Forced arbitration in an investment context is a growing threat. Shareholders should not be deprived of access to the justice system when they have been scammed or cheated by companies that they chose to invest in. This practice allows companies to pocket ill-gotten gains, sometimes amounting to hundreds of millions of dollars.
For most investors, their rights under federal securities laws can only be vindicated by banding together because of the expense and complexity that bringing an individual securities action entails. In addition, an investors’ ability to hold a bad financial bad actor accountable for wrongdoing removes an important deterrent against corporate misconduct, restricts the flow of information to the U.S. Securities and Exchange Commission (SEC) and other regulators about market-wide abuses, and conflict with the clear intent of Congress and the courts.
The SEC has limited resources to police the financial market, which is why we cannot constrain investors from holding wrongdoers accountable. In fact, private lawsuits can provide “greater deterrence against more serious securities law violations” than SEC enforcement actions.
SEC Commissioner Robert Jackson , U.S. Senator Elizabeth Warren, and the SEC Investor Advocate Rick Fleming all oppose restrictions to an investors’ access to justice. Learn more here.