What Experts Are Saying
Academics
Carliss Chatman, Professor at Southern Methodist University, Bloomberg, December 8, 2025
“Even with the SEC’s policy shift, most public companies see mandatory arbitration of securities claims as destabilizing rather than protective. The fact that only a small, idiosyncratic issuer has adopted such a clause tells us that companies serious about reducing litigation risk continue to prefer predictable judicial oversight”
Nell Minow, Corporate Governance Scholar, December 4, 2025
“It's really important as we are looking at the overwhelming assault on shareholder rights and access to information. That we keep our eye on both the individual elements and the big picture. And then therefore the second metaphor is whack-a-mole.”
“The focus is on shareholder access to information, shareholder rights, shareholder access to independent analysis. If there were a movie to explain where we are right now, it would be the Empire Strikes Back because all of this dates back to ExxonMobil.”
“It's not a coincidence that Exxon Mobil is out front in trying to basically be both the umpire and the and the uh hitter and the pitcher in the same game by taking back the right to vote shares on behalf of the shareholders. It's because of Exxon Mobil and the engine number one proxy contest that American corporations have become so frantic about this that they're just avalanching money to lobbyists to get all these changes.”
“Remember that those who love to rhapsodize about the purity of the free market turn into snowflakes when they don't like what the free market has to say.”
Ann Lipton, Professor at University of Colorado Law School, 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."
Legal Experts
Laura Posner, partner at Cohen Milstein, Capitol Account, December 10, 2025
“Forced arbitration allows struggling or high-risk companies to operate with less transparency and fewer consequences, leaving smaller retail investors, in particular, without the recourse they’ve been assured of for decades.”
Laura Posner, partner at Cohen Milstein, Capitol Account, November 21, 2025
"[Institutional] investors have fiduciary obligations to their members. They are going to have to bring arbitrations. We’re not talking about one litigation or five litigations or 10 litigations. We are talking, in certain circumstances, likely hundreds of separate arbitrations. The defendants in these cases are the CEO, the CFO – the senior executives are the witnesses. So you’re going to have your CEO deposed 200 times? That is not a manageable way to conduct business."
Jeroen van Kwawegen, securities attorney, Law.com, October 29, 2025
"You're going to have thousands of arbitrations. There is no more global release. When people think about plaintiff's lawyers—the plague of us—they never think about the peace that we actually provide.”
Appointed or Elected Officials
Caroline A. Crenshaw, SEC Commissioner, December 11, 2025
“As I mentioned earlier, the Commission has given permission to issuers to enforce mandatory arbitration provisions against their shareholders, meaning (i) less private enforcement of the law, and (ii) confidentiality provisions that will keep corporate wrongdoing out of the public eye.”
“Deterring misconduct is a public good. Without deterrence, there is no accountability. Corporate actors comply with the rules because failing to do so, under normal circumstances, is costly. When we remove the tools that detect fraud and we make it less costly to commit fraud, people will commit more fraud. It’s that simple.”
Caroline A. Crenshaw, SEC Commissioner, POLITICO, December 9, 2025
“The true advisability of all these policies will reveal themselves eventually. But I certainly wouldn’t be alone in analogizing the trend toward deregulation in this current environment to the period immediately prior to the stock market crash in 1929.”
“We’re reducing corporate accountability. In my view, deterring misconduct is a public good. Corporate actors come into compliance with the rules because failing to do so has costs. But we’re moving away from the deterrence framework: dropping litigations, lower enforcement numbers, lower civil penalties, presidential pardons, allowing mandatory arbitration, meaning no-class action private enforcement of shareholder rights. Our whistleblower cadence has really ground down to almost a halt.”
Caroline A. Crenshaw, SEC Commissioner, IAC Meeting, December 4, 2025
“The Commission has issued a policy statement effectively permitting public companies to employ mandatory arbitration clauses to prevent shareholders from litigating either their singular or class action claims in federal court not leaving the decision up to them.”
“And we certainly have not measured the cumulative effect of these policy changes, which I've been told repeatedly in the past is important to members of industry.”
“Moreover, we have not benefited from the considered feedback of impacted investors. Investors who will have fewer disclosures less input over how the management of the companies they own put their investor dollars to work, and potentially fewer, if any, avenues of redress when they are victims of fraud.”
“Indeed, all of these changes lopsidedly inure to the benefit of management and to the detriment of shareholders, corporate accountability, and the governance structures that provide checks on corporate decision makers.”
Policy Experts
Tyler Gellasch, Chief Executive of Advocacy Group Healthy Markets Association, Financial Times, December 8, 2025
“It makes sense that a desperate company that’s been steadily losing money would want to block lawsuits from its shareholders. What doesn’t make sense is why anyone would think that it would make investors want to give that company or its management more money.”
