Last Thursday night, the U.S. Senate passed The Restore American Financial
Stability Act, which seeks to implement financial reforms, curb abusive
lending practices, and limit risk-taking by large institutions.
Under the current version of the Act, the SEC will be called upon to decide
the fate of mandatory securities arbitration. As it now stands, investors
must pursue claims against brokerage firms through FINRA-sponsored mandatory
arbitration, rather than pursuing a claim in court. . The Act directs
the SEC to evaluate mandatory pre-dispute arbitration clauses and promulgate
The battle now shifts to the House-Senate conference, where the Senate's
version of the Act will be reconciled with the House bill passed last December.