Published: February 2024

Call for SEC to ban mandatory arbitration agreements

Consumer Action joined allies in a letter to the SEC chairman asking the agency to issue a rulemaking banning the use of mandatory pre-dispute arbitration agreements in investment adviser and broker-dealer contracts.

Consumer Action joined its allies in a letter calling upon the Securities and Exchange Commission (SEC) to adopt rules, pursuant to the Dodd-Frank Act, to ban the use of mandatory pre-dispute arbitration agreements in investment adviser and broker-dealer contracts. Pervasive in the financial services industry, and often a condition of obtaining services, the provisions of these agreements force investors who have suffered fraud or abuse by their advisers into arbitration forums that are often unfair, opaque and expensive. The SEC should prohibit the inclusion of mandatory pre-dispute arbitration provisions and allow investors with a grievance to choose, after a dispute arises, whether to opt for arbitration or settle their dispute in a courtroom. 

Lead Organization

Public Citizen

More Information

Read the letter here.

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