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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 231 and 241

[Release No. 33-11389; 34-103988]

RIN 3235-AN55

Acceleration of Effectiveness of Registration Statements of Issuers with Certain Mandatory

Arbitration Provisions

AGENCY: Securities and Exchange Commission.

ACTION: Final rule; Policy statement.

SUMMARY: 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.

DATES: Effective date: September 19, 2025.

FOR FURTHER INFORMATION CONTACT: 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.

SUPPLEMENTARY INFORMATION:

Table of Contents

II.

Introduction

Discussion

Acceleration of a Registration Statement’s Effectiveness

The Arbitration Act and Issuer-Investor Mandatory Arbitration Provisions

Effect of Supreme Court Case Law Developments Regarding the FAA on the

Application of Section 8(a)’s “Public Interest/Investor

Protection” Standard

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.

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.

III.

Conclusion

IV.

Other Matters

Statutory Authority

Introduction

This statement concerns requests to accelerate the effective date of registration statements

filed under the Securities Act of 1933 (“Securities Act”) 1 by issuers with a mandatory arbitration

provision for investor claims arising under the Federal securities laws 2 (“issuer-investor

mandatory arbitration provision”). 3 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”) 4 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

15 U.S.C. 77a et seq.

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.

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.

9 U.S.C. 1 through 16. The Arbitration Act was enacted prior to the enactment of all of the Federal securities

statutes.

provision. 5 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. 6

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 issuerinvestor 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 7 will not impact decisions whether to accelerate the

effectiveness of a registration statement under the Securities Act. 8 Accordingly, when

considering acceleration requests pursuant to Securities Act section 8(a) 9 and Rule 461

thereunder, 10 the staff will focus on the adequacy of the registration statement’s disclosures,

including disclosure regarding issuer-investor mandatory arbitration provisions. 11

II.

Discussion

See 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 court 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.

See, e.g., Amendment to Registration Statement on Form S-1, The Carlyle Group L.P., File No. 333-176685

(Jan. 10, 2012).

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.

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 et seq.; (ii) declare

effective post-effective amendments to registration statements; and (iii) qualify an offering statement or a postqualification amendment under 17 CFR 230.251 et seq. (“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.

15 U.S.C. 77h(a) (“section 8(a)”).

17 CFR 230.461 (“Rule 461”).

Section 4A of the Exchange Act gives the Commission the authority to delegate its functions to a division of the

Commission. See 15 U.S.C. 78d-1(a). The Commission retains a discretionary right to review any division use

A. Acceleration of a Registration Statement’s Effectiveness

Section 5 of the Securities Act requires that a registration statement must be in effect as

to a security before an issuer may sell it. 12 Section 8(a) provides that a Securities Act registration

statement becomes effective automatically 20 calendar days after it is filed. Securities Act

Rule 473(a) 13 permits an issuer to include a “delaying amendment” on the front page of a

registration statement that extends the effective date to: (1) 20 calendar days after the issuer

complies with Rule 473(b); 14 or (2) an indefinite period that will end when the Commission

grants the issuer’s request to accelerate the effective date of the registration statement. The issuer

may submit a request for acceleration under Rule 461 specifying when it wants the registration

statement declared effective. The staff, acting pursuant to its delegated authority, will accelerate

the effective date of a registration statement if it meets the criteria under section 8(a) and Rule

461. 15

The section 8(a) criteria are primarily focused on ensuring complete and adequate

disclosure of material information to the public. Additionally, the criteria require consideration

of “the public interest and the protection of investors.” 16 Courts have considered the scope of the

public interest and investor protection standard in the context of the Federal securities laws and

determined that, when applying this standard, it is only permissible to consider those matters

of delegated authority. See 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. See 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. See 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.

15 U.S.C. 77e(a).

17 CFR 230.473(a).

17 CFR 230.473(b).

Certain Securities Act registration statements become effective automatically upon filing with the Commission

and do not require acceleration. See, e.g., 17 CFR 230.462.

See section 8(a) and Rule 461(b).

over which the Commission has authority under the Federal securities laws. 17

B. The Arbitration Act and Issuer-Investor Mandatory Arbitration Provisions

During the registration process, issuers have on occasion asked whether the presence of

an issuer-investor mandatory arbitration provision would impact acceleration of the effectiveness

of their registration statement. 18 An issuer-investor mandatory arbitration provision may

implicate the Arbitration Act, which establishes a “liberal Federal policy favoring arbitration

agreements.” 19 Section 2 of the statute, which is the FAA’s principal substantive provision,

provides in pertinent part that “[a] written provision in . . . a contract evidencing a transaction

involving commerce to settle by arbitration a controversy thereafter arising out of such contract

or transaction . . . shall be valid, irrevocable, and enforceable.” 20

Whether the FAA may apply to an issuer-investor mandatory arbitration provision turns

in the first instance on whether there is a valid and enforceable written agreement to arbitrate. 21

