh Circuit in We- issbuch distinguished Scherk by pointing out:

Weissbuch, 558 F.2d at 835 . We agree that here our concern also must be for the “relatively uninformed individual investor,” id., as in Wilko and Weissbuch , rather than for parties with equal bargaining power who have negotiated an arbitration agreement, as in Scherk .

Second, the need for “the exercise of judicial direction to fairly assure [the Act’s] effectiveness,” Wilko, 346 U.S. at 437 , 74 S.Ct. at 188 , is the same under the 1934 Act as it is under the 1933 Act. See Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Moore, 590 F.2d at 826 . In concluding that claims under the securities laws should not be subject to arbitration, the Second Circuit in Allegaert v. Perot, 548 F.2d 432, 437 (2d Cir.1977), stressed the difference between judicial proceedings and arbitration. It stated “ ‘[t]his type of question concerning fraud within the meaning of Rule 10b-5 is properly litigated in the courts where a complete record is kept of the proceeding and findings and conclusions are made.’ ” Allegaert, 548 F.2d at 437 , quoting Greater Continental Corp. v. Schechter, 422 F.2d 1100, 1103 (2d Cir.1970). Allegaert’s language echoes the Court’s concerns in Wilko :

Wilko, 346 U.S. at 435-436 , 74 S.Ct. at 186-187 (footnotes omitted). For other cases comparing the relative merits of judicial proceedings and arbitration, see Marchese v. Shearson Hayden Stone, Inc., 734 F.2d 414, 419-421 (9th Cir.1984) (declaratory relief action concerning the interpretation of the Commodities Exchange Act is not arbitrable); Amaro v. Continental Can Co., 724 F.2d 747 , 750 n. 3 (9th Cir.1984) (arbitration award on grievance under a collective bargaining agreement was not res judicata of Employee Retirement Income Security Act claim); Stroh Container Co. v. Delphi Industries, Inc., 783 F.2d 743 , 751 n.12 (8th Cir.), cert. denied, — U.S. —, 106 S.Ct. 2249 , 90 L.Ed.2d 695 (1986) (action to confirm an arbitration award).

The third Wilko factor, the 1933 Act’s protections to ensure a judicial forum, are also present in the 1934 Act for section 10(b) claims. The requirements for diversity jurisdiction need not be met to bring a claim under section 10(b), and even in cases in which diversity jurisdiction can be established, a section 10(b) plaintiff has greater service-of-process and venue resources than does a diversity plaintiff. There is no amount in controversy requirement. Section 27, the jurisdictional section of the 1934 Act, provides for nationwide service of process, as does section 22 of the 1933 Act. See 15 U.S.C. § 78aa (section 27 of the 1934 Act); 15 U.S.C. § 77v (section 22 of the 1933 Act).

In fact, the 1934 Act provides even greater venue choices than does the 1933 Act. Compare 15 U.S.C. § 78aa (section 27 of the 1934 Act) (any district where the defendant is found, inhabits or transacts business, or “where any act or transaction constituting the violation occurred”) with 15 U.S.C. § 77v (section 22 of the 1933 Act) (any district where the defendant is found, inhabits or transacts business, “or in the district where the offer of sale took place”). Both venue provisions are broader than those applicable to diversity suits. See 28 U.S.C. § 1391 . Finally, while the 1933 Act grants concurrent jurisdiction to federal and state courts, the 1934 Act vests exclusive jurisdiction in the federal courts. This distinction is an even more forceful indication of Congress’ intent that federal courts oversee the interpretation and application of the 1934 Act. We therefore conclude that the factors that led the Wilko Court to conclude that Congress intended to preclude enforcement of arbitration agreements under the 1933 Act can be no less applicable to claims under the 1934 Act.

Our holding, that Congress intended to preclude enforcement of agreements to arbitrate claims arising under section 10(b) of the Securities Exchange Act of 1934, comports with the legislative history and purposes of the 1934 Act, as well as with the Supreme Court’s analysis of similar claims under the 1933 Act. We therefore affirm the district court’s order denying Dean Witter’s motion to compel arbitration of Harry Conover’s section 10(b) claims.

Affirmed.