July 20, 2017

IPOs: Commissioner Piwowar Favors Allowing Mandatory Arbitration

Speaking at the Heritage Foundation earlier this week, SEC Commissioner Mike Piwowar said that the SEC might be receptive to requests by IPO companies to include mandatory arbitration clauses in their charters. Here’s an excerpt from this Reuters article:

A key U.S. securities regulator on Monday voiced support for possibly allowing companies to tuck language into their initial public offering paperwork that would force shareholders to resolve claims through arbitration rather than in court. “For shareholder lawsuits, companies can come to us to ask for relief to put in mandatory arbitration into their charters,” said Michael Piwowar, a Republican member of the U.S. Securities and Exchange Commission. “I would encourage companies to come and talk to us about that.”

Mandatory arbitration bylaws got a lot of attention a few years back when Carlyle Group tried to install one in its IPO – although it ultimately backed off. The SEC Staff has historically said that these clauses were contrary to public policy & potentially inconsistent with the anti-waiver provisions of Section 14 of the Securities Act & Section 29(a) of the Exchange Act – so a shift in policy here would be big news.

IPOs: GOP Wants a Smoother Ride

Efforts to encourage IPOs are a big part of the SEC’s agenda. According to this MarketWatch report, Congressional Republicans are on-board as well – they believe that current rules discourage IPOs & deprive retail investors of a chance at the “lottery tickets” those deals represent.

SEC Commissioner Nominee: Hester Peirce to Get Another At-Bat

This WSJ article reports that President Trump plans to nominate former Senate aide Hester Peirce to fill the vacant Republican slot on the SEC (here’s a White House press release – this press release indicates the nomination was sent to the Senate yesterday).

If that name sounds familiar, it’s because President Obama nominated her to serve as a Commissioner in 2015 – but the full Senate never acted on her nomination, as we blogged about numerous times (here’s one of those blogs).

John Jenkins