Sponsors (6)
The bill expands investors' ability to seek public-court remedies and collective enforcement (strengthening protections and transparency) at the cost of higher litigation and compliance burdens, legal transition risks, and potential reductions in public market access and liquidity.
Retail investors and shareholders (including middle-class and small investors) can choose to sue in public courts rather than be forced into arbitration, preserving access to jury trials, class/representative/consolidated actions, and public court records.
Investors and the markets gain greater transparency and more uniform investor-protection standards because exchanges and registration rules will bar or deter issuer provisions that force arbitration, encouraging better corporate governance.
Allowing court access and representative/class actions makes it easier to aggregate small claims and enforce harms affecting many investors, which can lower per-plaintiff litigation costs and improve deterrence against misconduct.
Issuers, brokers, dealers, and investment advisers will face higher litigation exposure, legal and insurance costs, which are likely to be passed on to clients and investors through higher fees or reduced services.
Some companies that retain arbitration provisions could be barred from registering securities or listing, which may reduce the number of firms accessing public capital and shrink the supply of investable public securities, harming market liquidity and long-term investor returns.
Voiding pre-existing arbitration waivers and displacing the normal Federal Arbitration Act analysis could create legal and contractual uncertainty and transitional costs for firms, counterparties, and clients about which dispute-resolution rules apply.
Based on analysis of 6 sections of legislative text.
Prohibits mandatory pre-dispute arbitration and class-action waivers by issuers, brokers/dealers, and investment advisers and bars SEC registration/listing when issuer documents require 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 imposed by issuers, brokers, dealers, municipal securities dealers, and investment advisers in new or extended agreements, and bars listing or SEC registration of securities when an issuer’s governing documents require arbitration of shareholder disputes. Existing arbitration that was already initiated before the law stays valid; otherwise covered provisions in prior agreements are voided only to the extent the agreement is entered into, modified, or extended after enactment. The bill changes Exchange Act, Securities Act, and Investment Advisers Act rules to give investors the option to pursue court litigation or class/representative actions instead of being forced into arbitration, and directs exchanges and the SEC to deny listings or registration when issuer-imposed arbitration mandates are present in covered documents or contracts.