SEC Commissioner Hester Peirce is taking a leading advocate for institutional investors to task over its opposition to mandatory arbitration at Johnson & Johnson and other companies.

The Republican’s remarks at a Council of Institutional Investors conference in Washington March 5 came a few weeks after the Securities and Exchange Commission allowed Johnson & Johnson to block a shareholder proposal that would steer aggrieved investors into arbitration rather than bringing class-action lawsuits against the company. J&J didn’t want shareholders to have a say on the matter.

The Council of Institutional Investors said in a January letter to the SEC that forced arbitration is a “potential threat to principles of sound corporate governance that balance the rights of shareowners against the responsibility of corporate managers to run the business.”

Peirce wouldn’t say whether mandatory arbitration is always appropriate, but told the advocacy group she’s worried about potential harm to investors through litigation.

“Such suits can depress shareholder value since they often result in costly payouts to make the suit go away,” Peirce said at the conference.

The commission said in February the J&J shareholder’s proposal violated New Jersey law, but didn’t speak to whether barring investor class-action lawsuits broke federal law. The agency has yet to permit a U.S. company to mandate arbitration, despite lobbying from the business community to give companies the power.