Acceleration of Effectiveness of Registration Statements of Issuers With Certain Mandatory Arbitration Provisions

<RULE> SECURITIES AND EXCHANGE COMMISSION <CFR>17 CFR Parts 231 and 241</CFR> <DEPDOC>[Release No. 33-11389; 34-103988]</DEPDOC> <RIN>RIN 3235-AN55</RIN> <SUBJECT>Acceleration of Effectiveness of Registration Statements of Issuers With Certain Mandatory Arbitration Provisions</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Securities and Exchange Commission. <HD SOURCE="HED">ACTION:</HD> Final rule; Policy statement. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Securities and Exchange Commission (“Commission”) is issuing this statement to inform the public that the presence of a provision requiring arbitration of investor claims arising under the Federal securities laws will not impact decisions regarding whether to accelerate the effectiveness of a registration statement. Accordingly, when making such decisions, the staff will focus on the adequacy of the registration statement's disclosures, including disclosure regarding the arbitration provision. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> <E T="03">Effective date:</E> September 19, 2025. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Questions about specific filings should be directed to staff members responsible for reviewing the documents the issuer files with the Commission. For general questions about this statement, contact John Fieldsend, Special Counsel, at (202) 551-3430, Division of Corporation Finance, or Anna Sandor, Senior Counsel, or Yoon Choo, Senior Counsel, at (202) 551-6787, Division of Investment Management, U.S. Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Table of Contents</HD> <EXTRACT> <FP SOURCE="FP-2">I. Introduction</FP> <FP SOURCE="FP-2">II. Discussion</FP> <FP SOURCE="FP1-2">A. Acceleration of a Registration Statement's Effectiveness</FP> <FP SOURCE="FP1-2">B. The Arbitration Act and Issuer-Investor Mandatory Arbitration Provisions</FP> <FP SOURCE="FP1-2">C. Effect of Supreme Court Case Law Developments Regarding the FAA on the Application of Section 8(a)'s “Public Interest/Investor Protection” Standard</FP> <FP SOURCE="FP1-2">1. Nothing in the Text of the Anti-Waiver Provisions or any Other Provisions of the Federal Securities Statutes Could Be Construed as a Clearly Expressed Congressional Intention That the Arbitration Act Would Not Apply to Federal Securities Laws Claims</FP> <FP SOURCE="FP1-2">2. Under Supreme Court precedent, the FAA Is Not Displaced Merely Because Bilateral Arbitration May Undermine the Economic Incentive of Some Persons To Bring Private Federal Securities Law Claims</FP> <FP SOURCE="FP-2">III. Conclusion</FP> <FP SOURCE="FP-2">IV. Other Matters</FP> <FP SOURCE="FP-2">Statutory Authority </FP> </EXTRACT> <HD SOURCE="HD1">I. Introduction</HD> This statement concerns requests to accelerate the effective date of registration statements filed under the Securities Act of 1933 (“Securities Act”)  <SU>1</SU> <FTREF/> by issuers with a mandatory arbitration provision for investor claims arising under the Federal securities laws  <SU>2</SU> <FTREF/> (“issuer-investor mandatory arbitration provision”). <SU>3</SU> <FTREF/> As discussed in further detail in section II.C. there have been a number of developments involving the U.S. Supreme Court's (“Supreme Court” or “Court”) interpretation and application of the Federal Arbitration Act of 1925 (“FAA” or “Arbitration Act”)  <SU>4</SU> <FTREF/> that inform such acceleration requests. In addition, as discussed in further detail in Section II.B., potential uncertainty exists regarding the intersection of the FAA and state law. For example, Delaware recently amended its General Corporation Law in a way that may prohibit certificates of incorporation or bylaws from including an issuer-investor mandatory arbitration provision. <SU>5</SU> <FTREF/> Other states may adopt different approaches on this issue. Notwithstanding these developments and potential uncertainty, the Commission has not spoken publicly on this topic even though, during the registration process, issuers have on occasion sought to include such a provision in their Securities Act registration statements. <SU>6</SU> <FTREF/> <FTNT> <SU>1</SU>  15 U.S.C. 77a <E T="03">et seq.