Sponsors (2)
The bill increases investors' rights to sue in court and to bring collective actions—boosting accountability and investor confidence—while imposing higher litigation risk and costs on financial firms that may be passed to customers, create market frictions, and spur legal uncertainty.
Retail and other individual investors (including middle‑class families and small‑business owners) regain a clear, statutory ability to choose a court rather than be forced into pre‑dispute arbitration for securities and adviser disputes, expanding access to judicial remedies.
Shareholders and small investors gain broader ability to bring collective/class or representative actions, lowering barriers to pursuing group claims, improving prospects for recovery, and increasing plaintiffs' leverage to deter misconduct.
Public litigation and listing/registration rules that bar mandatory pre‑dispute arbitration should increase transparency and accountability of public issuers and exchanges, helping deter corporate misconduct and level the playing field for shareholders.
Brokers, issuers, investment advisers and other financial firms will face higher litigation and insurance costs, which are likely to be passed on to customers as higher fees or reduced services.
More disputes going to court could mean longer, costlier proceedings for investors compared with arbitration, and increased court caseloads could delay compensation and resolution for harmed clients.
Some issuers, brokers, or advisers may avoid U.S. exchange listings, public registration, or certain retail markets to preserve arbitration practices or limit exposure, reducing investment options, capital access for small issuers, and services for some investors (especially lower‑income).
Based on analysis of 6 sections of legislative text.
Stops issuers, brokers, dealers, and advisers from forcing pre-dispute arbitration or class-action waivers in securities, listing, registration, and adviser-client agreements; voids many existing clauses.
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 between issuers, brokers, dealers, municipal dealers, funding portals, and investment advisers and their customers or shareholders. It conditions listing and SEC registration eligibility on issuers not embedding mandatory shareholder arbitration requirements in bylaws, governing documents, or shareholder contracts, and voids most pre-enactment arbitration provisions except where arbitration was already initiated. Applies to new, modified, or extended agreements after enactment (with specific voiding rules for many existing agreements), and adds these restrictions into the Securities Exchange Act of 1934, Securities Act of 1933 registration rules, and the Investment Advisers Act of 1940.