The SEC’s Embrace of Mandatory Arbitration in IPOs: A Retreat from Investor Protection and Public Accountability
Authors:
Rebecca Dawson, Kara Wolke, Jonathan RotterTue 26th May 2026 | Posted by Melissa Wright, on Publications
On September 19, 2025, the Securities and Exchange Commission (“SEC” or “Commission”) adopted a policy that potentially marks one of the most consequential shifts in U.S. securities regulation in decades, and at the very least will impose tremendous uncertainties and costs on investors and companies. In a unilateral announcement that bypassed the required rulemaking process, the SEC said that it would break from long-standing precedent to facilitate the inclusion mandatory arbitration provisions in corporate charters and bylaws.[1] Mandatory arbitration forces shareholders who have been victims of fraud to individually sue companies in a private, confidential forum, instead of a court, […]