Menendez, Colleagues Introduce Bill to Help Investors Wronged by Bad Actors

Press Release

U.S. Senator Bob Menendez, chairman of the Senate subcommittee that oversees Wall Street, today joined several colleagues in introducing the Investor Choice Act, bicameral legislation prohibiting pre-dispute mandatory (or "forced") arbitration agreements and barring bans on class action lawsuits in customer contracts investors often must enter into in order to receive services from broker-dealers or investment advisors.

"Forced arbitration clauses invariably favor big business over everyday consumers by hampering their ability to seek justice when they are wronged," said Sen. Menendez. "No one should be forced to give up their rights when they invest their hard-earned money to plan for retirement or save for their child's education. Our bill levels the playing field and protects investors by prohibiting forced arbitration clauses in any client agreement with a broker, dealer, or investment advisor. Let's pass this bill without delay."
The bill is cosponsored by Sens. Menendez, Jeff Merkley (D-Ore.), Richard Durbin (D-Ill.), Elizabeth Warren (D-Mass.), Sheldon Whitehouse (D-R.I.), and Richard Blumenthal (D-Conn.). The House companion is cosponsored by U.S. Representatives Bill Foster (D-Ill.-11), Carolyn Maloney (D-N.Y.-12), Gregory Meeks (D-N.Y.-5), Sean Casten (D-Ill.-06), Nydia Velázquez (D-N.Y.-07), Chuy García (D-Ill.-04), Jan Schakowsky (D-Ill.-09), and Madeline Dean (D-Pa.-04).

"Every consumer deserves a fair shot at justice when they've been wronged or taken advantage of by investors," said Sen. Merkley. "But when an investment advisor or broker chooses the judge, pays the judge, and promises future business to the judge, it's clear that the system meant to deliver that justice is rigged. Let's make this the year that we fix that, by standing up for consumers and passing the Investor Choice Act."

"Individuals shouldn't need to surrender their legal rights because they choose to work with a financial advisor or broker dealer to plan for their retirement and invest their hard earned money," said Rep. Foster. "This legislation levels the playing field for consumers and prevents them from being victims of a rigged system that denies them fair legal recourse if they are wronged. I'm proud to work with Senator Merkley on this important legislation for American consumers."

"Forced arbitration lets broker dealers and financial advisors muscle Americans out of the courtroom and into proceedings they control," said Sen. Whitehouse. "We need a fair, transparent system that lets consumers pursue justice when they're wronged, not a rigged process designed to rob them of their rights."

"Americans shouldn't be forced to sign away their fundamental legal rights in order to plan for their financial future," said Sen. Blumenthal.
The legislation is endorsed by North American Securities Administrators Association (NASAA), American Association for Justice (AAJ), Public Citizen, and Public Investors Advocate Bar Association.

The Senate version of the legislation is available here. The House version is available here.