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http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=200911101400dowjonesdjonline000421&title=dodd-bill-would-allow-investors-to-sue-people-who-aid-in-fraud


Dodd Bill Would Allow Investors To Sue People Who Aid In Fraud



By Fawn Johnson, Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- Senate Banking Committee Chairman Christopher Dodd's (D., Conn.) broad financial overhaul bill, unveiled Tuesday, includes several investor protection devices, including investors' ability to sue people who help commit securities fraud.

The provision would permit private civil actions for any person who "knowingly or recklessly provides substantial assistance" to securities fraudsters.

The "aiding and abetting provisions" in Dodd's bill could be seen as something of a change for the veteran senator, who also sponsored the controversial 1995 Securities Litigation Reform Act, which limited individual investors' ability to sue securities and accounting firms in class-action stock fraud cases.

Dodd's bill also would empower the Securities and Exchange Commission to ban brokers from requiring customers to sign pre-dispute mandatory arbitration clauses, allowing the customers to take their complaints to court.

The Senate legislation also mandates uniform standards for anyone providing customers with investment advice, eliminating the current law's different standards for broker-dealers and investment advisers.

The House Financial Services Committee approved its own investor protections bill last week with similar provisions on mandatory arbitration and a harmonized standard for broker-dealers and investment advisers.

Lawmakers in both the House and Senate also have proposed an investment advisory committee that will advise the SEC on its policies.

In addition, Dodd's bill also would create an Office of Investor Advocate within the SEC, "to identify areas where investors have significant problems dealing with the SEC and [the Financial Industry Regulatory Authority, or Finra] and provide them assistance," according to a bill summary.

-By Fawn Johnson, Dow Jones Newswires; 202-862-9263; [e-mail]


(END) Dow Jones Newswires
11-10-091400ET
Copyright (c) 2009 Dow Jones & Company, Inc.