On Nov. 6, 2025, the Council of Institutional Investors (CII) sent a letter to Securities and Exchange Commission (SEC) Chairman Paul S. Atkins opposing recent SEC actions related to mandatory arbitration clauses in public company registration statements.
Mandatory arbitration provisions can limit investors’ ability to bring claims in court, pursue class actions, or rely on public legal precedent. They can also enable quicker and more confidential resolution of disputes for businesses, partly by eliminating the possibility of a jury trial in some instances. Changes in SEC policy could affect how companies structure initial public offerings and corporate charters, with implications for investor protections and corporate accountability across U.S. capital markets.
The CII letter came in response to a September 2025 SEC policy statement that said the presence of arbitration clauses will not affect whether the agency accelerates approval of registration statements, a step that allows companies to move more quickly toward public offerings. The letter also addressed remarks Atkins made in an Oct. 9 speech suggesting state corporate law, including in Delaware, could permit mandatory arbitration provisions. CII said the policy statement and comments represent a reversal of the SEC’s long-standing position opposing forced arbitration in public company governing documents and said that a formal public comment process on the policy shift should have occurred.
The SEC has recently adjusted several long-standing practices affecting investor rights and corporate governance. In November 2025, the agency said it would limit staff responses to most no-action requests during the 2025–26 proxy season, reducing informal guidance on shareholder proposal exclusions.
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