I 

113TH CONGRESS 

1ST SESSION H. R. 2998 

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

IN THE HOUSE OF REPRESENTATIVES 

AUGUST 2, 2013 

Mr. ELLISON introduced the following bill; which was referred to the 

Committee on Financial Services 

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 2013’’. 

6 SEC. 2. FINDINGS. 

7 Congress makes the following findings: 

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


jbell on DSK7SPTVN1PROD with BILLS
2 

•HR 2998 IH

1 securities markets and to the participation of retail 

2 investors in such markets. 

3 (2) Brokers, dealers, and investment advisers 

4 hold powerful advantages over investors, and manda5 tory arbitration clauses, including contracts that 

6 force investors to submit claims to arbitration or to 

7 waive their right to participate in class actions, le8 verage these advantages to severely restrict the abil9 ity of defrauded investors to seek redress. 

10 (3) Investors should be free to choose arbitra11 tion to resolve disputes if they judge that arbitration 

12 truly offers them the best opportunity to efficiently 

13 and fairly settle disputes, and investors should also 

14 be free to pursue remedies in court, should they view 

15 that option as superior to arbitration. 

16 SEC. 3. ARBITRATION AGREEMENTS IN THE SECURITIES 

17 EXCHANGE ACT OF 1934. 

18 Section 15(o) of the Securities Exchange Act of 1934 

19 (15 U.S.C. 78o(o)) is amended to read as follows: 

20 ‘‘(o) LIMITATIONS ON PRE-DISPUTE AGREE21 MENTS.—Notwithstanding any other provision of law, it 

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

23 or municipal securities dealer to enter into, modify, or ex24 tend an agreement with customers or clients of such entity 


jbell on DSK7SPTVN1PROD with BILLS
3 

•HR 2998 IH

1 with respect to a future dispute between the parties to 

2 such agreement that— 

3 ‘‘(1) mandates arbitration for such dispute; 

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

5 a customer or client of such entity to select or des6 ignate a forum for resolution of such dispute; or 

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

8 a customer or client to pursue a claim relating to 

9 such dispute in an individual or representative ca10 pacity or on a class action or consolidated basis.’’. 

11 SEC. 4. ARBITRATION AGREEMENTS IN THE INVESTMENT 

12 ADVISERS ACT OF 1940. 

13 Section 205(f) of the Investment Advisers Act of 

14 1940 (15 U.S.C. 80b–5(f)) is amended to read as follows: 

15 ‘‘(f) Notwithstanding any other provision of law, it 

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

17 modify, or extend an agreement with customers or clients 

18 of such entity with respect to a future dispute between 

19 the parties to such agreement that— 

20 ‘‘(1) mandates arbitration for such dispute; 

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

22 a customer or client of such entity to select or des23 ignate a forum for resolution of such dispute; or 

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

25 a customer or client to pursue a claim relating to 


jbell on DSK7SPTVN1PROD with BILLS
4 

•HR 2998 IH

1 such dispute in an individual or representative ca2 pacity or on a class action or consolidated basis.’’. 

3 SEC. 5. EFFECTIVE DATE. 

4 This Act, and the amendments made by this Act, 

5 shall take effect on the date of the enactment of this Act 

6 and shall apply to any agreement created, modified, or ex7 tended after the date of enactment of this Act. 

Æ 


jbell on DSK7SPTVN1PROD with BILLS