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Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
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- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
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NEWSLETTERS & ALERTS
Rules & Regulations
Congress Is Half-Way Toward Repealing the Arbitration Rule
by Howard Haykin
For better or for worse, the Republican-controlled Congress is half-way toward repealing the new controversial rule from the Consumer Financial Protection Bureau (CFPB) that would enable consumers to bring or join group lawsuits – aka “class action lawsuits” – against financial services firms. [See CFPB posting, “New protections against mandatory arbitration”]
The House of Representative voted 231-190 to repeal the rule using the Congressional Review Act – which allows Congress to eliminate regulations within 60 days of their release and bars agencies from issuing similar rules in the future. One Republican joined all Democrats in voting against repeal. The repeal resolution now moves to the Senate, where 24 Senators have introduced a similar resolution. Of course, Senate Republicans have a smaller, if not slim, majority.
The CFPB arbitration rule forces companies to re-write the arbitration clauses in New Accounts Agreements so that consumers are not prohibited from joining class-action lawsuits. It also mandates that financial firms hand over information about “initial claims and counterclaims, answers to these claims and counterclaims, and awards issued in arbitration.”
In a Tuesday editorial, the WSJournal Editorial Board endorsed repeal of the arbitration rule, while accusing CFPB head Richard Cordray of embarking on “a regulatory tear as he prepares to run for Governor of Ohio.” [see WSJournal, "Repealing the Arbitration Rule"]
But not everyone in the business community wants the new rule repealed. In its opinion piece, "The GOP's Foolish Decision," U.S. News says that overturning the new "anti-forced arbitration regulation" would be a political and policy mistake. Their reasoning is that, "in reality, the clauses are often imposed on consumers without informed consent, and are increasingly being used to shield corporate wrongdoing." As such, the new rule protects Americans from the negative effects of forced arbitration clauses in a host of financial contracts - and such clauses are already banned in mortgages and real estate.
In any event, Wall Street is pulling for the appeal - and the only remaining question is not "if," but "when."