Press Release

SEC Commissioner Caroline A. Crenshaw’s, Statement, September 17, 2025

•  “Today, we find another way to stack the deck against investors. The commission has decided to hastily construct a new shortcut to its preferred policy destination. Investors will be distressed to discover that the only thing waiting to greet them at the end of their journey down this path is a courthouse with its doors welded shut.”
• “The Commission finds another way to stack the deck against investors—this time primarily small, retail shareholders in public companies. We do so by opening the floodgates to something called mandatory arbitration. So, what is mandatory arbitration?”
• “Mandatory arbitration forces harmed shareholders to sue companies in a private, confidential forum, instead of a court and without the benefit of proceeding in the form of a class action.”
• “If that collection of things transpired in a courtroom without a party’s consent, judges would not hesitate to call it what it is: a violation of due process.”

Sen. Elizabeth Warren & Sen. Jack Reed, Press Release and Letter, September 17, 2025

• “A reversal by the Commission of its decades-old policy with respect to forced arbitration would not be consistent with Section 14 of the Securities Act and Section 29(a) of the Exchange Act, and would deprive investors of a key tool that allows them to hold companies accountable for misconduct.”
• “If the Commission rolls back protections against forced arbitration, it would open the floodgates to companies adopting these provisions. This would eliminate the critical tool of private securities litigation for securities law enforcement, denying relief for investors and allowing misconduct to go unpunished.”
• “Given these risks to investors and our securities markets, we are deeply concerned about the Commission’s potential change in policy regarding forced arbitration. If the Commission rolls back protections against forced arbitration, it would open the floodgates to companies adopting these provisions. This would eliminate the critical tool of private securities litigation for securities law enforcement, denying relief for investors and allowing misconduct to go unpunished.”

Oregon Treasurer Elizabeth Steiner, Press Release and Letter, September 17, 2025

• Today’s SEC’s decision would hide fraud, weaken accountability, and harm individual investors, from retirees to families saving for college. This change in SEC policy is wrong. To make matters worse, the SEC pushed this policy change through without allowing time for a transparent public discussion. This change is another indication that the federal administration is ready to cut corners and rig outcomes to put consumers and investors at a disadvantage.”

Marcie Frost, Chief Executive Officer of the California Public Employees’ Retirement System (CalPERS), Letter, September 17, 2025

• “When a public company commits securities fraud, investors can seek accountability by joining together to file a class action lawsuit to enforce federal and state investor protection laws. Class actions are a powerful deterrent for corporations against defrauding their investors, and such actions are embedded in federal and state laws.”
• “For years, the SEC has declined to accelerate IPO registrations that include forced arbitration provisions and has supported the exclusion of such proposals from company ballots. These actions have been consistent with the Commission’s mandate to protect investors and promote healthy capital markets. Changing course now would tilt the playing field against investors, including the millions of Americans who rely on their retirement savings.”
• “There is clear market consensus against forced arbitration. Shareholders and issuers have repeatedly rejected such provisions.”

Ann Lipton at University of Colorado Law School, Quote in Reuters, September 17, 2025

• "From a public policy perspective, this is horrific. It halts all development of the law and it halts all insight into what companies are really doing."

Public Citizen, Statement, September 17, 2025

•  “With this decision, the SEC lit a four-alarm-fire for American investors who already face a perilous path down Wall Street.”

Lauren Ormsbee, a partner at Labaton Keller Sucharow, Quote in Law.com, September 22, 2025

• “It would be a red flag to investors about what the company is trying to achieve through that. Is it calling to attention some type of weakness in the company’s disclosures?”

Salvatore Graziano, a partner at Bernstein Litowitz Berger & Grossmann, Quote in Law.com, September 22, 2025

• “They would be suffering endless arbitrations. Each arbitration requires the same proceeding, where the same executives have to show up… there’s no record, so each arbitration is a trial anew.”

Matthew Close, O’Melveny & Myers vice chair and co-chair of the Securities Litigation practice, Quote in Law.com, September 22, 2025

• “Make no mistake, companies that move forward on this… will attract lawsuits challenging these provisions.

Sidley Austin LLP, Legal Alert, September 18, 2025

• Issuers that are early adopters [of mandatory arbitration clauses] will likely face significant litigation that challenges the use and scope of these clauses.