See Business Roundtable v. SEC, 905 F.2d 406, 412 (D.C. Cir. 1990) (“Business Roundtable”) (holding that the

Commission could not rely on the statutory mandate to “protect investors and the public interest” to take

regulatory action that would “overturn or at least impinge severely on the tradition of state regulation of

corporate law”) and id. at 413-14 (citation modified) (explaining that statutory language about the “public

interest” “must be limited to ‘the purposes Congress had in mind when it enacted the legislation,’” and such

language cannot be read to permit the Commission to regulate areas that Congress has not assigned to the

agency (quoting NAACP v. FPC, 425 U.S. 662, 670 (1976) (“NAACP”)). See generally FCC v. Consumers’

Research, 145 S.Ct. 2482, 2503 (2025) (explaining that the Supreme Court has “long held that the words

‘public interest’ in a regulatory statute do not encompass the general public welfare but rather take meaning

from the purposes of the regulatory legislation” (citation modified)); NAACP, 425 U.S. at 670 (rejecting the

argument that the Federal Power Commission’s broad “public interest” mandate authorized it to promulgate

rules prohibiting its regulated entities from engaging in discriminatory employment practices generally). Similar

limitations apply to the “protection of investors” language in section 8(a). See generally Davis v. Mich. Dept. of

Treasury, 489 U.S. 803, 809 (1989) (explaining that “statutory language cannot be construed in a vacuum,” but

rather “the words of a statute must be read in their context and with a view to their place in the overall statutory

scheme”).

The timing of when an issuer requests acceleration is often tied to market conditions, and the inability to predict

with certainty whether the staff would exercise its delegated authority or have the matter considered by the

Commission poses challenges for issuers.

CompuCredit Corp. v. Greenwood, 565 U.S. 95, 98 (2012) (“CompuCredit Corp.”) (quoting Moses H. Cone

Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)).

9 U.S.C. 2.

Galloway v. Santander Consumer USA, Inc., 819 F.3d 79, 89 (4th Cir. 2016) (explaining that “application of the

FAA requires demonstration of … a written agreement that includes an arbitration provision which purports to

cover the dispute” (citation modified)). Courts have not interpreted the FAA to require “written agreements” to

be signed. See, e.g., Seawright v. Am. Gen. Fin. Servs., Inc., 507 F.3d 967, 978 & n.5 (6th Cir. 2007)

Assuming it is written, whether an agreement to arbitrate is valid and enforceable is generally

determined based on “the contract law of the state governing the agreement.” 22 However, a state

law that “target[s] the enforceability of [mandatory] arbitration agreements either by name or by

more subtle methods, such as by ‘interfering with fundamental attributes of arbitration’” may be

preempted by the Arbitration Act. 23 The applicability of the FAA to a particular issuer-investor

mandatory arbitration provision is a legal matter implicating the intersection of a Federal statute

that Congress did not authorize the Commission to administer, and the unique laws of the state or

(explaining that “arbitration agreements under the FAA need to be written, but not necessarily signed”

(emphasis in original)); Caley v. Gulfstream Aero. Corp., 428 F.3d 1359, 1369 (11th Cir. 2005) (“Gulfstream

Aero. Corp.”) (“We readily conclude that no signature is needed to satisfy the FAA’s written agreement

requirement.”); Tinder v. Pinkerton Sec., 305 F.3d 728, 736 (7th Cir. 2002) (explaining that although “the FAA

requires arbitration agreements to be written, it does not require them to be signed”); Valero Refining, Inc. v.

M/T Lauberhorn, 813 F.2d 60, 64 (5th Cir. 1987) (“We note also that section three of the Act does not require

that a charter party be signed in order to enforce an arbitration agreement contained within it.”); McAllister

Bros., Inc. v. A&S Transp. Co., 621 F.2d 519, 524 (2d Cir. 1980) (explaining that “a party may be bound by an

agreement to arbitrate even in the absence of a signature”); Medical Development Corp. v. Indus. Molding

Corp., 479 F.2d 345, 348 (10th Cir. 1973) (“it [is] not necessary that there be a simple integrated writing or that

a party sign the writing containing the arbitration clause.”).

Banks v. Mitsubishi Motors Credit of Am., Inc., 435 F.3d 538, 540 (5th Cir. 2005); see, e.g., Memmer v. United

Wholesale Mortg., LLC, 135 F.4th 398, 404 (6th Cir. 2025) (“Whether the parties entered a valid agreement to

arbitrate is a question of state contract law.”); Marshall v. Georgetown Mem’l Hosp., 112 F.4th 211, 218 (4th

Cir. 2024) (“Whether an agreement to arbitrate was formed is a question of ordinary state contract law

principles.” (quoting Rowland v. Sandy Morris Fin. & Estate Planning Servs., LLC, 993 F.3d 253, 258 (4th Cir.

