Securities
Nov. 3, 2025
Arbitrating securities fraud cases: Balancing efficiency with investor rights
The SEC now allows mandatory arbitration in IPOs, reshaping litigation risk for public issuers, raising governance and insurance questions, and making expert, well-structured arbitration crucial for fair, efficient resolution of securities disputes.
The U.S. Securities and Exchange Commission's September 2025 policy shift allowing companies to include mandatory arbitration clauses in their IPO registration statements seeks to redefine the litigation landscape for public issuers. For the first time in decades, the SEC will not block or delay a company's registration statement merely because it requires investors to arbitrate federal securities law claims. SEC Chair Paul Atkins framed this as a deregulatory move to "make I...
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