H.R. 2998 — Introduced in House

I 113th CONGRESS 1st Session H. R. 2998 IN THE HOUSE OF REPRESENTATIVES August 2, 2013 Mr. Ellison introduced the following bill; which was referred to the Committee on Financial Services A BILL To amend the Securities Exchange Act of 1934 to prohibit mandatory pre-dispute arbitration agreements, and for other purposes. 1. Short title This Act may be cited as the Investor Choice Act of 2013. 2. Findings Congress makes the following findings: (1) Investor confidence in fair and equitable recourse is essential to the health and stability of the securities markets and to the participation of retail investors in such markets. (2) Brokers, dealers, and investment advisers hold powerful advantages over investors, and mandatory arbitration clauses, including contracts that force investors to submit claims to arbitration or to waive their right to participate in class actions, leverage these advantages to severely restrict the ability of defrauded investors to seek redress. (3) Investors should be free to choose arbitration to resolve disputes if they judge that arbitration truly offers them the best opportunity to efficiently and fairly settle disputes, and investors should also be free to pursue remedies in court, should they view that option as superior to arbitration. 3. Arbitration agreements in the Securities Exchange Act of 1934 Section 15(o) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(o)) is amended to read as follows: (o) Limitations on pre-Dispute agreements Notwithstanding any other provision of law, it shall be unlawful for any broker, dealer, funding portal, or municipal securities dealer to enter into, modify, or extend an agreement with customers or clients of such entity with respect to a future dispute between the parties to such agreement that— (1) mandates arbitration for such dispute; (2) restricts, limits, or conditions the ability of a customer or client of such entity to select or designate a forum for resolution of such dispute; or (3) restricts, limits, or conditions the ability of a customer or client to pursue a claim relating to such dispute in an individual or representative capacity or on a class action or consolidated basis. . 4. Arbitration agreements in the Investment Advisers Act of 1940 Section 205(f) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–5(f)) is amended to read as follows: (f) Notwithstanding any other provision of law, it shall be unlawful for any investment adviser to enter into, modify, or extend an agreement with customers or clients of such entity with respect to a future dispute between the parties to such agreement that— (1) mandates arbitration for such dispute; (2) restricts, limits, or conditions the ability of a customer or client of such entity to select or designate a forum for resolution of such dispute; or (3) restricts, limits, or conditions the ability of a customer or client to pursue a claim relating to such dispute in an individual or representative capacity or on a class action or consolidated basis. . 5. Effective date This Act, and the amendments made by this Act, shall take effect on the date of the enactment of this Act and shall apply to any agreement created, modified, or extended after the date of enactment of this Act.