(1) Investor confidence in fair and equitable re-
course is essential to the health and stability of the 
securities markets and to the participation of retail 
investors in such markets. 
(2) Brokers, dealers, and investment advisers 
hold powerful advantages over investors, and manda-
tory arbitration clauses, including contracts that 
force investors to submit claims to arbitration or to 
waive their right to participate in a class action, le-
verage these advantages to severely restrict the abil-
ity of defrauded investors to seek redress. 
(3) Investors should be free to choose arbitra-
tion to resolve disputes if they judge that arbitration 
truly offers them the best opportunity to efficiently 
and fairly settle disputes, and investors should also 
be free to pursue remedies in court should they view 
that option as superior to arbitration. 
SEC. 3. ARBITRATION AGREEMENTS IN THE SECURITIES 
EXCHANGE ACT OF 1934. 
Section 15(o) of the Securities Exchange Act of 1934 
(15 U.S.C. 78o(o)) is amended to read as follows: 
‘‘(o) 
LIMITATIONS
ON
PRE-DISPUTE
AGREE-
MENTS.—Notwithstanding any other provision of law, it 
shall be unlawful for any broker, dealer, funding portal, 
or municipal securities dealer to enter into, modify, or ex-
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tend an agreement with customers or clients of such entity 
with respect to a future dispute between the parties to 
such agreement that— 
‘‘(1) mandates arbitration for such dispute; 
‘‘(2) restricts, limits, or conditions the ability of 
a customer or client of such entity to select or des-
ignate a forum for resolution of such dispute; or 
‘‘(3) restricts, limits, or conditions the ability of 
a customer or client to pursue a claim relating to 
such dispute in an individual or representative ca-
pacity or on a class action or consolidated basis.’’. 
SEC. 4. ARBITRATION AGREEMENTS IN THE INVESTMENT 
ADVISERS ACT OF 1940. 
Section 205(f) of the Investment Advisers Act of 
1940 (15 U.S.C. 80b–5(f)) is amended to read as follows: 
‘‘(f) Notwithstanding any other provision of law, it 
shall be unlawful for any investment adviser to enter into, 
modify, or extend an agreement with customers or clients 
of such entity with respect to a future dispute between 
the parties to such agreement that— 
‘‘(1) mandates arbitration for such dispute; 
‘‘(2) restricts, limits, or conditions the ability of 
a customer or client of such entity to select or des-
ignate a forum for resolution of such dispute; or 
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‘‘(3) restricts, limits, or conditions the ability of 
a customer or client to pursue a claim relating to 
such dispute in an individual or representative ca-
pacity or on a class action or consolidated basis.’’. 
SEC. 5. APPLICATION. 
The amendments made by this Act shall apply with 
respect to any agreement entered into, modified, or ex-
tended after the date of the enactment of this Act. 
Æ 
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