Congress Could Nix Mandatory Arbitration

more+
less-

Congress Could Nix Mandatory ArbitrationIn light of the absence of SEC action on topic, Rep. Keith Ellison, D-Minn., a member of the House Financial Services Committee, has introduced the Investors Choice Act of 2013. It would prohibit firms from including mandatory arbitration in broker and investment adviser agreements.

“Investors want to get back in the market, but they’re rightly wary that the game is rigged against them,” Rep. Ellison said, “The Investor Choice Act helps level the playing field. Investors shouldn’t have to sign away their rights in order to work with a financial advisor or broker dealer to build a secure retirement. By removing some of the unfair advantages, consumers will be more eager to invest, which will create jobs and strengthen our economy.”

Not surprisingly, the legislation has won the support of the North American Securities Administrators Association (NASAA). Whether it will garner the support of the House Financial Services Committee is far less certain.

As discussed in a prior post, the controversy over mandatory arbitration agreements heated up in the wake of a recent FINRA enforcement action against Charles Schwab, in which FINRA claimed that its rules prohibit class-action waivers by brokerage and investment banking firms.  Schwab has a mandatory class-action waiver in its contracts., In the Schwab action, an arbitration panel had dismissed part of the complaint, ruling that while Schwab’s contract did in fact violate FINRA rules, FINRA may not enforce them because they are in conflict with the Federal Arbitration Act.

Mr. Ellison does have a point. Let’s see where the Investor Choice Act goes. I’ll keep you posted.

Sources:

http://www.nasaa.org/25252/nasaa-strongly-supports-the-investor-choice-act-of-2013/

http://www.investmentnews.com/article/20130805/FREE/130809965

Written by:

Published In:

SEC

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Eckerle Law | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.
×
Loading...
×
×