The United States House Financial Services Committee recently passed the Investor Choice Act, H.R. 2620. The Investor Choice Act, introduced by Representative Bill Foster, would prohibit broker-dealers, investment advisers, and others from including mandatory arbitration clauses in their customer agreements. H.R. 2620 would also prohibit bans on class action suits in these customer agreements. The bill includes language making it retroactive, meaning if the bill becomes law, any customer agreement in effect before then that violates these prohibitions would be void. The full text of the bill is available here: Text – H.R.2620 – 117th Congress (2021-2022): Investor Choice Act of 2021 | Congress.gov | Library of Congress.
Findings in Section 2 of H.R. 2620 include, “Issuers, 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 the right of investors to participate in a class action lawsuit, leverage those advantages to severely restrict the ability of defrauded investors to seek redress,” and “Investors should be free too—(A) choose arbitration to resolve disputes if they judge that arbitration truly offers them the best opportunity to efficiently and fairly settle disputes; and (B) pursue remedies in court should they view that option as superior to arbitration.” No Republicans joined the seven Democrats who cosponsored the bill.