PIABA Urges SEC to Limit RIAs' Mandatory Arbitration and Mandate Disclosure of Client Claims

Posted on July 28th, 2023 at 11:02 AM
PIABA Urges SEC to Limit RIAs' Mandatory Arbitration and Mandate Disclosure of Client Claims

From the Desk of Jim Eccleston at Eccleston Law.

The Public Investors Advocate Bar Association (PIABA), a trade group representing plaintiffs' lawyers, has urged the Securities and Exchange Commission (SEC) to take action against the "broken" arbitration system used by investors bringing claims against registered investment advisers (RIAs). PIABA also demands increased transparency from RIAs concerning customer complaints.

PIABA's case to the SEC included a presentation consisting of testimonials from two customers of RIAs who had difficulty recouping losses due to the high costs or lack of accountability in arbitration. In one case, the plaintiff received an upfront estimate of $200,000 for pursuing a claim against her investment adviser through arbitration, which is more than she allegedly lost, according to AdvisorHub

Likewise, the SEC recently released a report expressing concerns about RIAs' use of mandatory arbitration clauses and highlighting issues such as investors being compelled to attend hearings far from their homes, receiving lower damages, and being subjected to bans on class action claims.

PIABA further emphasizes that investors face difficulties in properly vetting RIAs due to the lack of disclosure regarding the existence and resolution of claims. Unlike financial advisors who must report customer complaints and litigation to the Financial Industry Regulatory Authority (FINRA), SEC-overseen investment advisers are not always obligated to disclose this information, leading to a disparity in transparency between the two groups.

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Related Attorneys: James J. Eccleston

Tags: Eccleston, Eccleston Law, PIABA, SEC, arbitration

Return to Archive



This was the best of all possible outcomes and I cannot thank you and the team enough.

Michael S.


February 23, 2024
Advisor Accepts Industry Bar Amid FINRA Probe into Outside Business Activities

John A. Dougherty, a veteran advisor with 23 years of experience, agreed to an AWC (Acceptance, Waiver, and Consent) after refusing to cooperate with a regulatory investigation into allegations of undisclosed outside business activities.

February 22, 2024
Key Considerations for Advisors When Assessing the Financial Soundness of Annuities

While rating agencies like Fitch and S&P Global Ratings generally highlight the strength of annuity issuers, advisors still should scrutinize certain factors in their assessment process.

February 21, 2024
SEC Alleges Fraud Against Morgan Stanley and Former Executive in Block Trading Business

As reported by the Wall Street Journal, the Securities and Exchange Commission (SEC) has charged Morgan Stanley & Co. LLC and its former head of equity syndicate desk, Pawan Passi, with a multi-year fraud involving the disclosure of confidential information related to block trades.