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Regulation

SEC chairman says he’s not ready to force arbitration

Securities and Exchange Commission Chairman Jay Clayton

Barring investor lawsuits is not on his radar, SEC Chairman Jay Clayton told a Senate panel Tuesday.

During a hearing on cryptocurrency held by the Senate Banking Committee, Mr. Clayton was questioned by Sen. Elizabeth Warren, D-Mass., over a news report that the Securities and Exchange Commission was considering allowing companies to prevent investors from filing class-action lawsuits by requiring arbitration instead.

Asked whether he would support what Ms. Warren said would be an "enormous change," Mr. Clayton said that while he could not dictate whether the issue comes before the Securities and Exchange Commission, he is "not anxious to see a change in this area."

"If this issue were to come up before the agency, it would take a long time for it to be decided, because it would be the subject of a great deal of debate. In terms of where we can do better, this is not an area that is on my list of where we could do better," Mr. Clayton told the committee.

Ms. Warren also pressed the SEC chairman on his plans for a fiduciary standard that would be separate from one already issued by the Department of Labor. On June 1, 2017, the SEC issued a request for information to consider promulgating its own rules. Noting that there are five regulators with some degree of oversight of retirement investments, Mr. Clayton said, "My main objective is to bring clarity to that, without jeopardizing investor protection. (The current system) is a combination of an insufficient standard in some places, a lack of clarity and also, the standard is only as good as the remedy," Mr. Clayton said.