Research Handbook on Securities Regulation in the United States

Research Handbook on Securities Regulation in the United States

Research Handbooks in Financial Law series

Edited by Jerry Markham and Rigers Gjyshi

This fascinating Handbook provides a clear explanation of the securities market regulation regime in the United States. A diverse set of contributors offer a comprehensive overview of the regulatory process, Dodd-Frank, the principal securities statutes, and the regulators and market participants involved. In addition to a general summary of the topic, this volume provides detailed explanations of the process for registering securities, exemptions from registration, secondary distributions, and the underwriting process. Scholars and students of financial law, banking and regulatory law will find this book a useful resource, as will attorneys, compliance professionals, risk-mitigation professionals and corporate leaders.

Chapter 15: Private rights of action under U.S. securities laws: key differences between litigation and arbitration of securities disputes, limited right of action against investment advisers, and the uncertain future of class litigation

Leslie A. Blau, Mark Liston and Peter Evans

Subjects: economics and finance, financial economics and regulation, law - academic, finance and banking law


When a customer wants to bring claims against securities broker-dealers or their salespersons for violations of the law or the rules of self-regulatory organizations, it is important to bear in mind the differences between arbitration and litigation of such disputes. If one has a choice of forum (in most cases, the agreement between the customer and the dealer will mandate arbitration), these differences may be crucial when deciding whether to bring the claims in court or in FINRA arbitration. With respect to investment advisers (who are not FINRA members and therefore not subject to mandatory FINRA arbitration), violations of the Investment Adviser Act may give rise to a private right of action for rescission. However, there are limitations on who may be liable for such violations, and money damages are unavailable. Finally, class actions in the courts have long been an important vehicle for vindicating claims based on violations of securities laws. But recent developments within FINRA and the U.S. Supreme Court now threaten their existence. Prior to 2007, there were two dominant self-regulatory organizations with jurisdiction over almost all brokers and brokerage firms: the National Association of Securities Dealers (“NASD”) and the New York Stock Exchange (“NYSE”). The Financial Industry Regulatory Authority (“FINRA”) was created on July 30, 2007, when the NASD and NYSE merged their regulatory, compliance and arbitration functions.

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