Skip to content


Forced arbitration in the 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 the companies in which they choose to invest. This practice allows companies to pocket ill-gotten gains – sometimes amounting to hundreds of millions of dollars.

Because of the expense and complexity that bring a securities action entails, most investors can only vindicate their rights under federal securities laws by banding together in class actions. Forced arbitration clauses banning class actions thus effectively eliminate investors’ ability to hold financial bad actors accountable for wrongdoing, remove an important deterrent against corporate misconduct, restrict 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.

The limited resources that the SEC has to police financial markets makes it all the more important for investors to retain the ability to independently hold wrongdoers accountable. In fact, private lawsuits can provide even “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 on investors’ access to justice.

Learn more about the problem, and what the SEC can do about it, here.