“When a company is trying to protect itself from the consequences of lying to its shareholders, that doesn’t instil investor confidence in the company or its management.”
Andrew Behar, Board Chair and President of As You Know and the CEO of As You Sow, Fortune, December 5, 2025
“The third pillar — limiting securities litigation — further weakens the mechanisms that hold public companies accountable. Atkins insists shareholders will retain the ability to bring “meritorious claims,” but such language is cover for weakening standards, shortening deadlines, or raising barriers to class actions. By doing so, the SEC risks making justice inaccessible to the very investors it is meant to protect. For many Americans, class actions are the only realistic recourse when corporate misconduct wipes out savings. If disclosure declines, shareholder engagement is restricted, and litigation is limited, a perfect storm emerges: fewer warnings, fewer questions, fewer consequences.”
Séverine Neervoort, Global Policy Director of ICGN, IAC Meeting, December 4, 2025
“An erosion of shareholder rights in the United States, a trend that risk weakening America's position as the world's leading destination for global capital.”
“We're deeply concerned by the recent announcements from the division that it will not respond substantively to most Rule 14A8 no action request this proxy season. Shareholder resolution are vital mechanisms which company owners can raise ideas and concerns with management and all shareholders. So they are not indeed the only tool, they are not the only way, but they've been quite instrumental in driving improvements to corporate governance in the United States. And for decades, issuers and investors have relied on SEC staff guidance, although advisory it has been an independent and trustworthy check that gives procedural clarity. And it has been, it has helped curb the potential for arbitrary exclusion of shareholder proposals by boards of directors.”
“So by stepping back from the process, the SEC risks significantly reducing shareholder influence, but also the important checks and balances that protect the long-term interests of the company and its owners.”
“There is the risk that we will see increased opposition from investors through votes against board of directors, and that perhaps companies will be exposed to increased litigation. So you limit the constructive channels that are in place for investor expression, and that I think there is a risk that the new framework escalates tensions between the company owner and management, which is really I suppose not intended.”
“Mandatory arbitration were also mentioned earlier and I won't go into the detail, but I think the the new policy shift can really constrain investors' ability to seek redress. They often preclude collective actions and move disputes into private forums that do not create the legal precedent. So you erode transparency, legal certainty, and market discipline. And for investors, especially minority investors, seeking remedies through public courts is a cornerstone of shareholder rights, risk lowering the quality of the due process and the governance standards in the United States, thereby presenting a risk to the attractiveness of the capital market.”
Defense Bar
Shah, French, and Adams, Cooley LLP, November 11, 2025
“The SEC’s policy statement emphasized two main takeaways. First, the SEC is taking a neutral stance on mandatory arbitration provisions – specifically, ‘the presence of an issuer-investor mandatory arbitration provision will not impact decisions whether to accelerate the effectiveness of a registration statement under the Securities Act.’ Second, disclosure remains paramount. The SEC made clear that it will ‘focus on the adequacy of the registration statement’s disclosures, including disclosure regarding issuer-investor mandatory arbitration provisions.’ The SEC concluded that mandatory arbitration provisions are not inconsistent with the federal securities laws. But the SEC left open key questions related to state law preemption – an area that will be closely watched going forward.”
Scott N. Sherman and Matt Gorga, Nelson Mullins, Blog, October 27, 2025
“Importantly, the SEC’s policy statement does not guarantee the enforceability of these provisions. Companies must still navigate a patchwork of state corporate laws, which may restrict or condition the use of mandatory arbitration. ... Moreover, the broader issue of whether the FAA preempts such state restrictions remains unresolved and is likely to be the subject of future litigation.”
“[R]egardless of the technically unresolved preemption questions, some scholars still believe that, notwithstanding the FAA and current Supreme Court precedent, it will “be trivially easy for courts to conclude that an arbitration provision set forth in the charter or bylaws of a public corporation is unenforceable against shareholders,” because corporations are “a creation of state law” and this issue “it is a matter of equity and the integral role that a state plays in chartering corporations.”
Maurice Pesso, Kennedys, Law360, October 9, 2025
"Securities class actions, for all the bad press that they get, are actually not terrible for publicly traded companies in the form of consolidating a problem and giving you a mechanism to resolve that problem in a single forum with a single lead plaintiff."
Covington, October 7, 2025
“Some commentators have suggested that the adoption of mandatory arbitration provisions could lead to a decrease in securities class action lawsuits. While this result is certainly possible, as we discuss below, the enforceability of such provisions is not clear, and there are countervailing considerations that may make the adoption of mandatory arbitration provisions undesirable in certain circumstances.”
