Historical, Bipartisan Opposition to Forcing Investors into Arbitration

By August 16, 2018QUOTE COMPILATION

Quotes from the SEC

“Meritorious private securities-fraud actions, including class actions, are an essential supplement to criminal prosecutions and SEC enforcement actions.”

SEC and DOJ Joint BriefBrief for the United States as Amicus Curiae Supporting Respondent, Amgen Inc. v. Connecticut Retirement Plans, 568 U.S. _ (2013), https://bit.ly/2HkPI8V

“Private suits under Section 10(b) of the Securities Exchange Act and Rule 10(b)(5) thereunder ... are instrumental in recompensing investors who are cheated through the issuance of false and misleading information or by other means. When corporate officers, accountants, lawyers or others involved in the operation of a public company deceive investors for their own benefit, they should be held accountable for their actions. If this were not the case, investors would be far less willing to participate in our securities markets. This would limit the most important source, and raise the costs, of new capital for all American businesses.”

Chairman Richard Breeden (R)Private Litigation under the Federal Securities Laws Hearings before the Senate Securities Subcommittee (1993) https://bit.ly/2Miptpg

“It would be difficult, not to say unwise, to centralize all responsibility for the integrity of our markets in Washington. The Commission was not intended to be the KGB of Capitalism – we’re not equipped to operate as an all-pervasive agency. Instead, over the decades, a structure has been created in which, for the most part, market forces can solve market problems, and investors reserve the right to protect themselves. The securities laws are not a call for market participants to relinquish responsibility, but rather to take it.”

Chairman Arthur Levitt (D)Between Caveat Emptor and Caveat Venditor: The Middle Ground of Litigation Reform (Jan. 25, 1995).

“Private cases, so long as they are well-grounded, are an important enforcement mechanism supplementing the SEC in the policing of our markets. Most often, the larger the frauds, the greater investors must rely on private cases to recover their losses.”

Chairman William Donaldson (R), Chairman Arthur Levitt (D), Commissioner Harvey GoldschmidBrief Amici Curiae of Former SEC Commissioners, Stoneridge Investment Partners, LLC v. Scientific-Atlantic, Inc, 552 U.S. 148 (2008) https://bit.ly/2nEFozM

“After all, the Commission is in the business of protecting investors, and no system of protection would be complete unless it provided some reasonably usable means for injured investors to obtain monetary redress in cases in which our own enforcement activities did not prevent the injury.”

Commissioner Richard B. Smith (R)January 12, 1968 https://bit.ly/2P5y3FH

“Given the continued growth in the size and complexity of our securities markets, and the absolute certainty that persons seeking to perpetrate financial fraud will always be among us, private actions will continue to be essential to the maintenance of investor protection.”

William R. McLucas, Enforcement DirectorPrivate Litigation under the Federal Securities Laws Hearings before the Senate Securities Subcommittee (1993) https://bit.ly/2Miptpg

“It is clear that investors must have private rights of action co-extensive with the Commission’s under Section 10(b). It is unrealistic to expect that the Commission will have the resources to police all securities frauds on its own, and as a result, it is essential that investors be given private rights of action to complement and complete the Commission’s efforts.”

Commissioner Luis A. Aguilar April 11, 2012, https://bit.ly/2MNAFGD

“Without access [to] class actions in [appropriate] cases, both investors and broker-dealers have been put to the expense of wasteful, duplicative litigation....The Commission believes that investor access to the courts should be preserved for class actions.”

Order Approving Proposed Rule Change Relating to the Exclusion of Class Actions from Arbitration Proceedings57 Fed. Reg. 52659. 52660 (Nov. 4, 1992)

Quotes from Congress

“Private securities litigation is an indispensable tool with which defrauded investors can recover their losses without having to rely on government action. Such private lawsuits promote public and global confidence in our capital markets and help to deter wrongdoing and to guarantee that corporate officers, auditors, directors, lawyers and others properly perform their jobs.”

Securities Litigation Reform Conference Report H.R. Conf. Rept. No. 104-369, pg. 31 (1995) https://bit.ly/1EJ4ugC

“Private actions under section 10(b) of the Securities Exchange Act serve two important purposes. These actions are the primary means through which defrauded investors can seek redress. The threat of a suit discourages would-be violators from committing fraud.”

Prepared Statement of Sen. Richard Shelby (R-AL) Private Litigation under the Federal Securities Laws Hearings before the Senate Securities Subcommittee (1993) https://bit.ly/2Miptpg

“I support a vigorous 10(b)(5) private right of action so that shareholders who are defrauded can be made as whole as possible. Perpetrators of fraud who compromise our capital markets for their own personal gain should pay a stiff penalty.”

Prepared Statement of Sen. Pete V. Domenici (R-NM)Private Litigation under the Federal Securities Laws Hearings before the Senate Securities Subcommittee (1993) https://bit.ly/2Miptpg

“[P]rivate lawsuits promote public and global confidence in our capital markets and help to deter wrongdoing and to guarantee that corporate officers, auditors, directors, lawyers and others properly perform their jobs.”

Securities Litigation Reform Conference ReportH.R. Conf. Rept. No. 104-369, pg. 31 (1995) https://bit.ly/1EJ4ugC

Quotes from the Courts

“Congress, the Executive Branch, and this Court, moreover, have ‘recognized that meritorious private actions to enforce federal antifraud securities laws are an essential supplement to criminal prosecutions and civil enforcement actions brought, respectively, by the Department of Justice and the Securities and Exchange Commission.’ Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U. S. 308, 313 (2007).”

Amgen Inc. v. CT Ret. Plans & Trust Funds 568 U.S. _ (2013)

“The securities statutes seek to maintain public confidence in the marketplace . . . by deterring fraud, in part, through the availability of private securities fraud actions.”

Dura Pharmaceuticals, Inc. v. Broudo544 U.S. 336, 345 (2005).