2021)) (citation modified)); Rodgers-Rouzier v. Am. Queen Steamboat Operating Co., LLC, 104 F.4th 978, 991

(7th Cir. 2024) (“An arbitration agreement is just a type of contract, and the FAA does not itself provide a

substantive law governing the formation or general interpretation of contracts, so ordinary state contract law

always fills in crucial gaps in any arbitration agreement.”); Meyer v. Uber Techs., Inc., 868 F.3d 66, 74 (2d Cir.

2017) (“State law principles of contract formation govern the arbitrability question.” (quoting Nicosia v.

Amazon.com, Inc., 834 F.3d 220, 231 (2d Cir. 2016))); Donaldson Co., Inc. v. Burroughs Diesel, Inc., 581 F.3d

726, 731 (8th Cir. 2009) (explaining that “state contract law governs the threshold question of whether an

enforceable arbitration agreement exists between litigants”); Gulfstream Aerospace Corp., 428 F.3d at 1368

(“[I]n determining whether a binding agreement arose between the parties, courts apply the contract law of the

particular state that governs the formation of contracts.”). The FAA also contemplates that in some instances

mandatory arbitration agreements may be governed by the laws of a foreign jurisdiction. See generally 9 U.S.C.

202 (addressing arbitration agreements that may implicate foreign jurisdictions).

Epic Systems Corp. v. Lewis, 584 U.S. 497, 508 (2018) (“Epic Systems Corp.”) (citation modified); see also

Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University, 489 U.S. 468, 478

(1989) (“[T]he FAA pre-empts state laws which require a judicial forum for the resolution of claims which the

contracting parties agreed to resolve by arbitration.”); see also, e.g., Southland Corp. v. Keating, 465 U.S. 1, 1016 (finding preempted a state statute which rendered agreements to arbitrate certain franchise claims

unenforceable); Perry v. Thomas, 482 U.S. 483, 490 (1987) (finding preempted a state statute which rendered

unenforceable private agreements to arbitrate certain wage collection claims). While the Supreme Court has

determined that state laws that target arbitration are preempted, section 2 of the FAA does include a narrow

“savings clause” that “permits arbitration agreements to be declared unenforceable ‘upon such grounds as exist

at law or in equity for the revocation of any contract.’” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339

(2011) (“Concepcion”) (quoting section 2 of the FAA). The Supreme Court has held that that this savings clause

allows “‘generally applicable contract defenses, such as fraud, duress, or unconscionability.’” Id. (quoting

Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996)).

other jurisdiction governing the provision. 24 Accordingly, we do not consider it within the

Commission’s purview to conclude whether any particular issuer-investor mandatory arbitration

provision is enforceable for purposes of the FAA.

C. Effect of Supreme Court Case Law Developments Regarding the FAA on the

Application of Section 8(a)’s “Public Interest/Investor Protection” Standard

Assuming the FAA applies to a particular issuer-investor mandatory arbitration

provision, there is a separate question whether the Federal securities statutes override the FAA.

In the past, the Federal securities statutes were thought to potentially override the FAA because

issuer-investor mandatory arbitration provisions could be viewed as inconsistent with the Federal

securities statutes in at least two respects: (1) issuer-investor mandatory arbitration provisions

could violate the anti-waiver provisions of the Federal securities statutes by foreclosing a judicial

forum; 25 and (2) such provisions could unduly impede the ability of investors to bring private

actions to vindicate their rights under the Federal securities laws by foreclosing class action

litigation in courts.

After considering the Supreme Court’s jurisprudence relating to the FAA and analyzing

case-law developments involving the intersection of the FAA and other Federal statutes, we have

concluded that, in the context of issuer-investor mandatory arbitration provisions, the Federal

To illustrate some of the potential complexities involved, consider Delaware corporate law. Corporate charters

and bylaws would appear to constitute written agreements. See, e.g., Centaur Partners, IV v. Nat’l Intergroup,

Inc., 582 A.2d 923, 928 (Del. 1990) (citing cases) (“Corporate charters and by-laws are contracts among the

shareholders of a corporation and the general rules of contract interpretation are held to apply.”). Thus, an

arbitration provision in a Delaware corporate charter or bylaw may constitute a written agreement to arbitrate

for purposes of the FAA. But see Manesh & Joseph A. Grundfest, The Corporate Contract and Shareholder

Arbitration, 98 NYU L. REV. 1106 (2023); Ann M. Lipton, Manufactured Consent: The Problem of Arbitration

Clauses in Corporate Charters and Bylaws, 104 GEO. L.J. 583 (2016). 8 DEL. CODE ANN. Tit. 8, Section 115(c)

(2025).

