WASHINGTON, D.C.—Benjamin Schiffrin, Director of Securities Policy for Better Markets, issued the following statement in connection with Better Markets’ new Fact Sheet, “The SEC’s Attempt to Kill Securities Class Actions Through Mandatory Arbitration Violates Congressional Action”:
“The Securities and Exchange Commission’s recent decision to allow public companies to force shareholders into mandatory arbitration subverts the will of Congress. Thirty years ago, when Congress passed the Private Securities Litigation Reform Act of 1995 (PSLRA), Congress chose to preserve securities class actions. Yet mandatory arbitration, which prevents shareholders from filing class action lawsuits in court, would eliminate them.
“In the PSLRA, Congress recognized that meritorious private securities litigation is essential to the integrity of U.S. capital markets and an indispensable tool in securities regulation. The SEC’s acceptance of mandatory arbitration flies in the face of this recognition.
“The SEC should not be able to arrogate for itself the power to end securities fraud class action lawsuits. That is the prerogative of Congress. Congress chose not to exercise that prerogative in the PSLRA or the intervening 30 years since its passage. Yet the SEC’s decision to permit mandatory arbitration provisions for shareholder disputes could have that result. The SEC’s action will harm the very investors that the SEC supposedly exists to protect.”
The fact sheet is available here.
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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.
