The Securities and Exchange Commission this week said that it would allow corporations filing registration statements to use predispute arbitration clauses for investor claims. In its policy statement, the SEC said that “the presence of an issuer-investor mandatory arbitration provision will not impact decisions whether to accelerate the effectiveness of a registration statement under the Securities Act.” It represents a significant regression of investor rights and protection.
Also this week, Rep. Hank Johnson (D-Ga.) and Sen. Richard Blumenthal (D-Conn.) introduced their bills, H.R.5350 and S.2799, which would eliminate the use of predispute arbitration clauses for consumer, worker, and antitrust disputes. ‘Consumer disputes’ in the bill include disputes over securities and other investments. This bill offers restoration of consumer/investor rights.