15 U.S.C. 77n is the anti-waiver provision in the Securities Act (“section 14”). (“Any condition, stipulation, or

provision binding any person acquiring any security to waive compliance with any provision of this title or of

the rules and regulations of the Commission shall be void.”). 15 U.S.C. 78cc(a) is the anti-waiver provision in

the Exchange Act (“section 29(a)”) (“Any condition, stipulation, or provision binding any person to waive

compliance with any provision of this title or any rule or regulation thereunder, or any rule of a self-regulatory

organization, shall be void.”). 15 U.S.C. 77aaaa (section 327 of the Trust Indenture Act of 1939 (“Trust

Indenture Act”), 15 U.S.C. 77aaa et seq.); 15 U.S.C. 80a-46(a) (section 47(a) of the Investment Company Act

of 1940 (“Investment Company Act”), 15 U.S.C. 80a-1 et seq.); and 15 U.S.C. 80b-15(a) (section 215(a) of the

Investment Advisers Act of 1940 (“Investment Advisers Act”), 15 U.S.C. 80b-1 et seq.) contain similar antiwaiver provisions.

securities statutes do not override the Arbitration Act’s policy favoring enforcement of

arbitration agreements. This conclusion follows from the fact that nothing in the text of the antiwaiver provisions or any other provision of the Federal securities statutes demonstrates a clearly

expressed congressional intention to except issuer-investor mandatory arbitration provisions

from the Arbitration Act’s policy favoring arbitration. Because the Federal securities statutes do

not override the Arbitration Act when it applies to the enforceability of an issuer-investor

mandatory arbitration provision, the existence of such a provision is not within the ambit of

appropriate considerations under section 8(a)’s public interest and investor protection standard

and will not impact determinations whether to accelerate the effective date of a registration

statement. 26

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.

Applying current and relevant Supreme Court precedent, there is no basis to conclude

that either the anti-waiver provisions or any other provision of the Federal securities statutes

displaces the primacy of the Arbitration Act in the context of issuer-investor mandatory

arbitration provisions.

For many decades, the anti-waiver provision set forth in section 14 was understood to

prohibit issuer-investor mandatory arbitration provisions relating to Federal securities law

claims. In a 1953 decision involving the enforceability of an arbitration agreement between a

brokerage firm and its customers, the Supreme Court held that “the right to select the judicial

forum is the kind of ‘provision’ that cannot be waived under [section] 14 of the Securities

Act.” 27 In reaching this conclusion, the Court agreed with the firm’s customer (who purchased

See supra note 17 (citing Business Roundtable).

Wilko v. Swan, 346 U.S. 427, 434-35 (1953) (“Wilko”) (overruled by Rodriguez de Quijas v.

Shearson/American Express, Inc., 490 U.S. 477 (1989) (“Rodriguez”)).

the securities at issue in the dispute) that “the purpose of Congress [in enacting the anti-waiver

provision] was to assure that sellers could not maneuver buyers into a position that might weaken

their ability to recover under the Securities Act.” 28 The Court expressed the view that, “[w]hile a

buyer and seller of securities, under some circumstances, may deal at arm’s length on equal

terms, it is clear that the Securities Act was drafted with an eye to the disadvantages under which

buyers labor. Issuers of and dealers in securities have better opportunities to investigate and

appraise the prospective earnings and business plans affecting securities than buyers. It is

therefore reasonable for Congress to put buyers of securities covered by that [Securities] Act on

a different basis from other purchasers” who are otherwise subject to the terms of the FAA. 29

But in a pair of decisions in the late 1980s, the Supreme Court took a different course. 30

The first of these was a 1987 decision in which the Court considered whether the anti-waiver

provision in section 29(a) precludes enforcement of an arbitration agreement between a brokerdealer and its customer. Even though the text of the Exchange Act’s anti-waiver provision is

substantively identical to the Securities Act’s provision, the Court held that it does not prohibit

the enforcement of arbitration agreements. 31 The Court explained that by its terms the provision

declares void only an agreement that waives “compliance with any provision of” the Exchange

Act, which the Court read to prohibit only waiver of the act’s substantive obligations. 32 Based on

that understanding, the Court concluded that the anti-waiver provision does not render

Id. at 432.

Id. at 435.

See Rodriguez, 490 U.S. at 485-86 and Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 228-38

(1987) (“McMahon”).

McMahon, 482 U.S. at 228-29. The case involved a fraud claim under section 10(b) of the Exchange Act that a

customer had brought against a broker-dealer. 15 U.S.C. 78j(b). The arbitration proceeding was administered by

a self-regulatory organization (“SRO”). See 15 U.S.C. 78c(a)(26) (Exchange Act section 3(a)(26)). The

Commission filed an amicus curiae brief with the Supreme Court arguing that the anti-waiver provisions of the

Federal securities statutes did not preclude enforcement of the arbitration agreement between the brokerage firm

and its customer because of the Commission’s regulatory oversight over SRO arbitration procedures under

section 19 of the Exchange Act (“section 19”). 15 U.S.C. 78s. The amicus brief urged the Supreme Court to

adopt the position that a separate analysis would be required in situations where the Commission lacked

statutory oversight authority.

