Secret Arbitration Clauses Hurt Investors

Before becoming a trial attorney, I worked for over twelve years in the Securities Industry. I witnessed first hand how financial advisors and the whole marketing arm of the big brokerage house and big banks took advantage of customers. I saw financial planners steering people investments not because they were appropriate, but because the planner received a higher commission or pay out.

Almost all account documents contain arbitration clauses in the fine print. These clauses mean you are not allowed to take your broker to court if they mismanage your money or overcharge you. Any violation of their duty to you must be arbitrated. The advantage in arbitration goes to the brokerage firm. Many arbitrators are industry insiders. Evidence is not weighed the same way, nor is it presented the way it is handled in Court.

Further, arbitration precludes participation in Class Action suits - often the only way to take on a big broker who has been overcharging.

If you have lost money or feel that your investment advisor or company has hurt you financially, call Attorney Bob Vogel at the Vogel Law Firm at 865-357-1949 or email rlvogel@robertvogellaw.com

 

Here's some additional information:

AAJ: Protect Consumers From Secretive Forced Arbitration

Washington, DC—The American Association for Justice (AAJ) applauds the Consumer Financial Protection Bureau (CFPB) for its continued work to protect consumers from corporate wrongdoing at a time when the use of forced arbitration clauses by the financial sector has grown tremendously. In the forthcoming study, the CFPB must fully examine the devastating impact forced arbitration has on the rights of American consumers,according to comments submitted by AAJ.

“Arbitration can be an effective method of dispute resolution when both parties voluntarily agree to arbitrate,” said AAJ President Gary M. Paul. “When corporations hide forced arbitration clauses in the fine print of a non-negotiable contracts to limit the legal rights of an individual it becomes an abusive weapon."

In 2011, a study of financial institutions’ policies by the Pew Charitable Trust found 71% of account agreements required accountholders to submit to a private arbitrator selected by the bank.

In addition, CFPB must investigate the expanding use of forced arbitration clauses to ban class-actions. Last year the U.S. Supreme Court decided AT&T Mobility v. Concepcion, giving corporations broad authority to force consumers into one-sided secret arbitrations, practically writing a blueprint for how to avoid class-actions, and ultimately, any accountability.

“Class actions make it economically feasible to seek justice for individually smaller, but not inconsequential injuries and create the power and ability to level the playing field between ordinary citizens and powerful defendants,” added Mr. Paul.

The CFPB must not only thoroughly investigate the use of forced arbitration clauses, but must act quickly to protect the rights of consumers to seek justice.

AAJ continues to support the Arbitration Fairness Act of 2011 (S. 987/H.R. 1873) which would amend the Federal Arbitration Act (FAA) to eliminate forced arbitration clauses in employment, consumer, and civil rights cases, and would allow consumers and workers to choose arbitration after a dispute occurred.

The Center for Constitutional Litigation (CCL) submitted additional comments on behalf of AAJ focused on the judicial, not Congressional, expansion of the FAA to consumer disputes. Both sets of comments can be found here.

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As the world's largest trial bar, the American Association for Justice (formerly known as the Association of Trial Lawyers of America) works to make sure people have a fair chance to receive justice through the legal system when they are injured by the negligence or misconduct of others—even when it means taking on the most powerful corporations. Visit http://www.justice.org/newsroom.