SEC Urged to Reform Mandatory Arbitration

The U.S. Securities and Exchange Commission (SEC) is being pressed by the chief securities regulator for Massachusetts to eliminate the mandatory arbitration clause in contracts between registered investment advisers and their customers.

Under the clause a client can’t sue an advisor over investment losses or other damages but must submit all disputes to binding arbitration.

In a letter sent to the SEC, William F. Galvin, Secretary of the Commonwealth of Massachusetts, told the commission that the frequent use of pre-dispute arbitration clauses is troubling.

The letter said that according to research conducted by the Massachusetts Securities Division, nearly half of investment advisors it surveyed said they included a mandatory pre-dispute arbitration clause in their advisory contracts with customers.

Galvin wrote that requiring the clause was inconsistent with the duty of advisers to act in the best interests of their clients.

If you or a loved one has been wronged by consumer fraud, contact Sokolove Law today for a free legal consultation and to find out if a consumer fraud lawyer may be able to help you.

Tags:

About Us

Sokolove Law, LLC is the nation’s largest marketer of legal services that help people obtain access to the civil justice system while ensuring they receive superior quality legal representation. With over 30 years of service, Sokolove Law has helped thousands of injured parties obtain the compensation they deserve from their legal claim such as mesothelioma, cerebral palsy, nursing home abuse, dangerous drugs, disability insurance denial, and medical malpractice cases.

Subscribe