McMahon, 482 U.S. at 228-29.

unenforceable agreements that waive section 27 of the Exchange Act, 33 which confers Federal

courts with exclusive subject matter jurisdiction over violations of that Act, because this

jurisdictional provision does not impose any statutory duties. 34

Two years later, in another dispute involving a brokerage firm and its customer, the Court

reconsidered whether the anti-waiver provision in section 14 precludes the enforcement of

mandatory arbitration arrangements. Based on the text of the anti-waiver provision, the Court

held that section 14 applies only to the substantive provisions of the Securities Act, not to its

jurisdictional or procedural provisions. 35 Further, the Court explained that its prior holding in

1953 reflected a judicial hostility to arbitration that it has since abandoned:

Once the outmoded presumption of disfavoring arbitration proceedings is set to

one side, it becomes clear that the right to select the judicial forum and the wider

choice of courts are not such essential features of the Securities Act that [section]

14 is properly construed to bar any waiver of these provisions. Nor are they so

critical that they cannot be waived under the rationale that the Securities Act was

intended to place buyers of securities on an equal footing with sellers. 36

The Court also explained that “[t]o the extent that [its prior decision] rested on suspicion of

arbitration as a method of weakening the protections afforded in the substantive law to would-be

complainants, it has fallen far out of step with our current strong endorsement of the Federal

statutes favoring this method of resolving disputes.” 37 The Court concluded that “resort to the

arbitration process does not inherently undermine any of the substantive rights afforded to

petitioners under the Securities Act.” 38

Although these two Supreme Court decisions applying the anti-waiver provisions did not

involve the precise issue of issuer-investor mandatory arbitration provisions, we discern no

15 U.S.C. 78aa.

McMahon, 482 U.S. at 228.

Rodriguez, 490 U.S. at 482.

Id. at 481.

Id.

Id. 485-86.

reason to believe that any different result should follow. 39 Accordingly, we believe that the

inability to proceed in a judicial forum as a result of an issuer-investor mandatory arbitration

provision would not violate the anti-waiver provisions of the Federal securities statutes.

Moreover, in subsequent decisions, the Supreme Court has noted that, in any Federal

statute enacted after the Arbitration Act, which would include each of the Federal securities

statutes, there must be a “clearly expressed congressional intention” to override the act. 40 As the

Court has explained, “the intention must be ‘clear and manifest,’” 41 and while the Court has not

gone so far as to require unambiguous statutory language overriding the Arbitration Act, the

Court has explained that when Congress does not displace the FAA using unambiguous statutory

language, there is a “strong presumption” that the FAA applies exclusively to any issues

regarding the enforceability of the arbitration agreement, and the other Federal statute that gives

In rejecting Wilko’s negative assumptions regarding arbitration, the McMahon and Rodriguez decisions relied

on the enhanced oversight of the SROs’ arbitration processes (through greater authority over SRO rules) that the

Commission obtained as a result of certain amendments to section 19 in 1975. See McMahon, 482 U.S. at 23334 (“Since the 1975 amendments to [section] 19 of the Exchange Act … the Commission has had expansive

power to ensure the adequacy of the arbitration procedures employed by the SROs. No proposed rule change

may take effect unless the SEC finds that the proposed rule is consistent with the requirements of the Exchange

Act, 15 U.S.C. [section] 78s(b)(2); and the Commission has the power, on its own initiative, to ‘abrogate, add

to, and delete from’ any SRO rule if it finds such changes necessary or appropriate to further the objectives of

the Act, 15 U.S.C. [section] 78s(c).”) and id. at 233 (stating that “[e]ven if Wilko’s assumptions regarding

arbitration were valid at the time Wilko was decided, most certainly they do not hold true today for arbitration

procedures subject to the SEC’s oversight authority”). See also Rodriguez, 490 U.S. at 483 (referencing the

Commission’s “authority to oversee and to regulate [SRO-administered] arbitration procedures” in support of

its rejection of Wilko’s aversion to arbitration as an appropriate forum to entertain claims arising under the

Securities Act). We recognize that the broker-dealer arbitration arrangements at issue in McMahon and

Rodriguez were administered by SROs, which would not be the case with issuer-investor mandatory arbitration

provisions. Nonetheless, we do not understand either McMahon or Rodriguez to require that the Commission

have supervisory authority over the particular arbitration process employed in order for an issuer-investor

mandatory arbitration provision to be permissible under the Federal securities statutes. First, both decisions

were grounded on the separate rationale that Federal policy strongly favors enforcement of arbitration

agreements and that arbitration itself is a suitable means of resolving the kinds of commercial disputes arising

under the Federal securities laws. Second, any such understanding would be inconsistent with subsequent

Supreme Court decisions that, as discussed infra, establish a strong presumption that the Arbitration Act’s

policy favoring arbitration should control absent a clear and manifest statutory indication otherwise. Lastly, in

the three decades since McMahon and Rodriguez were decided, no subsequent decision has referred to

government oversight as a factor to consider in determining whether to enforce an arbitration agreement.

