U.S. Securities and Exchange Commission member Luis Aguilar is pressing the government to think about adopting rules that would limit or bar investment advisers and brokers from making customers sign away their right to file a securities fraud case. He made his statements in front of the he North America Securities Administrators Association’s yearly conference.
Aguilar spoke about how it was important to advocate for investor choice. He said that by giving investors the chance to choose how they wish to protect their legal rights and file their legal claims, the government would be enhancing federal securities laws while creating better investor protections.
The 2010 Dodd-Frank Act gives the Commission new powers to strengthen investor protections, including the authority to restrict pre-dispute arbitration agreements, which brokers routinely use. The agreements bar an investor from being able to sue the financial firm should a disagreement arise. Meantime, corporations generally remain in favor of arbitration as a venue for resolution because they believe this is less costly.
A few months back, Massachusetts Secretary of the Commonwealth William F. Galvin made a similar request, this time to the SEC. Galvin asked that investment advisers be prevented from including pre-dispute mandatory arbitration clauses in contracts. He said that nearly 50% of investment advisers surveyed that are registered in his state admitted to using these agreements.
At Shepherd Smith Edwards and Kantas, LTD, LLP our FINRA arbitration lawyers and securities fraud attorneys represent institutional and individual investors in both arbitration and the courts. Contact us today and ask for your free case assessment.
Read SEC Commissioner Aguilar’s Speech at the North American Securities Administrators Association’s Annual Conference in DC, April 16, 2013
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