Wall Street banks criticized for new investment firm contracts

Goldman Sachs and Citigroup have instituted contracts for investment firms that require them to go to court rather than arbitration

The big guys on Wall Street are drawing up a controversial contract regarding their relationships with investment firms. The contract is drawing criticism for its double standard, as the big banks — such as Goldman Sachs and Citigroup — seem to be setting up different rules for legal proceedings with different investors. 

The contract requires future legal disputes between the banks and investment firms to go to court instead of arbitration — a stipulation that critics claim is in favor of the banks since they can prolong legal proceedings for extensive amounts of time, and they know that investment firms are less likely to gain favor from juries versus individual investors. Wall Street banks require individual investors to settle in arbitration. Both contracts are seen as being set up purely to favor the banks.

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Juliana Kenny

Juliana Kenny is a contributor to InsideCounsel.com, covering a range of topics including patent litigation, conflict mineral laws, executive compensation, and antitrust regulation. Juliana earned B.A.s...

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