Overview

• The SEC’s new policy states staff will not deny or delay acceleration solely because a registrant’s governing documents require investor claims to be arbitrated.
• Amendments to Rule 431 remove automatic stays when staff acceleration decisions are challenged, limiting post-effectiveness disruption to offerings.
• Relying on Supreme Court precedent, the Commission concluded federal securities statutes do not displace the Federal Arbitration Act’s policy favoring enforcement of arbitration agreements.
• The SEC did not endorse the merits of mandatory arbitration and took no position on enforceability, noting that state corporate law, including Delaware’s new Section 115(c), may restrict such clauses.
• Commissioner Caroline Crenshaw dissented, warning of harms to retail investors from private arbitration and criticizing the lack of public comment.