SEC Issues Policy Statement Affirming Mandatory Arbitration Compliance With Federal Securities Laws
The SEC reaffirms that mandatory arbitration clauses in registration statements will not affect decisions to accelerate effectiveness, aligning with the Supreme Court's interpretation of the Federal Arbitration Act.
The SEC’s September 17, 2025 policy statement clarifies that mandatory arbitration clauses in registration statements will not impact the acceleration of registration effectiveness. The SEC emphasized that its decision aligns with current Supreme Court interpretations of the Federal Arbitration Act, stating that such clauses will not delay the registration process. Chairman Paul S. Atkins highlighted that the SEC’s role is to provide regulatory clarity, leaving it to the market to assess the implications of such provisions on companies and investors.
- Mandatory Arbitration Provision: A clause in corporate governance documents requiring investors to resolve disputes through arbitration rather than court litigation.
- Federal Arbitration Act: A U.S. federal law that provides the legal foundation for enforcing arbitration agreements and guiding their interpretation by courts.