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