NASAA Supports Arbitration Fairness Act


Yesterday, the North American Securities Administrators Association (NASAA) announced its full support (see press release here) of the Arbitration Fairness Act of 2009, which amends the Federal Arbitration Act to bar enforcement of pre-dispute arbitration clauses in a consumer, employment, franchise and civil rights dispute.  NASAA, whose membership consists of the securities administrators in the 50 states and other US districts and territories, is devoted to investor protection and opposes mandatory arbitration in the securities industry.  

NASAA also recognizes that, unlike the House version of the bill, the Senate version of the bill explicitly defines “consumer dispute”  to include disputes involving securities or investment.  Thus, Section 402(2) provides:

the term ‘consumer dispute’ means a dispute between a person other than an organization who seeks or acquires real or personal property, services (including services relating to securities and other investments), money, or credit for personal, family, or household purposes and the seller or provider of such property, services, money, or credit;

NASAA urges the House of Representatives to amend its version of the bill to conform to the Senate bill so that the AFA would explicitly bar enforcement of arbitration clauses in investors’ account agreements.   As I wrote last week on this blog, I think securities arbitration is sufficiently different from the consumer arbitration targeted by this bill so as to call for different policy choices. 


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Jill Gross
Jill Gross is a Professor of Law and the Director of the Investor Rights Clinic at Pace Law. She teaches the Investor Rights Clinic and Seminar, Mediation and Arbitration, Professional Responsibility, and Securities Litigation and Enforcement. She has published numerous law review articles in the area of dispute resolution and investor justice, and has been quoted in the national media on issues relating to securities arbitration. She is also a contributor to ADR Prof Blog.

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