U.S. Allows Brokerage Arbitration Exceptions
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WASHINGTON — Responding to complaints by employees and civil rights groups, federal regulators decided to allow exceptions to Wall Street’s requirement that brokerage firm employees settle discrimination disputes through industry-sponsored arbitration.
The move announced Tuesday by the Securities and Exchange Commission means that brokerage industry employees won’t automatically forfeit their right to sue their companies. Critics of the arbitration system complain that it is tilted in favor of the companies.
The SEC approved a proposal by the National Assn. of Securities Dealers, a self-policing group that handles most of the job discrimination cases, to eliminate its arbitration requirement. The change, which will take effect next Jan. 1, does not affect private, in-house agreements that employees might sign with brokerage firms.
Brokerages have defended the arbitration system, saying it is more efficient than settling employees’ complaints in court.
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