04.21.21
New Bill Would Outlaw Forced Investor Arbitration Agreements
by: Tracey Longo
U.S. Sen. Jeff Merkley (D-Ore.) and Rep. Bill Foster (D-Ill.) have introduced a measure that would ban broker-dealers and advisors from making clients sign mandatory arbitration agreements. The Investor Choice Act would change the Securities Exchange Act to make it illegal for any “broker, dealer, funding portal or any municipal securities dealer” to include a mandate for arbitration in the event of a dispute. The proposal would also void existing arbitration agreements and ban prohibitions that force investors to waive their right to bring class action lawsuits. The bill also makes customer agreements that restricts the ability of a customer or client to select a forum for resolution of disputes illegal. Finally, the proposal also bans any security from registering with the Securities and Exchange Commission if its issuer mandated arbitration for customer-advisor disagreements. Securities and Exchange Commission Chairman Gary Gensler has expressed his support for the proposed change.
Read the full article on Financial Advisor.