Overview

• In a September 17 policy statement, the SEC said the presence of issuer‑investor mandatory arbitration provisions will not affect decisions to accelerate registration statements.
• The Commission grounded its position in Federal Arbitration Act jurisprudence, concluding federal securities laws do not clearly displace the FAA.
• Review will center on the adequacy of disclosure about any arbitration requirement, and the SEC amended Rule 431 to align staff acceleration authority with the new approach.
• The policy passed 3–1 along party lines, with Chair Paul Atkins and Commissioner Hester Peirce in support and Commissioner Caroline Crenshaw dissenting over investor‑protection concerns.
• Legal uncertainty remains under state corporate law, particularly Delaware’s recent DGCL amendment, and investors such as CalPERS warn arbitration could curb class actions even as backers say the change may ease IPO legal costs.