The Securities and Exchange Commission (SEC) recently announced a significant, but controversial, policy change that may lead to more investor claims being arbitrated. As of September 17, 2025, the inclusion of a provision mandating arbitration of investor claims in a company’s corporate documents will no longer impact SEC determinations whether to accelerate the effective date of a registration statement.[1]
Here are five things arbitrators should know about this significant change:
- A registration statement is a disclosure document that a company must file with the SEC before it can legally offer securities to the public. Typically, a company’s registration statement becomes effective twenty (20) days after it is filed with the SEC. However, a company may request that the effective date of a registration statement be accelerated to allow the securities to be sold sooner.[2]
- Previously, SEC staff would not approve registration statement acceleration requests if the company’s registration statement included a requirement that federal securities laws claims be arbitrated—a position based on the view that federal law required access to a judicial forum. Consequently, many companies chose not to include a mandatory arbitration clause in their corporate documents.[3]
- The SEC’s new policy—that mandatory arbitration clauses in a company’s offering documents will no longer impact acceleration determinations—is intended to provide issuers with greater certainty concerning the agency’s approach to acceleration requests. The SEC deemed it necessary to clarify its position given developing U.S. Supreme Court law interpretating and applying the Federal Arbitration Act (FAA) and recent amendments to Delaware’s General Corporation Law prohibiting registration statements from including an issuer-investor mandatory arbitration provision.[4]
- It remains to be seen whether issuers will begin including mandatory arbitration clauses in their offering documents. Having experienced decades of federal class action lawsuits alleging misstatements in offering documents, companies may favor the confidentiality, efficiency, and lower cost of arbitration, having arbitrators with expertise in securities laws, and being able to limit class actions. But some investors have voiced concern that mandatory arbitration provisions in this context are contrary to public policy and threaten principles of sound corporate governance that balance investors’ rights with those of corporate managers, particularly given limitations on discovery, appeals, and class actions in arbitration, as well as the lack of a public record.[5] Issuers must also carefully consider the effect of state law on the inclusion of mandatory arbitration provisions and whether the FAA preempts those state laws.
- In the meantime, arbitrators with expertise in this area should be ready to hear investor claims and update their resumes to highlight their experience. Notably, the AAA-ICDR issued a statement shortly after the policy change, letting companies know that it has expanded its resources to support such claims, including a specialized panel to hear these cases and tailored guidelines to address the unique considerations of arbitration in disputes relating to federal securities laws.[6]
[1] https://www.federalregister.gov/documents/2025/09/19/2025-18238/acceleration-of-effectiveness-of-registration-statements-of-issuers-with-certain-mandatory
[2] See id.
[3] See https://corpgov.law.harvard.edu/2025/09/28/sec-issues-policy-statement-clarifying-view-on-mandatory-arbitration-provisions/#:~:text=The%20SEC%20staff%20previously%20indicated%20that%20they,override%20the%20FAA’s%20policy%20of%20favoring%20arbitration.
[4] See https://www.federalregister.gov/documents/2025/09/19/2025-18238/acceleration-of-effectiveness-of-registration-statements-of-issuers-with-certain-mandatory
[5] See https://www.cii.org/files/issues_and_advocacy/correspondence/2025/November%206,%202025%20SEC%20letter%20on%20mandatory%20arbitration%20(final).pdf
[6] See https://www.adr.org/news-and-insights/issuer-investor-arbitration-provisions-are-now-a-greater-option-for-public-companies/
Heidi Potter
CCA Associate