On June 21st, the Court of Appeals for the Fourth Circuit addressed what appears to be a novel question, whether a person who is not in a contractual relationship with a member firm nevertheless can be an "associated person" of that firm for purposes of FINRA arbitration. Waterford Investment Services, Inc. ("Waterford") claimed it should not be required to arbitrate an investor dispute because the advisor who allegedly gave the bad advice was an associated person with CBS, not Waterford. Applying the federal presumption in favor of arbitration, the Court held that to have indirect control of a person, such that he is an "associated person" under FINRA Rule 12200, a member firm need only have the potential power to influence the person, rather than exercise any actual control over him. Here, a significant degree of overlap existed between Waterford and CBS, with a common majority owner, officers and directors, and shared resources. As a result, Waterford had the potential power to control the advisor at issue and can be compelled to arbitrate the investor dispute. Waterford Investment Services, Inc. v. Bosco.