</E> </FTNT> <FTNT> <SU>2</SU>  As used in this statement, the phrase “Federal securities laws” includes the Federal securities statutes and any rules and regulations issued thereunder, whereas the phrase “Federal securities statutes” includes only the relevant statutes. </FTNT> <FTNT> <SU>3</SU>  Issuer-investor mandatory arbitration provisions may be contained in an issuer's articles or certificate of incorporation or bylaws. They may also be contained in indentures, limited partnership agreements, declarations of trust or trust agreements, American depositary receipts deposit agreements, or elsewhere. The use of the term “issuer-investor mandatory arbitration provision” is not meant to preclude (or foreclose) the possibility that issuers may seek to include other entities or persons related to, or connected with, the issuer within the scope of the arbitration provision. Relatedly, although we refer to issuer-investor mandatory arbitration provisions throughout as bilateral, it is possible that the issuer-investor mandatory arbitration provision may require investors to arbitrate certain claims involving parties other than the issuer. </FTNT> <FTNT> <SU>4</SU>  9 U.S.C. 1 through 16. The Arbitration Act was enacted prior to the enactment of all of the Federal securities statutes. </FTNT> <FTNT> <SU>5</SU>   <E T="03">See</E> 8 Del. Code Ann. Tit. 8, Section 115(c) (2025) (effective Aug. 1, 2025). Specifically, new paragraph (c) in section 115 permits the certificate of incorporation or bylaws to prescribe a forum or venue for certain claims that are not internal corporate claims but only if a stockholder may bring such claims in at least one <E T="03">court</E> in the State of Delaware that has jurisdiction over such claims. This statement expresses no view on whether this or any other state law provision is consistent with the FAA. </FTNT> <FTNT> <SU>6</SU>   <E T="03">See, e.g.,</E> Amendment to Registration Statement on Form S-1, The Carlyle Group L.P., File No. 333-176685 (Jan. 10, 2012). </FTNT> In order to provide issuers with greater certainty concerning the Commission's approach to requests to accelerate the effective date of a registration statement disclosing an issuer-investor mandatory arbitration provision, we are issuing this policy statement. For the reasons explained in this statement, we have determined that the presence of an issuer-investor mandatory arbitration provision  <SU>7</SU> <FTREF/> will not impact decisions whether to accelerate the effectiveness of a registration statement under the Securities Act. <SU>8</SU> <FTREF/> Accordingly, when considering acceleration requests pursuant to Securities Act section 8(a)  <SU>9</SU> <FTREF/> and Rule 461 thereunder, <SU>10</SU> <FTREF/> the staff will focus on the adequacy of the registration statement's disclosures, including disclosure regarding issuer-investor mandatory arbitration provisions. <SU>11</SU> <FTREF/> <FTNT> <SU>7</SU>  Conditions or restrictions that are part of the issuer-investor mandatory arbitration provision that may impact investors' substantive rights under the Federal securities laws are outside the scope of this statement. </FTNT> <FTNT> <SU>8</SU>  We would also apply this conclusion to decisions whether to: (i) accelerate the effectiveness of registration statements filed under the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. 78a <E T="03">et seq.;</E> (ii) declare effective post-effective amendments to registration statements; and (iii) qualify an offering statement or a post-qualification amendment under 17 CFR 230.251 <E T="03">et seq.</E> (“Regulation A”). Moreover, our conclusion that the Federal securities statutes do not override the FAA in the context of issuer-investor mandatory arbitration provisions is not limited to this context. This same conclusion also applies, for example, if an Exchange Act reporting issuer were to amend its bylaws or corporate charter to adopt an issuer-investor mandatory arbitration provision. </FTNT> <FTNT> <SU>9</SU>  15 U.S.C. 77h(a) (“section 8(a)”). </FTNT> <FTNT> <SU>10</SU>  17 CFR 230.461 (“Rule 461”). </FTNT> <FTNT> <SU>11</SU>  Section 4A of the Exchange Act gives the Commission the authority to delegate its functions to a division of the Commission. <E T="03">See</E> 15 U.S.C. 78d-1(a). The Commission retains a discretionary right to review any division use of delegated authority. <E T="03">See</E> 15 U.S.C. 78d-1(b). The Director of the Division of Corporation Finance possesses delegated authority to accelerate effectiveness of a registration statement under the Securities Act and the Exchange Act, declare effective post-effective amendments to registration statements, and to qualify an offering statement and an amendment to an offering statement under Regulation A. <E T="03">See</E> 17 CFR 200.30-1. The Director of the Division of Investment Management possesses similar delegated authority to accelerate effectiveness of a registration statement under the Securities Act and the Exchange Act and declare effective post-effective amendments to registration statements. <E T="03">See</E> 17 CFR 200.30-5. Throughout this statement, any statements about the Division of Corporation Finance or the Division of Investment Management declining to accelerate effectiveness of a registration statement mean declining to use their delegated authority to accelerate effectiveness. </FTNT> <HD SOURCE="HD1">II. Discussion</HD> <HD SOURCE="HD2">A. Acceler ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 58k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━