Washington, DC — According to new reporting, the representative of a shadowy trust that owns at least a small number of Johnson & Johnson shares is engaging in a ploy to force the Securities and Exchange Commission (SEC) to vote on allowing corporations to include forced arbitration language in company charters. The maneuver, which is opposed by the company, was slammed by the Secure Our Savings (SOS) coalition, a group comprised of more than 40 national and state-based organizations that has been calling on the SEC to safeguard Americans’ rights to join together to hold law-breaking corporations accountable in a court of law.
Harvard Law Professor Hal Scott, who has long agitated in support of forced arbitration, filed the proposal with Johnson and Johnson. To its credit, the company then turned to the SEC for permission to reject the proposal. The SEC’s decision on that request could be made by the Commissioners in the near future.
“For decades, SEC leaders from both parties have defended the importance of class action lawsuits to compensate defrauded investors and to promote market integrity by holding corporate wrongdoers accountable,” said Barbara Roper, Director of Investor Protection at SOS coalition member group Consumer Federation of America. “This unfortunate new stunt from Hal Scott gives the SEC an opportunity to once again show that it stands on the side of hardworking Americans and not unscrupulous actors who would try to evade accountability by hiding behind forced arbitration clauses.”
Over the last several months, some current and former SEC officials have fueled speculation that the SEC was considering abandoning its decades-old view that forced arbitration clauses violate the securities laws. In contrast, while he has not taken a position on the issue, SEC Chairman Jay Clayton has provided assurances that any discussion about allowing forced arbitration in company charters would be conducted in public and ultimately decided “in a measured and deliberative manner”by the full Commission, not staff.
“The savings of millions of seniors, veterans, retired teachers and others who rely on retirement investments are at stake,” concluded Roper. “The SOS coalition and allied groups will be closely monitoring developments to ensure that Chairman Clayton’s promises are kept and that shareholders’ rights are protected.”