Washington, D.C. – Today, U.S. Senator Catherine Cortez Masto (D-Nev.) introduced legislation that would help smaller investors get quality legal advice when they are harmed by their brokers or other financial professionals. The Investor Justice Act of 2022 would create a $5 million grant program to fund clinics where law students and professors can provide free legal representation to “small dollar” investors.
“Nevada investors who lose savings because of poor financial advice must have access to qualified legal help in recovering their losses,” said Senator Cortez Masto. “One practical way to do that is to fund legal aid clinics at law schools, including our excellent institutions in Nevada.”
“Nevada, like so many other states, has an enormous need for legal services to protect retirement savings,” said Prof. Benjamin Edwards, director of the Public Policy Clinic at the William S. Boyd School of Law at the University of Nevada, Las Vegas. “When ordinary investors have to go through securities arbitration, they need legal assistance to understand the process and to protect their rights. I applaud Senator Cortez Masto for introducing this legislation. Funding for Investor Protection Clinics will help retirees, people living on fixed incomes, and other ordinary investors.”
Most agreements between investors and brokers contain mandatory arbitration clauses. The lawyers who handle these cases for investors work on a contingency fee basis, and as a result, it is rarely economically feasible for them to accept cases where investors have lost less than $100,000. These smaller investors find it virtually impossible to obtain adequate representation, and many are forced to represent themselves.
Senator Cortez Masto had led efforts in the Senate to protect investors. She has introduced legislation to protect entrepreneurs who invest in franchise businesses by requiring financial disclosures for loans guaranteed by the Small Business Administration. She also introduced legislation to compensate whistleblowers who report wrongdoing by financial institutions. In addition, she has urged FINRA to establish guidance to protect seniors and adults living with dementia from being preyed on by unscrupulous financial advisors.