diff --git a/lib/scope.js b/lib/scope.js
index cfcb2d95..ad31f306 100644
--- a/lib/scope.js
+++ b/lib/scope.js
@@ -226,7 +226,7 @@ AST_Toplevel.DEFMETHOD("figure_out_scope", function(options) {
             defun.def_variable(node);
         } else if (node instanceof AST_SymbolLambda) {
             var def = defun.def_function(node, node.name == "arguments" ? undefined : defun);
-            if (options.ie) def.defun = defun.parent_scope.resolve();
+            if (options.ie && node.name != "arguments") def.defun = defun.parent_scope.resolve();
         } else if (node instanceof AST_SymbolLet) {
             var def = scope.def_variable(node);
             if (exported) def.exported = true;
diff --git a/test/compress/destructured.js b/test/compress/destructured.js
index 86a112cf..7850d516 100644
--- a/test/compress/destructured.js
+++ b/test/compress/destructured.js
@@ -3473,3 +3473,27 @@ issue_5314_2: {
     expect_stdout: "PASS"
     node_version: ">=6"
 }
+
+issue_5370: {
+    options = {
+        dead_code: true,
+        ie: true,
+        unused: true,
+    }
+    input: {
+        console.log(function arguments({}) {
+            return arguments;
+            try {} catch (e) {
+                var arguments;
+            }
+        }(42));
+    }
+    expect: {
+        console.log(function arguments({}) {
+            return arguments;
+            var arguments;
+        }(42));
+    }
+    expect_stdout: true
+    node_version: ">=6"
+}
diff --git a/test/compress/rests.js b/test/compress/rests.js
index d32cf2aa..98a640e8 100644
--- a/test/compress/rests.js
+++ b/test/compress/rests.js
@@ -1299,3 +1299,27 @@ issue_5360: {
     expect_stdout: "PASS"
     node_version: ">=8.3.0"
 }
+
+issue_5370: {
+    options = {
+        dead_code: true,
+        ie: true,
+        unused: true,
+    }
+    input: {
+        console.log(function arguments(...a) {
+            return arguments;
+            try {} catch (e) {
+                var arguments;
+            }
+        }());
+    }
+    expect: {
+        console.log(function arguments(...a) {
+            return arguments;
+            var arguments;
+        }());
+    }
+    expect_stdout: true
+    node_version: ">=6"
+}