Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Tuesday, March 19, 2013

NASAA Cites Lack of Civil Recovery Options as Weakening Investor Confidence

The lack of civil recovery options for harmed investors is weakening the confidence of investors in financial products and markets, Heath Abshure, the president of the North American Securities Administrators Association (NASAA) said in a keynote speech delivered today at the Securities Industry and Financial Markets Association (SIFMA) Compliance and Legal Society Annual Meeting in Scottsdale, Arizona.

The virtual elimination of litigation as a dispute resolution option through mandatory arbitration clauses, coupled with increasing procedural and evidentiary burdens, will have profound effects on investors and their confidence in investment products and markets. Most troubling is that these remedies are decreasing just as the era of crowdfunding and general solicitation in Regulation D, Rule 506 offerings is about to launch.  This presents particular risks to small investors.

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