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[DATE]
The Honorable [REPRESENTATIVE]
[Office Address]
Washington, DC [20515]
RE:
H.R. 2998 - “Investor Choice Act of 2013”
Dear [Representative]:
I am writing to express my support for the Investor Choice Act of 2013, and to
urge you to consider cosponsoring this important legislation in the House. If enacted, the
bill will substantially increase the protection of main street investors in [insert state
here].
Currently, investors in [insert state here] and throughout the country are
compelled to sign mandatory pre-dispute arbitration clauses when they invest with broker
dealers, and, in many instances, investment advisers. Mandatory pre-dispute arbitration
contracts require that investors submit to arbitration if they feel wronged; in other words,
investors must surrender their right to seek recourse in a court or in front of a jury.
Limiting an investor’s ability to access the judicial system results in a lack of confidence
in their investment professionals and, ultimately, in the broader securities market.
Prior to 1987, an investor’s claim against his or her broker for alleged wrongdoing
would generally be pursued as a lawsuit against the brokerage firm. But that year, the
Supreme Court upheld the enforceability of agreements to arbitrate investors’ claims
arising under the Securities Exchange Act of 1934, and subsequently, mandatory predispute arbitration clauses have become a fixture in contracts between investors and
brokerage firms.
Three years ago, Congress took the first step to reestablish adequate protection for
investors when it enacted Section 921 of Dodd-Frank Wall Street Reform and Consumer
Protection Act, which provides the Securities and Exchange Commission (SEC) with
explicit rulemaking authority to prohibit, condition or limit the use of mandatory predispute arbitration for the protection of investors. Although Congress gave the SEC this
important tool, it has not exercised its authority and does not seem likely to do so in the
foreseeable future. Congress cannot let more time pass without taking measures to protect
[insert state here] investors.
The Investor Choice Act of 2013 will level the playing-field for retail investors by
amending Section 921 of the Dodd-Frank Act to statutorily prohibit the use of mandatory
pre-dispute agreements in broker-dealer and investment adviser customer contracts,
thereby ensuring investors’ ability to pursue claims in the lawful forum of their choosing.
Importantly, the bill would not in any way prevent investors from voluntarily electing to
resolve a dispute through arbitration or mediation after the facts and circumstances of the
dispute have been discovered.
Investor confidence in fair and equitable recourse is critical to the stability of the
securities markets and long-term investments in [insert state here]. By cosponsoring
H.R. 2998, you will be taking an important step in safeguarding your constituents’ access
to full recourse under the law.
Thank you for your attention to this important matter. If I may be of any
assistance, please do not hesitate to contact me at [INSERT PHONE NUMBER AND
E-MAIL ADDRESS].
Sincerely,
[Your Name]
[Your Title]