From p. 72 of the Treasury Department’s Financial Regulatory Reform blueprint (entitled “A New Foundation: Rebuilding Financial Supervision and Regulation”) released today:

The SEC should study the use of mandatory arbitration clauses in investor contracts.

Broker-dealers generally require their customers to contract at account opening to
arbitrate all disputes. Although arbitration may be a reasonable option for many
consumers to accept after a dispute arises, mandating a particular venue and up-front
method of adjudicating disputes – and eliminating access to courts – may unjustifiably
undermine investor interests. We recommend legislation that would give the SEC clear
authority to prohibit mandatory arbitration clauses in broker-dealer and investment
advisory accounts with retail customers. The legislation should also provide that, before
using such authority, the SEC would need to conduct a study on the use of mandatory
arbitration clauses in these contracts. The study shall consider whether investors are
harmed by being unable to obtain effective redress of legitimate grievances, as well as
whether changes to arbitration are appropriate.

I find it interesting that the plan doesn’t call for the immediate outlawing of mandatory arbitration, via inclusion of securities arbitration in the Arbitration Fairness Act, but rather a more measured approach delegating authority to the SEC to ban mandatory arbitration only after careful study of its impact on investors and only if the study shows investors are “unable to obtain effective redress of legitimate grievances.”