Sponsors (6)
The bill expands retail investors' and shareholders' rights to pursue public court remedies and collective actions, improving accountability and transparency, but does so at the cost of higher litigation and compliance expenses, potential reduced access to public capital and liquidity, and transitional legal uncertainty that may slow dispute resolution and raise costs for market participants.
Retail investors, shareholders, and customers (including middle‑class families and small investors) can choose court litigation over forced arbitration, preserving access to jury trials, public courts, and class/representative actions.
Investors and small claimants gain stronger collective enforcement tools because class, representative, and consolidation mechanisms are preserved or expanded, making it easier to aggregate small claims and hold firms accountable.
Market participants and regulators face greater transparency and uniformity because exchanges must refuse listings tied to forced‑arbitration provisions and legacy waivers are voided, reducing hidden limits on investor dispute rights.
Issuers, brokers, dealers, and investment advisers face greater litigation exposure and higher legal/insurance costs, which are likely to be passed on to customers and investors through higher fees.
Companies that keep arbitration provisions could be blocked from registering securities and some firms may avoid public markets, which could shrink the pool of investable public securities and reduce market liquidity for investors.
Voiding existing arbitration waivers or categorically denying registration based on arbitration provisions creates legal and contractual uncertainty during the transition, complicating obligations for firms, counterparties, and customers.
Based on analysis of 6 sections of legislative text.
Prohibits mandatory pre‑dispute arbitration clauses and class‑action waivers in issuer, broker/dealer, and investment adviser agreements and blocks listing/registration when issuers require mandatory arbitration.
Official title: Amend the Securities Exchange Act of 1934 to prohibit mandatory pre-dispute arbitration agreements, and for other purposes.
Introduced June 24, 2026 by Jeff Merkley · Last progress June 24, 2026
Prohibits mandatory pre‑dispute arbitration clauses and class‑action waivers in many securities industry contracts and in issuer governing documents for listed or registered securities. The bill bars exchanges from listing and the SEC from registering securities whose issuer documents force shareholder arbitration and makes it unlawful for brokers, dealers, municipal dealers, funding portals, and investment advisers to require arbitration or to limit an investor’s choice of forum or ability to pursue individual, representative, class, or consolidated claims. The rules apply prospectively to agreements entered into, modified, or extended after enactment (with narrow grandfathering for arbitrations already initiated before the law takes effect). The measure aims to restore investor choice between arbitration and court litigation and to preserve class and representative claim rights for retail investors.