(Bloomberg) -- State treasurers from California, Illinois, Iowa, Oregon, Pennsylvania and Rhode Island are joining a push to persuade U.S. Securities and Exchange Commission Chairman Jay Clayton to uphold the agency’s longstanding position against mandatory shareholder arbitration clauses.
In a letter dated July 2, the treasurers led by California’s John Chiang expressed concern about reports that the SEC was considering a change in the policy. The officials, who manage state funds and investments, said they want to keep the right to sue on behalf of the public when securities laws are violated.
"Forced arbitration directly threatens our ability to meet those responsibilities," the letter said.
Senate Democrats, consumer groups and plaintiffs’ attorneys are among those who have earlier called on Clayton to maintain the policy. A change to mandatory arbitration may lower costs for companies and could facilitate initial public offerings, which Clayton wants to encourage.
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