In an April 16th speech, Commissioner Aguilar made clear that he supports Commission action under Section 921 of the Dodd-Frank Act to restrict or prohibit pre-dispute arbitration provisions in broker and adviser customer agreements:
“Currently, almost all customer agreements with brokerage firms include an arbitration clause requiring customers to arbitrate their claims in an arbitration forum– and they’re now popping-up in the investment advisory industry. By adding such provisions, brokerage and advisory firms are essentially requiring their clients to give up their legal rights before the client even knows about the nature of a dispute, and before the client has had the opportunity to consider whether giving up those rights would be in their interest. The inclusion of such provisions in brokerage and advisory contracts diminishes investor protection.
…
In passing the Dodd-Frank Act, Congress recognized the need to protect investors from abusive practices in the financial services industry. As many of you know, Section 921(a) of the Dodd-Frank Act authorizes the Commission to prohibit or restrict mandatory pre-dispute arbitration provision in customer agreements, if such rules are in the public interest and protect investors. The authority covers broker-dealers and investment advisers. I believe the Commission needs to be proactive in this important area. We need to support investor choice.”