Adjunct Professor George H. Friedman was quoted in an Investment News article about a new bill that might prohibit mandatory arbitration for customer disputes involving investment.
New legislation that would prohibit mandatory arbitration for customer disputes involving investments could raise the profile of the issue with the public and decision makers.
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But the arbitration legislation must navigate difficult terrain on Capitol Hill, where Democrats control the House and Republicans hold the majority in the Senate. It’s likely the GOP will resist arbitration reform.“In my view, neither of these bills is going to get enacted,” said George Friedman, former director of Finra arbitration. “They will pass the House. I expect they will die in the Senate.”
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But Finra and Securities and Exchange Commission officials may be summoned to Congress to testify on the bills — or on Finra arbitration generally. The Dodd-Frank financial reform law gave the SEC authority to end mandatory arbitration, but the agency hasn’t taken up the issue.“It’s not going to be smooth sailing for Finra or the SEC,” said Mr. Friedman, an adjunct professor of law at Fordham University. “The commission may feel some pressure to take a look at arbitration given that Dodd-Frank authorizes it to study the process.”