Sponsors (2)
The bill shifts dispute resolution power to investors—expanding court access and collective remedies to strengthen accountability and investor protections—but at the cost of higher litigation exposure and transitional legal and market disruptions that could raise fees, burden small issuers, and reduce some market options.
Retail and individual investors (including middle-class families and small shareholders) gain clear, enforceable rights to choose court proceedings and to pursue class or representative actions instead of being forced into pre-dispute arbitration.
Broader court access and collective remedies strengthen plaintiffs' leverage and deterrence against corporate misconduct, potentially improving recovery for harmed investors and encouraging greater issuer accountability.
Requiring that listed/registered issuers not bind investors to mandatory arbitration promotes more uniform investor protections and greater transparency across public markets.
Issuers, brokers, and investment advisers face higher litigation exposure, defense costs, and insurance premiums, which are likely to be passed on to customers as higher fees or reduced services.
More disputes moving to courts may lengthen resolution times, increase court congestion, and delay compensation for some investors compared with faster arbitration processes.
Some firms could delist, avoid U.S. exchanges, or forgo SEC registration to preserve arbitration practices, reducing investment options, market liquidity, and capital access for public companies.
Based on analysis of 6 sections of legislative text.
Bars mandatory pre-dispute arbitration and class-action waivers in issuer governance and most broker, dealer, and adviser agreements and conditions listings/registrations on their absence.
Official title: To amend the Securities Exchange Act of 1934 to prohibit mandatory pre-dispute arbitration agreements, and for other purposes.
Introduced June 25, 2026 by Bill Foster · Last progress June 25, 2026
Prohibits mandatory pre-dispute arbitration clauses and class-action waivers that block investors from suing in court in a wide range of securities and investment agreements. It stops exchanges and the SEC from listing or registering securities for issuers whose governing documents or shareholder contracts require arbitration, and bars brokers, dealers, municipal dealers, funding portals, and investment advisers from imposing or renewing such clauses in customer agreements entered, modified, or extended after enactment. Existing arbitration proceedings that began before enactment remain effective; otherwise prohibited arbitration provisions in pre-enactment agreements are void. The law applies to future or changed agreements after the enactment date.