Epic Systems Corp., 584 U.S. at 510 (quoting Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S.

528, 533 (1995)).

Id. at 510 (citations and internal quotation marks omitted); see also id. (admonishing that a party arguing that

another Federal statute displaces the FAA’s mandate bears a “heavy burden”).

rise to the underlying substantive claims has no relevance to any arbitration issues. 42

In applying this standard, we can discern nothing in the Federal securities statutes that

demonstrates a clear and manifest congressional intention to displace the FAA in the context of

issuer-investor mandatory arbitration agreements. The absence of any clearly expressed

congressional intent is particularly striking given that in 2010 Congress expressly granted the

Commission rulemaking authority to limit, condition, or prohibit arbitration agreements between

broker-dealers and their customers and comparable authority over arbitration agreements

between, among others, investment advisers and their clients. 43

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.

When considering section 8(a) and Rule 461’s public interest and investor protection

standard for accelerating the effectiveness of registration statements, a concern has been that

issuer-investor mandatory arbitration provisions, which are presumed to be bilateral in nature, 44

could unduly impede the ability of investors to bring private actions to enforce the Federal

Id. at 510-11 (citation modified) (citing United States v. Fausto, 484 U.S. 439, 452, 453 (1988)). See, e.g., id. at

517 (explaining that the Court has “stressed that the absence of any specific statutory discussion of arbitration”

must be considered by courts to be “an important and telling clue that Congress has not displaced the

Arbitration Act”) and CompuCredit Corp., 565 U.S. at 104 (explaining that, in contrast to clear statutory

provisions that deal expressly with arbitration, it is “unlikely” that “Congress would have sought to achieve the

same result in the [statute at issue] through a combination of the nonwaiver provision” and certain other

statutory provisions that never expressly reference arbitration).

See 15 U.S.C. 78o(o) (“section 15(o)”) (“Authority to Restrict Mandatory Pre-dispute Arbitration .—The

Commission, by rule, may prohibit, or impose conditions or limitations on the use of, agreements that require

customers or clients of any broker, dealer, or municipal securities dealer to arbitrate any future dispute between

them arising under the Federal securities laws, the rules and regulations thereunder, or the rules of a selfregulatory organization if it finds that such prohibition, imposition of conditions, or limitations are in the public

interest and for the protection of investors.”) and 15 U.S.C. 80b-5(f) (“section 205(f))”) (“Authority to Restrict

Mandatory Pre-dispute Arbitration.—The Commission, by rule, may prohibit, or impose conditions or

limitations on the use of, agreements that require customers or clients of any investment adviser to arbitrate any

future dispute between them arising under the Federal securities laws, the rules and regulations thereunder, or

the rules of a self-regulatory organization if it finds that such prohibition, imposition of conditions, or

limitations are in the public interest and for the protection of investors.’’). See also Dodd-Frank Wall Street

Reform and Consumer Protection Act of 2010, Pub. L. No. 111-203, 124 Stat. 1376, section 921 (amending the

Exchange Act to add section 15(o) and amending the Investment Advisers Act to add section 205(f)).

See, e.g., Lamps Plus, Inc. v. Varela, 587 U.S. 176 (2019).

securities laws by foreclosing class-wide proceedings. 45

But in 2013, the Supreme Court rejected a nearly identical argument involving private

claims under the Federal antitrust statutes. In American Express Co. v. Italian Colors

Restaurant, 46 the Court held that the Arbitration Act requires the enforcement of a mandatory

arbitration agreement for bilateral arbitration even though the plaintiff’s cost of individually

arbitrating the antitrust claims would exceed the potential recovery. In the Court’s view,

enforcement of the arbitration requirement would not “contravene the policies of the antitrust

laws” because those laws “do not guarantee an affordable procedural path to the vindication of

every claim.” 47

In support of this conclusion, the Court observed that nothing in the Federal antitrust

statutes affords a right to bring a class action and, in fact, those statutes were enacted years

before class actions were even authorized in Federal courts. 48 No person seeking to vindicate a

For completeness, we note that there were two different legal theories (both based on dicta in Supreme Court

decisions from the 1980s) through which this policy concern could have provided a legal basis for concluding

that issuer-investor arbitration agreements were prohibited under the Federal securities statutes. The first

involved a potential application of the anti-waiver provisions that the Supreme Court did not consider in

