The Problems With Mandatory Arbitration Of Securities Claims

By Samuel Ward and Michael Toomey (August 9, 2017, 11:49 AM EDT) -- A brief remark from SEC Commissioner Michael Piwowar during a July 17, 2017, Q&A has caused great concern among investors that the U.S. Securities and Exchange Commission might soon allow companies to introduce mandatory arbitration clauses into their corporate charters.[1] If allowed, required arbitration would have a fundamental, adverse effect on the ability of investors to protect themselves against wrongdoing by corporations and their directors and officers. If mandatory arbitration were to be widely adopted, investors could be prohibited from asserting claims in federal court under the federal securities laws, which would effectively result in the loss of the very protections that these laws were designed to provide. ...

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