Charles Schwab said Thursday that it will temporarily lift a ban on client class-action suits until all legal and regulatory challenges were resolved.
In a statement, Schwab said that effective immediately, the brokerage firm was “modifying its account agreements to eliminate the existing class-action lawsuit waiver for disputes related to events occurring on or after May 15, 2013, and for the foreseeable future.”
Members of Congress, state securities regulators and FINRA itself have been up in arms over a FINRA disciplinary panel’s decision in late February to uphold Schwab’s decision to include a class-action waiver in its customer arbitration agreements.
Heath Abshure, president of the North American Securities Administrators Association and Arkansas securities commissioner, told AdvisorOne Friday that Schwab’s announcement on Thursday to temporarily waive its ban on class-action lawsuits was “no victory.” However, he said, “It does show that Schwab has at least heard our voices.”
Schwab said in its Thursday statement that “While the company believes that dispute resolution is best handled via FINRA arbitration, we have chosen to voluntarily remove the waiver going forward until the issue is resolved by the appropriate regulatory and/or court decisions.”
Schwab said that the process would “likely take considerable time to resolve, and may leave clients with a degree of uncertainty about their dispute resolution options,” so “in the meantime, we have elected to remove that uncertainty until the legal and regulatory process is completed.”
Schwab also said that it would continue its existing policy of paying for the arbitration fees of any investor electing to pursue an arbitration claim under $25,000 against the firm.