SEC Struggles with RIA Arbitration Statistics

Posted on July 6th, 2023 at 8:43 AM
SEC Struggles with RIA Arbitration Statistics

From the desk of Jim Eccleston at Eccleston Law 

A recent report reveals that the Securities and Exchange Commission (SEC) lacks the means to monitor the count of registered investment advisor (RIA) arbitrations or keep track of unpaid arbitration awards.

According to the report, approximately 61 percent of RIAs serving retail investors include mandatory arbitration clauses in their investment advisory agreements. The report highlights the challenge faced by the SEC staff in assessing the impact of these clauses on investors who experience harm due to adviser misconduct. The lack of publicly available information on SEC-registered advisor arbitration prevents a thorough analysis of the effects of mandatory arbitration on affected clients.

According to a past president of the Public Investors Advocate Bar Association, the recent SEC report has shed light on a significant lack of information regarding RIAs and their use of forced arbitration. According to the interview published in ThinkAdvisor, this report serves as a warning to regulators and legislatures, urging them to implement stricter regulations on the rapidly expanding financial services sector.

 

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

 

 

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