WASHINGTON, D.C. — Stephen Hall, Legal Director and Securities Specialist, issued the following statement on tomorrow’s hearing titled “Small Print, Big Impact: Examining the Effects of Forced Arbitration,” being convened by the Senate Judiciary Committee:
“We commend the Committee for continuing its work to shine a light on the harmful impact of forced arbitration clauses. At this hearing, the focus will be on victims of harassment and discrimination who cannot seek justice in a court because they’re also victims of fine-print, forced arbitration clauses. These provisions, still widely used in the areas of employment, commerce, and finance, continue to force victims of illegal or predatory behavior into biased and secretive arbitration forums, where the prospects for relief are slim. The result is that individual workers, consumers, and investors have no realistic chance of recovering for the harms they have suffered, while the companies using these clauses escape accountability, even for the most egregious misconduct.
“It is past time to broadly prohibit the use of mandatory pre-dispute arbitration clauses, and that’s certainly true in the financial industry. The call for reform by the SEC is mounting steadily. In January, Better Markets and Public Citizen, joined by 15 public interest organizations, called upon the SEC to use its explicit statutory authority to finally put a stop to the use of contract clauses by brokers and investment advisers that force investors out of court and into arbitration. These clauses are pervasive, yet investors either don’t see them, don’t understand them, or are powerless to object. The SEC is also being urged to examine the especially deplorable use of forced arbitration clauses by investment advisers.
“While arbitration in a fair forum and under fair rules can at times be useful for workers, consumers, and investors, especially those with small claims, it should be a matter of choice, never forced upon them before any dispute arises. Prohibiting the use of pre-dispute mandatory arbitration clauses will finally give millions of Americans meaningful recourse for abusive corporate conduct, without harming honest businesses.”
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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.