McMahon and Rodriguez—i.e., whether undermining or effectively eliminating the economic incentive to

pursue a Federal securities law violation would violate the anti-waiver provisions by in effect “weakening”

investors’ ability to vindicate their rights to recover under the securities laws. See McMahon, 482 U.S. at 23031 (suggesting in dicta that the anti-waiver provision of the Exchange Act might preclude the enforcement of an

arbitration requirement if it “weakened” the ability of those protected by the securities laws to “vindicate” their

ability to recover). The other legal theory concerned the potential invocation of the “effective vindication”

exception, which is a judge-made exception to the FAA’s policy favoring arbitration agreements. See Mitsubishi

Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 637 n. 19 (1985). This exception—which the

Supreme Court has discussed only in dicta—would “prevent prospective waiver of a party’s right to pursue

statutory remedies,” id., and could potentially have been used to argue that bilateral arbitration effectively

denies injured investors a meaningful opportunity to seek a remedy by effectively eliminating their economic

incentive to do so. As discussed above, however, the Supreme Court has now effectively foreclosed any

argument that an arbitration agreement should not be enforced if, by precluding class-action relief, it would

eliminate the economic incentive for many victims to seek relief for their private securities law claims.

570 U.S. 228 (2013) (“Italian Colors”).

Id. at 233. When the decision speaks about an “affordable procedural path,” it appears to mean a procedural

path that is worth pursuing financially given the potential monetary recovery. See id. at 231 (“In resisting the

motion, respondents submitted a declaration from an economist who estimated that the cost of an expert

analysis necessary to prove the antitrust claims would be ‘at least several hundred thousand dollars, and might

exceed $1 million,’ while the maximum recovery for an individual plaintiff would be $12,850, or $38,549 when

trebled.”); id. at 236 (“But the fact that it is not worth the expense involved in proving a statutory remedy does

not constitute the elimination of the right to pursue that remedy.”) (emphasis excluded).

Id. at 234. The Sherman Act, 15 U.S.C. 1-7, was enacted in 1890. The Clayton Act, 15 U.S.C. 12-27, and the

Federal Trade Commission Act, 15 U.S.C. 41-58, were enacted in 1914.

claim under the Federal antitrust statutes in a bilateral arbitration proceeding that forecloses

class-action or collective proceedings would, in the Court’s view, be any worse off than a person

proceeding under those statutes when they were enacted because at that time there was no

allowance for class or collective procedures. 49 Based on that historical perspective, the Court

ultimately found no difficulty with enforcing the agreement for bilateral arbitration and

concluded that the FAA controls. 50 As the Court explained, because nothing in the Federal

antitrust statutes affords a right to vindicate one’s private claims through class or collective

actions, the “contrary congressional command” required by the Court’s decisions to displace the

Arbitration Act’s policy favoring arbitration was lacking. 51

Similar to the Court’s findings with the Federal antitrust statutes, no provision in the

Federal securities statutes “guarantee[s] an affordable procedural path to the vindication of every

claim.” 52 Further, like the Federal antitrust statutes, the Federal securities statutes do not

expressly include a right to proceed through class actions or collective actions. Finally, because

the Securities Act and the Exchange Act (like the antitrust statutes at issue in Italian Colors)

were enacted before class-action proceedings were permitted, it stands to reason that “the

individual suit” based on claims under those acts that was considered adequate and consistent at

the time those statutes were enacted remains so notwithstanding the advent of class-action

litigation. 53 Accordingly, the potential for an issuer-investor mandatory arbitration provision to

Italian Colors 570 U.S. 228, at 236. (“The class-action waiver merely limits arbitration to the two contracting

parties. It no more eliminates those parties’ right to pursue their statutory remedy than did federal law before its

adoption of the class action for legal relief in 1938.”) (internal citations omitted). See also id. at 236-37

(explaining that “the individual suit that was considered adequate to assure ‘effective vindication’ of a federal

right before adoption of class-action procedures did not suddenly become ‘ineffective vindication’ upon their

adoption”).

Id. at 234 (explaining that because the parties agreed to bilateral arbitration, “it would be remarkable for a court

to erase that expectation”).

Id. at 232-33.

Id. at 233.

See id. at 236-37. This argument does not apply to claims under the Trust Indenture Act, Investment Company

Act, or the Investment Advisers Act because those statutes were enacted after the Federal rules of civil

diminish, or even eliminate, the economic incentive for some investors to bring private claims

under the Federal securities laws is not a sufficient basis to conclude that the Federal securities

statutes displace the Arbitration Act’s mandate. 54

III.

Conclusion

For the reasons discussed above, the Commission has determined that the presence of an

issuer-investor mandatory arbitration provision will not impact decisions regarding whether to

accelerate the effectiveness of a registration statement. While the discussion above focuses on

the Court’s application of the FAA, we acknowledge there may be instances in which the FAA

does not apply, such as where there is no valid and enforceable written agreement for purposes

of the FAA. Given that neither the Commission nor the staff is well-positioned to conclusively

determine when the FAA applies, 55 and in light of the case-law developments discussed above,

we believe that any relevant issues concerning an issuer-investor mandatory arbitration provision

are best addressed through complete and adequate disclosure of material information in the

registration statement. Accordingly, when considering acceleration requests pursuant to section

8(a) and Rule 461, the staff will focus on the adequacy of the registration statement’s

disclosures, including disclosure regarding issuer-investor mandatory arbitration provisions.

