The US Securities and Exchange Commission (SEC) recently changed its longstanding position disfavoring the inclusion of certain mandatory arbitration provisions in corporate certificates of incorporation or bylaws. As Chair Paul Atkins explained, the SEC’s September 17, 2025, policy statement “provides the Commission’s views on whether mandatory arbitration provisions are inconsistent with the federal securities laws – and concludes that they are not.” The upshot? The SEC’s decisions concerning “whether to accelerate the effectiveness of a registration statement will not be affected by the presence of a provision requiring arbitration of investor claims arising under the federal securities laws.”
To be clear, the policy statement does not express a view on whether mandatory arbitration provisions are “appropriate or optimal for issuers or investors.” And Atkins explained that the SEC will not weigh in on the second-order question of whether a company should adopt mandatory arbitration provisions, noting that he expects “robust public debate on this issue among various interested parties.” Indeed, since the SEC issued its policy statement, stakeholders have already begun debating the costs and benefits of mandating arbitration in this context – an issue we anticipate will be litigated on multiple fronts.