Jeffrey L. Steinfeld and Michael J. Stern, Winston & Strawn, October 6, 2025
“In deciding whether to adopt a mandatory arbitration provision, issuers should consider how investors may react, along with the views of other constituents such as proxy advisory firms and insurance providers. For example, CalPERs almost immediately voiced disagreement with the SEC’s policy change, and the Council of Institutional Investors has previously opposed the use of arbitration clauses in corporate bylaws.”
Herbert Smith Freehills Kramer, October 3, 2025
“In certain instances involving arbitration provisions that preclude class actions, plaintiffs’ attorneys have responded with mass arbitration tactics — whereby they have filed hundreds or more of individual arbitrations — that can force companies to incur costs to defend against claims they may not consider meritorious.”
DLA Piper, October 1, 2025
“Arbitration does not offer the same finality as a class action, which allows companies to resolve the claims of all class members at once subject to the ability of individual class members to opt out. It also may require issuers to incur significant up-front costs, since companies typically pay most of the filing and arbitrator fees in such proceedings. Further, arbitration – especially mass arbitration – likely would not materially lessen the attorneys’ fees issuers would incur defending securities claims.”
“The SEC’s policy statement did not express a view on whether issuer-mandated arbitration provisions are enforceable or appropriate for issuers or investors. Investors likely will challenge such provisions under Section 14 of the Securities Act of 1933 and/or Section 29(a) of the Exchange Act of 1934, both of which provide that “[a]ny condition, stipulation, or provision binding any person to waive compliance with any provision of this chapter . . . shall be void.” 15 U.S.C. § 77n; 15 U.S.C. § 78 cc.”
Woodruff Sawyer October 1, 2025
“First, it’s a truth universally acknowledged that no one wants to jeopardize what could otherwise be a successful IPO. For this reason, expect potential pushback from everyone, from your investment bankers to your attorneys. The concern is that, when it comes to an IPO, if you are explaining anything other than your business, you may already be losing. ... Until and unless it becomes a norm, first movers in adopting mandatory arbitration provisions could be seen as less desirable investments by some governance-focused money managers.”
Jenner & Block, October 2025
“The Statement has not been without criticism, however, with some viewing it as a shift away from consumer protection. Indeed, the decision itself only passed by three-to-one majority, on account of a forceful dissenting opinion from Caroline Crenshaw, the only Democratic SEC commissioner on the panel, who stated that the Statement “finds another way to stack the deck against investors – this time primarily small, retail shareholders in public companies.”
Freshfields, September 30, 2025
“Another potential roadblock to charters and other organizational documents with mandatory arbitration is the receptiveness of investors. Activist investors and proxy voting advisors may mobilize against these provisions. Moreover, investor concerns with mandatory arbitration provisions and their impact on shareholder remedies could affect investor decisions to participate in IPOs.”
Ballard Spahr, September 29, 2025
“Moreover, it is unknown whether large underwriters and institutional investors will accept the inclusion of an arbitration provision. Underwriters and institutional investors play a large role in shaping the governance of an IPO company to ensure that the company is attractive in the public markets. These institutional investors are the companies that often serve as named plaintiffs in securities class actions, and they may be less likely to make a substantial investment in a company that requires mandatory arbitration.”
Lockton, September 28, 2025
“In addition, even if arbitration may deter some individual shareholders from bringing claims, IPOs could still face the prospect — and cost — of a myriad of separate arbitrations that would have to be defended, with the risk of inconsistent results and the proverbial “death by a thousand cuts.” In the long run, plaintiff shareholders and corporate defendants alike may also find a lack of court opinions issued in shareholder litigation to be problematic, as case law helps to provide more consistent and predictable outcomes for all parties.”
Skadden, Arps, Slate, Meagher & Flom LLP, September 26, 2025
“The SEC’s decision represents a sharp break with past practice. For decades, the SEC held to the view that mandatory arbitration clauses could potentially violate the anti-waiver provisions of the federal securities laws by foreclosing a judicial forum and unduly impeding private investors’ ability to vindicate their rights under federal securities laws by precluding class actions in the courts.”
John Coates, Professor at Harvard Law School, IAC Meeting, December 4, 2025
“I really do think issuers would be worse off with class arbitration than with class action. Class actions because they lead to a trial and potential public, you know, they there's a whole apparatus set up designed to weed out bad claims.”
“And I know issuers think there's still weak claims that are broad and they get too far into the process, but you go into arbitration where you don't have those procedural ways to get rid of cases, and you have an arbitrator whose tendency is to split the difference when close questions.”
“The expected losses for companies on weak claims would go up. Now, the alternative may be, well, we don't have class actions of any kind anymore. And that would be a dramatic reduction of the ability of investors to protect their rights.”
“And unlike the consumer contract context where most of us like are never gonna bargain with AT&T over our arbitration clause. Investors will change the cost of capital if you take away their ability to sue for fraud, which is what would happen if you got rid of class actions altogether.”
