II 

118TH CONGRESS 

2D SESSION S. 3715 

To amend the Securities Exchange Act of 1934 to prohibit mandatory predispute arbitration agreements, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 31, 2024 

Mr. MERKLEY (for himself, Mr. BLUMENTHAL, Ms. CORTEZ MASTO, Mr. 

DURBIN, Mr. MENENDEZ, Mr. WHITEHOUSE, and Ms. WARREN) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To amend the Securities Exchange Act of 1934 to prohibit 

mandatory pre-dispute arbitration agreements, and for 

other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Investor Choice Act 

5 of 2024’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) Investor confidence in fair and equitable re9 course is essential to the health and stability of the 


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1 securities markets and to the participation of retail 

2 investors in those markets. 

3 (2) Issuers, brokers, dealers, and investment 

4 advisers hold powerful advantages over investors, 

5 and mandatory arbitration clauses, including con6 tracts that force investors to submit claims to arbi7 tration or to waive the right of investors to partici8 pate in a class action lawsuit, leverage those advan9 tages to severely restrict the ability of defrauded in10 vestors to seek redress. 

11 (3) Investors should be free to— 

12 (A) choose arbitration to resolve disputes if 

13 they judge that arbitration truly offers them 

14 the best opportunity to efficiently and fairly set15 tle disputes; and 

16 (B) pursue remedies in court should they 

17 view that option as superior to arbitration. 

18 SEC. 3. ARBITRATION AGREEMENTS IN THE SECURITIES 

19 EXCHANGE ACT OF 1934. 

20 (a) IN GENERAL.—The Securities Exchange Act of 

21 1934 (15 U.S.C. 78a et seq.) is amended— 

22 (1) in section 6(b) (15 U.S.C. 78f(b)), by add23 ing at the end the following: 

24 ‘‘(11) The rules of the exchange prohibit the 

25 listing of any security if the issuer of the security, 


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1 in the bylaws of the issuer, other governing docu2 ments, or any contract with a shareholder relating to 

3 the parties as issuer and shareholder, mandates ar4 bitration for any dispute between the issuer and the 

5 shareholders of the issuer, without regard to whether 

6 such a provision in the bylaws, documents, or con7 tract is otherwise permissible under title 9, United 

8 States Code.’’; and 

9 (2) in section 15 (15 U.S.C. 78o), by amending 

10 subsection (o) to read as follows: 

11 ‘‘(o) LIMITATIONS ON PRE-DISPUTE AGREE12 MENTS.—Notwithstanding any other provision of law, in13 cluding any provision of title 9, United States Code, it 

14 shall be unlawful for any broker, dealer, funding portal, 

15 or municipal securities dealer to enter into, modify, or ex16 tend an agreement with customers or clients of that entity 

17 with respect to a future dispute between the parties that— 

18 ‘‘(1) mandates arbitration for that dispute; 

19 ‘‘(2) restricts, limits, or conditions the ability of 

20 a customer or client of that entity to select or des21 ignate a forum for resolution of that dispute; or 

22 ‘‘(3) restricts, limits, or conditions the ability of 

23 a customer or client of that entity to pursue a claim 

24 relating to that dispute in an individual or repVerDate Sep 11 2014 04:41 Feb 03, 2024 Jkt 049200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3715.IS S3715

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1 resentative capacity or on a class action or consoli2 dated basis.’’. 

3 (b) APPLICATION TO EXISTING AGREEMENTS.— 

4 (1) IN GENERAL.—With respect to an agree5 ment described in section 15(o) of the Securities Ex6 change Act of 1934 (15 U.S.C. 78o(o)), as amended 

7 by subsection (a) of this section, that was entered 

8 into before the date of enactment of this Act, any 

9 provision of that agreement that is prohibited by 

10 such section 15(o), as amended by subsection (a) of 

11 this section, is void. 

12 (2) ONGOING ARBITRATION.—A provision of an 

13 agreement prohibited by section 15(o) of the Securi14 ties Exchange Act of 1934 (15 U.S.C. 78o(o)), as 

15 amended by subsection (a) of this section, shall not 

16 be void under paragraph (1) if arbitration required 

17 by that provision was initiated by any party on or 

18 before the date of enactment of this Act. 

19 SEC. 4. ARBITRATION AGREEMENTS IN THE SECURITIES 

20 ACT OF 1933. 

21 Section 6 of the Securities Act of 1933 (15 U.S.C. 

22 77f) is amended by adding at the end the following: 

23 ‘‘(f) LIMITATION ON ARBITRATION REQUIRE24 MENTS.—A security may not be registered with the Com25 mission if the issuer of the security, in the bylaws of the 


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1 issuer, other governing documents, or any contract with 

2 a shareholder relating to the parties as issuer and share3 holder, mandates arbitration for any dispute between the 

4 issuer and the shareholders of the issuer, without regard 

5 to whether such a provision in the bylaws, documents, or 

6 contract is otherwise permissible under title 9, United 

7 States Code.’’. 

8 SEC. 5. ARBITRATION AGREEMENTS IN THE INVESTMENT 

9 ADVISERS ACT OF 1940. 

10 (a) IN GENERAL.—Section 205(f) of the Investment 

11 Advisers Act of 1940 (15 U.S.C. 80b–5(f)) is amended 

12 to read as follows: 

13 ‘‘(f) Notwithstanding any other provision of law, in14 cluding any provision of title 9, United States Code, it 

15 shall be unlawful for any investment adviser to enter into, 

16 modify, or extend an agreement with customers or clients 

17 of the investment adviser with respect to a future dispute 

18 between the parties to that agreement that— 

19 ‘‘(1) mandates arbitration for that dispute; 

20 ‘‘(2) restricts, limits, or conditions the ability of 

21 a customer or client of the investment adviser to se22 lect or designate a forum for resolution of that dis23 pute; or 

24 ‘‘(3) restricts, limits, or conditions the ability of 

25 a customer or client of the investment adviser to 


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1 pursue a claim relating to that dispute in an indi2 vidual or representative capacity or on a class action 

3 or consolidated basis.’’. 

4 (b) APPLICATION TO EXISTING AGREEMENTS.— 

5 (1) IN GENERAL.—With respect to an agree6 ment described in section 205(f) of the Investment 

7 Advisers Act of 1940 (15 U.S.C. 80b–5(f)), as 

8 amended by subsection (a) of this section, that was 

9 entered into before the date of enactment of this 

10 Act, any provision prohibited by such section 205(f), 

11 as amended by subsection (a) of this section, is void. 

12 (2) ONGOING ARBITRATION.—A provision of an 

13 agreement prohibited by section 205(f) of the Invest14 ment Advisers Act of 1940 (15 U.S.C. 80b–5(f)), as 

15 amended by subsection (a) of this section, shall not 

16 be void under paragraph (1) if arbitration required 

17 by that provision was initiated by any party on or 

18 before the date of enactment of this Act. 

19 SEC. 6. APPLICATION. 

20 Except as otherwise stated, the amendments made by 

21 this Act shall apply with respect to any agreement entered 

22 into, modified, or extended after the date of enactment 

23 of this Act. 

Æ 


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