Remarks by Commissioner Peirce Before the Investor Advisory Committee
As we close out 2024, allow me a moment to thank you for sharing your time and your wisdom this last year. I look forward to working with all of you next year, which is likely to be a particularly eventful year for both the Commission and the Investor Advisory Committee. Thank you also to […]
Hester M. Peirce is a Commissioner at the U.S. Securities and Exchange Commission. This post is based on her recent remarks. The views expressed in this post are those of Commissioner Peirce and do not necessarily reflect those of the Securities and Exchange Commission or its staff.
As we close out 2024, allow me a moment to thank you for sharing your time and your wisdom this last year. I look forward to working with all of you next year, which is likely to be a particularly eventful year for both the Commission and the Investor Advisory Committee.
Thank you also to the panelists who are joining you today to discuss arbitration and alternative assets. Last year, the Office of the Investor Advocate and the Office of the Ombuds published a report concerning the use of mandatory arbitration clauses by registered investment advisers.[1] Though inconclusive as to the effects of mandatory arbitration on advisory clients, the report suggested “establishing uniform disclosure requirements for adviser arbitration information.” [2] A disclosure regime can morph into a prohibitory regime. Today’s discussion, therefore, should not lose sight of the importance of allowing investors and their advisers to choose binding arbitration to resolve disputes. Freedom of contract is a bedrock principle. Submitting a dispute to arbitration is, in many instances, a cheaper and less burdensome process than litigation. Moreover, as Professor Todd Zywicki has pointed out, “although [] contractual provisions to arbitrate disputes are initially agreed to by contract, [] a substantial body of common law regulation has been built up by courts to ensure that [arbitration processes] are fair and effective alternatives to lawsuits.” [3]