Nothing in this statement should be understood to express any views on the specific terms of an

arbitration provision, or whether arbitration provisions are appropriate or optimal for issuers or

procedure were amended to permit class-wide relief. Nonetheless, we believe that the FAA’s mandate controls

even if injured persons lack an economic incentive to pursue bilateral arbitration for claims under these statutes.

Because these statutes do not afford an entitlement to class-wide relief and Congress did not provide such a

right when it authorized class-wide procedures in Federal litigation, they lack a clear expression of a

congressional intention to displace the FAA. See id. at 234 (explaining that “congressional approval of Rule 23

[of the Federal Rules of Civil Procedure]” does not “establish an entitlement to class proceedings for the

vindication of statutory rights”).

The Supreme Court has instructed that the FAA’s policy favoring arbitration agreements is not impacted even

when the one party with superior bargaining power may have imposed the arbitration requirement. See

Concepcion, 563 U.S. at 340-41.

See supra notes 19-24 and accompanying text.

investors.

IV.

Other Matters

Pursuant to the Congressional Review Act, 56 the Office of Information and Regulatory

Affairs has designated this policy statement as not a “major rule,” as defined by 5 U.S.C. 804(2).

This statement is a significant regulatory action under Executive Order 12866, as amended, and

has been reviewed by the Office of Management and Budget.

This statement does not impose any new rules, regulations, or other requirements on

issuers, but could influence issuer behavior to the extent that an issuer did not previously have an

issuer-investor mandatory arbitration provision. This is in part due to concerns about potential

impacts on acceleration requests. After publication of this statement, it is possible that some

issuers may adopt issuer-investor mandatory arbitration provisions, which could potentially deter

or prevent some investors from filing civil actions arising under the Federal securities laws. For

both issuers and investors, adoption of such provisions would likely impact the cost of resolving

future investor claims for damages and the extent of any monetary or other relief that might be

awarded in connection with such claims. However, it is difficult to estimate how many issuers

are likely to adopt issuer-investor mandatory arbitration provisions, or the ultimate economic

impact of any such provisions, if adopted.

Some issuers may choose not to include such provisions due to potential state law

considerations or concern about potential negative reactions from shareholders and other

investors. Actions or potential actions by others, including proxy voting advice businesses, stock

exchanges, and institutional investors, can be expected to influence the number of issuers who

adopt arbitration of issuer-investor claims arising under the Federal securities laws. Further,

some issuers may already have issuer-investor mandatory arbitration provisions, irrespective of

this statement. A number of other issuers may have no plans to register an offering or class of

5 U.S.C. 801 et seq.

securities, and thus would not be affected by this statement.

Statutory Authority

The statement contained in this release is being adopted pursuant to the authority set forth

in section 19 of the Securities Act and section 23 of the Exchange Act.

List of Subjects in 17 CFR Parts 231 and 241

Securities.

Text of Amendments

For the reasons set forth in the preamble, the Commission is amending title 17, chapter II

of the Code of Federal Regulations as follows:

PART 231 — INTERPRETATIVE RELEASES RELATING TO THE SECURITIES ACT

OF 1933 AND GENERAL RULES AND REGULATIONS THEREUNDER

1. The authority for part 231 continues to read as follows:

Authority: 15 U.S.C. 77a et seq.

2. Amend § 231 by adding an entry at the end of the table to read as follows:

Subject

Release No.

*******

Acceleration of Effectiveness of

Registration Statements of Issuers

33-11389

with Certain Mandatory

Arbitration Provisions

Date

Fed.

Reg.

Vol. and

page

[INSERT FEDERAL

Sept. 17, 2025 REGISTER DOCUMENT

CITATION].

PART 241 — INTERPRETATIVE RELEASES RELATING TO THE SECURITIES

EXCHANGE ACT OF 1934 AND GENERAL RULES AND REGULATIONS

THEREUNDER

3. The authority for part 241 continues to read as follows:

Authority: 15 U.S.C. 78a et seq.

4. Amend § 241 by adding an entry at the end of the table to read as follows:

Subject

Release No.

*******

Acceleration of Effectiveness of

Registration Statements of Issuers

34-103988

with Certain Mandatory

Arbitration Provisions

By the Commission.

Dated: September 17, 2025.

Vanessa A. Countryman,

Secretary.

Date

Fed.

Reg.

Vol. and

page

[INSERT FEDERAL

Sept. 17, 2025 REGISTER DOCUMENT

CITATION].

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.