The Investor Choice Act, authored by Rep. Bill Foster (D-Ill.) seeks to bar not only broker-dealers but other corporations from deploying mandatory arbitration agreements. At a recent hearing, the Act met strong opposition from industry groups such as SIFMA as well as the Chamber of Commerce. Tom Quaadman, executive vice president with the Chamber of Commerce, defended the arbitration process as a vital dispute resolution tool that helps clients and advisors alike avoid lengthy and costly litigation.
On Friday a ranking Democratic member of the Senate Banking Committee, Sen. Sherrod Brown, introduced a bill aimed at ending pre-dispute arbitration agreements that have become commonplace in business-to-consumer businesses. The bill, called the Arbitration Fairness for Consumers Act, is specifically focused on student loan and credit card contracts; however, it has enormous implications for the securities industry, in which almost every brokerage contract includes a binding arbitration clause.