Justice Stanley Forman Reed wrote the majority opinion that relied on the explicit wording in the Securities Act and expressed doubt as to whether arbitration could truly protect the rights of investors.

Although the decision was overruled, one aspect of it survived Rodriguez de Quijas: Reed's dictum that "manifest disregard" for the law would be enough to justify a court's overturning an arbitral award.

[3] Instead of responding to his complaint, Hayden Stone sought a stay pending the outcome of arbitration, per a clause in Wilko's customer agreement mandating that both parties use that method of dispute resolution.

At all stages of the case the Securities and Exchange Commission (SEC) was granted permission to take an active role in the proceedings as an amicus curiae on Wilko's side.

There was no such declaration to that effect in its text, and in 1941 the Supreme Court had itself said that "[t]he essential purpose of the statute is to protect investors by requiring publication of certain information concerning securities before offered for sale.

"[15] Judge Clark, for his part, found Goddard's argument "very convincing": Commercial arbitration has been highly successful in bringing a businessman's adjudication to business questions.

[16]Arbitration chosen by both parties after a dispute had developed was permissible, Clark agreed, citing cases where courts had approved it under the Federal Employers Liability Act (FELA).

"Because I believe important rights under this notable first of a series of famous Acts for the benefit of the investing public should not be capable of nullification by long fineprint restrictions of the broker's devising," he concluded, "I think the ruling below wise and beneficent.

[19]Reed likened the case to Boyd v. Grand Trunk Western Railroad Co.,[20] where the Court had held that a contractual limitation on choice of venue for lawsuits conflicted with an anti-waiver provision in the FELA.

In 1961, the Southern District of New York became the first court to consider that question in Reader v. Hirsch & Co.. Judge Archie Owen Dawson held that the similar anti-waiver provision in the 1934 Act likewise barred predispute arbitration agreements.

"[E]ven if the substantive portions of the Acts of 1933 and 1934 were more dissimilar, still Wilko would be quite persuasive in determining the instant application," he wrote, since in his reading that case's decisive factor was the forum-selection provision rather than the anti-waiver language.

Alberto-Culver, the Illinois-based manufacturer of personal care products, filed suit in the Northern District of Illinois after finding that the German trademarks Fritz Scherk had sold them were seriously encumbered.

[33] "The relevant statutory language has not changed materially and it is not easy to identify a principled basis for distinguishing that case from this," John Paul Stevens, later elevated to the Supreme Court himself, wrote about Wilko in his dissent.

To the extent that reliance on statutory protection plays a relatively less significant part in the investment decision, there is a correspondingly lesser justification for a prohibition against any waiver of the benefits of the Act.

Moreover, in transactions which are sufficiently large and complex that the parties typically contemplate the possibility of future controversy, the method of resolving foreseeable disputes is itself a proper subject of bargaining.

Here, as in Wilko, the allegations of fraudulent misrepresentation will involve "subjective findings on the purpose and knowledge" of the defendant, questions ill-determined by arbitrators without judicial instruction on the law.

Judge Wilfred Feinberg wrote that while the circuit had enforced arbitration clauses in disputes between brokerage firms, per Congress's intent to let the industry police itself, "such acceptance does not decide this case."

[44] Justice Byron White wrote a short concurrence in that case reminding his colleagues that the issues with the arbitrability of 1934 Act claims under Wilko that Stewart had explored in Scherk were still open.

"Although Scherk and Byrd may cast some doubt on whether the Supreme Court, if presented with the issue, would hold claims under [the 1934 Act] to be non-arbitrable, it would be improvident for us to disregard clear judicial precedent in this Circuit based on mere speculation.

"[47] Shortly after Byrd the Court had also held for the first time, in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., that a statutory claim under the Sherman Act was arbitrable as well as a contractual one in the absence of explicit congressional intent to the contrary,[48] overruling another widely accepted Second Circuit precedent in the process.

It was really a device to introduce the argument that Wilko turned primarily on the acceptance of arbitration, a reading he described as "overly narrow", feeling it contradicted what he had written in Mitsubishi Motors.

"[A]fter a statute has been construed, either by this Court or by a consistent course of decision by other federal judges and agencies, it acquires a meaning that should be as clear as if the judicial gloss had been drafted by the Congress itself," he reminded his colleagues.

[65] Stevens, writing for Brennan, Marshall and Blackmun, the same four justices who had dissented in McMahon, joined Kennedy in his criticism of the Fifth Circuit for overruling Wilko on its own., calling it "indefensible judicial activism".

In a 1986 Second Circuit case, Judge Walter R. Mansfield summarized over three decades worth of jurisprudence on the issue in another securities-fraud claim: It is not to be found in the federal arbitration law ...

[84]Shortly before Rodriguez, the Supreme Court had held in another arbitration case, Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University,[85] that parties could, in their contracts, deviate from the terms of the FAA.

Some lawyers, mindful of the unsettled debate over manifest disregard, began drafting contracts whose arbitration clauses provided for a more clearly defined standard of judicial review.

In 1995 the Fifth Circuit decided that the Supreme Court's pro-arbitration decisions from Moses Cone onwards required that they enforce the contract as written in Gateway Technologies, Inc. v. MCI Telecommunications Corp.[86] Two years later the Ninth Circuit followed suit in LaPine Technology Corp. v. Kyocera Corp., where Judge Ferdinand Fernandez writing for the panel that "the FAA is not an apotropaion designed to avert overburdened court dockets; it is designed to avert interference with the contractual rights of the parties."

In Citigroup Global Markets, Inc. v. Bacon, the following year, the Fifth Circuit decided Hall Street had settled the question and overruled a district court's vacation of an award.

[94] The next year, 2010, the Eleventh Circuit followed suit in Frazier v. CitiFinancial Corp.[95] With the case's main holding overruled, Wilko is no longer discussed in the context of securities law.

But "[i]n so doing, federal courts not only fail to consider the historical context that preceded Wilko but also seemingly ignore the fact that common definitions of the word 'disregard' are not limited in a fashion that exclusively requires scienter," he writes.