In the case of Shearson/American Express Inc. et al. v. McMahon et al., 1986, the U.S Supreme Court ruled in favor of Shearson/American Express Inc., stating that claims under the Securities Exchange Act of 1934 and Racketeer Influenced and Corrupt Organizations Act (RICO) can be subject to arbitration agreements between brokerage firms and their customers. The McMahons had alleged fraudulent activity on part of their broker, but they had previously signed a client agreement which included an arbitration clause for any disputes arising from transactions or contracts made with Shearson/ American Express Inc.. The court held that this clause was enforceable as there were no indications within either act suggesting that Congress intended to exclude such claims from mandatory arbitration agreements.

In the dissenting opinion for Shearson/American Express Inc. v. McMahon, Justice Blackmun, joined by Justices Brennan and Marshall, argued that the majority's decision to enforce arbitration agreements in cases involving violations of federal securities laws was a departure from established precedent. They contended that this ruling undermined investor protection by limiting access to judicial forums where full discovery rights and other procedural protections are available. The dissenters believed that Congress intended these statutory claims to be resolved judicially rather than through arbitration when it enacted the Securities Exchange Act of 1934 and Racketeer Influenced Corrupt Organizations (RICO) Act provisions at issue in this case. They also expressed concern about potential bias within self-regulatory organization-operated arbitral forums due to their funding sources.