The California Legislature has approved a bill aimed at stopping banks from using arbitration clauses to shield themselves from lawsuits over sham accounts — a direct response to the Wells Fargo scandal.
Senate Bill 33 passed the state Assembly on Tuesday and was approved by the Senate on Wednesday. It now goes to Gov. Jerry Brown’s desk.
If the bill becomes law, financial institutions may challenge it, arguing it stands in opposition to a federal law that favors arbitration and has been used to prevent states from weakening or disregarding arbitration agreements.
Authored by Sen. Bill Dodd (D-Napa) and sponsored by State Treasurer John Chiang, the legislation was designed to block a legal tactic Wells Fargo successfully used to keep disputes over unauthorized accounts out of public court proceedings.
Read the full story on LATimes.com.
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