One landmark decision penned by Lumbard was Modern Settings v. Prudential (1991), which dealt with a dispute between an investor and a broker over alleged unauthorized trading.
The customer agreement between the parties provided "Reports of the execution of orders and statements of my account shall be conclusive if not objected to within five days and ten days, respectively, after transmittal to me (Modern Settings) by mail or otherwise."
Lumbard held that such a contract clause is presumptively enforceable. It is reasonable to require that a customer memorialize his objections so courts will not become a forum for endless swearing contests between brokers and customers.
On the other hand, he allowed for the possibility of the invalidity of such a clause in some cases. "There will be instances where a disparity in sophistication between a brokerage firm and its customer will warrant a flexible application of such written notice clauses.... Similarly, we do not foreclose the possibility that a broker may be estopped from raising a defense based on the written notice clause if the broker's own assurances of deceptive acts forestall the customer's filing of their required written complaint."
Read more about this topic: J. Edward Lumbard