Investor Choice: Ending Mandatory Arbitration in Financial Disputes.
This law restores the right of investors to sue financial firms and security issuers in court, rather than being forced into private arbitration. Citizens who lose money due to fraud or misconduct can now freely choose between court litigation and arbitration to resolve disputes. This change also voids mandatory arbitration clauses in most existing customer agreements.
Key points
Brokers, investment advisers, and dealers are prohibited from using contracts that mandate arbitration for future customer disputes.
Investors regain the full right to pursue claims in court, including the ability to participate in class action lawsuits against financial companies.
Security issuers cannot mandate arbitration in disputes with shareholders if they want their securities listed on an exchange.
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