To Arbitrate or Not to Arbitrate: The SEC Now Allows Companies to Choose

On September 17, 2025, the Securities and Exchange Commission (the Commission) voted 3-1 to issue a policy statement clarifying that the presence of a mandatory arbitration provision for investor claims arising under the federal securities laws in an issuer’s articles or certificate of incorporation, bylaws or any securities-related contractual agreements (Operating Documents) will not affect the Commission’s decision whether to accelerate the effectiveness of that issuer’s registration statement.

The statement marks a reversal of the Commission’s longstanding refusal to accelerate an issuer’s registration statement under these circumstances, a position that has resulted in U.S. public companies generally not including mandatory arbitration provisions for federal securities law claims in their Operating Documents. As a result, these claims can and have historically been filed as class actions in federal courts.

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