Sen. Merkley and Democrats Push to Ban Mandatory Arbitration for Investors
The Investor Choice Act of 2026 is currently in the early stages of the legislative process. It was recently introduced in the Senate and sent to the Committee on Banking, Housing, and Urban Affairs for review. No further actions are scheduled at this time.
This bill has strong support from progressive Democrats but lacks Republican cosponsors. Similar efforts to ban arbitration have faced stiff opposition in the Senate.
Companies that want to sell stock to the public or register securities would no longer be able to require shareholders or investors to settle disputes through arbitration instead of the courts. This removes a tool some smaller or newly public companies use to limit costly lawsuits, potentially raising legal exposure and the cost of going public.
“The rules of the exchange prohibit the listing of any security if the issuer of the security, in the bylaws of the issuer, other governing documents, or any contract with a shareholder relating to the parties as issuer and shareholder, mandates arbitration for any dispute between the issuer and the shareholders of the issuer”
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Sent to a congressional committee for expert review. The committee decides whether this bill moves forward.
Introduced in Senate
The bill was officially filed and given a number. It now enters the legislative queue.
No votes have been recorded for this legislation yet.
The Investor Choice Act of 2026 would prohibit broker-dealers and investment advisers from requiring customers to sign mandatory arbitration agreements. Attorney David Meyer noted that giving investors the option to go to court would force the FINRA arbitration process to become more transparent.
Legislation introduced by Democrats in the House and Senate would prohibit broker-dealers, funding portals, and investment advisers from using contracts that require customers to settle future disputes through arbitration, effectively giving investors their 'day in court.'
Document Type
Congressional Bill
Official Title
Investor Choice Act of 2026
Analysis generated by AI. Always verify with official sources.