D&G Law

Will all securities fraud claims be swept under the rug of mandatory arbitration?

Donaldson & Guin, LLC - securities fraud litigation blogStock brokers have for years required any claims involving their actions or advice to be submitted to binding, mandatory arbitration. Now companies that issue stock or sell bonds are trying to do the same. Carlyle Group recently filed a registration statement with the SEC to sell new stock, and as a term of the stock certificates, is trying to require that any claim of misstatements in connection with the sale be sent to private arbitration (and therefore kept out of the courts). With all the restrictions courts have placed on securities litigation (and the resulting lower recoveries for investors), I don’t know why Carlyle is bothering with this. But the trend against letting courts and juries decide disputes is disconcerting.