Westlaw The Securities and Exchange Commission has clarified that the presence of a mandatory arbitration provision will not affect decisions on accelerating the effectiveness of a registration statement.
Acceleration of Effectiveness of Registration Statements of Issuers with Certain Mandatory Arbitration Provisions, Exchange Act Release No. 103988 (Sept. 17, 2025).
The agency on Sept. 17 issued a policy statement and an amendment to its Rules of Practice to provide clarity on the issue.
“As an agency that trumpets the importance of disclosure and transparency, the commission’s lack of a recent public position on this important topic is unmoored from both its mission and its mandate. That ends today,” SEC Chairman Paul S. Atkins said in a press statement.
Issuers have periodically asked whether a mandatory arbitration provision for investor claims would impact the acceleration of their registration statement’s effectiveness, the SEC said.
The new policy is based on the U.S. Supreme Court’s current interpretation of the Federal Arbitration Act, the commission said.
Focus shifts to disclosure
According to a related fact sheet, the SEC concluded that federal securities statutes do not override the Federal Arbitration Act’s policy favoring arbitration.
As a result, the SEC may not consider the existence of such a provision under the “public interest and the protection of investors” standard in Section 8(a) of the Securities Act of 1933, 15 U.S.C.A. ” when staff decide on acceleration requests.
Instead, the staff will focus on the adequacy of the registration statement’s disclosures, including disclosure regarding the arbitration provision, the SEC said.
Automatic stay removed
Additionally, the SEC amended its Rules of Practice to remove a requirement for an automatic stay of a delegated action when it is reviewed by the commission.
The change applies to the acceleration of a registration statement’s effectiveness and the qualification of an offering statement under Regulation A of the Securities Act of 1933, 17 CFR ”
Regulation A provides an exemption for certain public offerings of up to $20 million to $75 million.
An automatic stay of a staff determination is “unnecessary and disruptive” to the registration process, the fact sheet said. The amendments will provide issuers and investors with “greater predictability and certainty,” according to the SEC.
The policy statement and the amendments will take effect upon publication in the Federal Register, the SEC said.