Yesterday, the SEC announced an open meeting to be held at 10:00 am Eastern on Wednesday, September 17th. The agenda includes:

ITEM 2: Acceleration of Effectiveness of Registration Statements of Issuers with Certain Mandatory Arbitration Provisions – The Commission will consider whether to issue a policy statement addressing the presence of a provision requiring arbitration of investor claims arising under the Federal securities laws and its impact on decisions whether to accelerate the effectiveness of a registration statement.

ITEM 3: Amendments to the Commission’s Rules of Practice – The Commission will consider whether to amend its Rules of Practice relating to procedures governing Commission review of staff actions made pursuant to delegated authority in connection with the determination of the effectiveness of a registration statement or the qualification of a Regulation A offering.

On Item 2, MoFo’s Ryan Adams on LinkedIn said, “Wow, this is a big deal! Could this be the end of the SEC’s prohibition on mandatory arbitration provisions in the governing documents of those looking to go public? Sure seems like it…” If so, it would mean the death of a decades-old policy position that these clauses are contrary to public policy & potentially inconsistent with the anti-waiver provisions of the Securities Act & Exchange Act.

There has been speculation before that the SEC could change its stance on mandatory arbitration provisions (on this site, back as far as 2007 and during the first Trump administration). But this latest development goes far beyond speculation!

While it seems like this change would be a positive development for corporate America, some say companies should be careful what they wish for. Plus, most investors don’t like mandatory arbitration provisions. And then there are state laws to consider.

– Meredith Ervine