Today the Committee meets to examine an issue of great importance ... the use of mandatory arbitration agreements in the securities industry, especially as they relate to claims of discrimination.
There is simply no place for discrimination--in the workplace--or anywhere else. Discrimination undermines the very system of meritocracy and individual achievement that makes America great. People should be judged on the basis of their ability--not on the color of their skin, gender, ethnic background, religious affiliations or any other irrelevant basis. The practice of discrimination must not be tolerated, and we must do all we can to ensure that discrimination has no place in the workplace.
For this reason, we need to address the genuine abuses that persist in the modem working environment--and we must ensure--that every working man and woman has an opportunity for redress and access to the legal avenues needed to confront and prevent discrimination.
Mandatory arbitration of disputes is a long-standing practice in the securities industry. For years, employees in securities firms have been required to sign such an agreement as a condition of employment, mandating that all disputes be settled by way of arbitration, rather than litigation. Customer disputes, as well as disputes between securities firms, are also subject to arbitration.
There are those who believe that the arbitration process of the securities industry should exclude claims of discrimination. Let me make it clear--a system of arbitration which fosters discrimination cannot be permitted to stand. But the reality of our overburdened court system demonstrates that we need to allow for the option of arbitration where it is deemed appropriate.
The federal securities laws, over which this Committee has jurisdiction, embody a unique scheme of self-regulation by the securities industry and markets subject to the authority of the Securities and Exchange Commission. As a result of concerns raised about the inclusion of discrimination claims in the industry's commonly used arbitration process, many changes have already been made.
Recently, the NASD changed its rule regarding its mandatory arbitration process. In addition, I was extremely gratified to receive a letter from the New York Stock Exchange announcing that at their September meeting, the NYSE Board expects, and I quote, "to submit our rule change to the SEC and have it in place by January 1, 1999." 1 look forward to hearing about these positive developments during the course of this hearing.
I want to commend Senator Feingold and Congressman
Markey for focusing attention on this important matter. They
have both studied the issue carefully and are here to share their
views. I thank my distinguished colleagues for their diligence,
and for joining us here today. I look forward to hearing their
testimony, as well as the testimony of our other distinguished
witnesses, including Commissioner Hunt of the SEC.
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