“The cost of capital would go up just as it has in every other country, which is why, by the way, notwithstanding Atkin’s views on this topic. Thousands of companies come here and voluntarily list and take on liability risk. Because the trade-off, lower cost of capital in return for some pesky litigation now and then, is worth it to them. And I just think fundamentally the idea of moving to arbitration across the board, again, like some of these other ideas, is not an equilibrium. It's just not going to ultimately work.”
Adam Zimmerman, Professor at University of Southern California, Bloomberg, September 25, 2025
“There have been plaintiffs’ attorneys who have adopted these really interesting business models to file tens, if not hundreds or thousands, of arbitration cases all at once.”
Lauren Ormsbee, a partner at Labaton Keller Sucharow, 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, 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.”
Caroline A. Crenshaw, SEC Commissioner, 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.”
Elizabeth Steiner, Oregon Treasurer, 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.”
Michael D. Scott, Director of the National Coordinating Committee for Multiemployer Plans, Bloomberg, November 5, 2025
“Forced arbitration creates costly, uncertain, and inefficient proceedings that benefit no one—not participants, not plan sponsors, and ultimately not the companies themselves.”
Corey Frayer, Director of Investor Protection at the Consumer Federation of America, October 23, 2025
“There is a concerted effort by this SEC to essentially eliminate the ability of shareholders to hold corporations accountable. “The direction Chairman Atkins is moving is quite out of line with the mainstream, and you’re starting to hear people come out and say that.”
“He adds that the resistance is just getting started: “I don’t think I’ve had enough time to estimate how big this coalition will grow, but out of the gate it is clear there is broad concern among a lot of actors.”
Amanda Fischer, Policy Director & COO of Better Markets, October 16, 2025
“What’s missing in this tornado of activity is a core duty of the Commission: to engage in rulemaking with considered, public input from stakeholders across the economy.”
“The SEC has abandoned ‘regular order’ for how it is supposed to consider proposals that seek to change rules under the federal securities laws.”
“Instead, the Chair has advanced his agenda through a combination of legal maneuvers and staff actions that may effectively accomplish his goals but robs the public of the crucial input to which they are entitled under the APA.”
“This sneaky mode of effectively rescinding the rule without going to the trouble of formally rescinding it via a public process amounts to a ‘repeated flouting of the APA.’”
“Rules of such broad effect should be set by the full Commission, not by staff answering only to the Chairman.”
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.”
Mintz, September 26, 2025
“There are several advantages to adjudicating federal securities class actions in court rather than in arbitration that should not be overlooked – including those afforded under the federal Private Securities Litigation Reform Act of 1955 (PSLRA). ... the PSLRA, where applicable, imposes an automatic stay of discovery in all cases where defendants have filed a motion to dismiss. ...The PSLRA also heightens the standards that must be met to successfully plead a securities law claim.”
“Before taking the plunge and incorporating such mandates, companies and their advisors should carefully account for the advantages that they may forfeit under the PSLRA and other court rules if they opt to defend securities suits before private arbitrators.
“Even if defendants successfully defend a stockholder’s suit in arbitration, then, they face the prospect of having to relitigate the same claim filed by a different yet similarly situated investor. Defendants, in theory, face the prospect of adjudicating dozens, if not hundreds, of similar suits piecemeal – an expensive and inefficient way of achieving “finality” as to their legal exposure.”
“The adjudicators of any dispute (arbitrators and judges included) do not always rule correctly, but corporate defendants litigating class actions in state and federal court can appeal bad decisions – sometimes with a corresponding stay to the original court’s ability to advance the litigation while the appeal is pending. Arbitration awards, by contrast, can only be appealed on very narrow grounds, and are almost never overturned.”
Cleary Gottlieb, September 25, 2025
"Mandatory arbitration could result in companies being bombarded with hundreds if not thousands of separate arbitration cases, requiring the company to pay filing fees for each matter, with limited ability for consolidation, and with no mechanism for a release on a collective basis. This could ultimately cost more money, take more time and result in less finality than defending a class action in federal court."
“Against this backdrop, issuers will need to evaluate whether they would like to adopt mandatory arbitration provisions (if permissible under applicable state law). While there are certainly some advantages, such as potentially reducing frivolous lawsuits and potentially benefitting from enhanced confidentiality protections in arbitration compared to litigation, it is possible such a provision could ultimately cause more harm than good for companies"
A&O Shearman, September 24, 2025
“Companies should consider how their current and future investors may react, including how institutional investors may view such provisions and whether the presence of such provisions could affect the price at which those investors are prepared to invest.”
Bryan Cave Leighton Paisner, September 22, 2025
“It is not clear that corporations would benefit from adopting mandatory arbitration clauses. Some corporate counsel believe that corporations could incur greater litigation cost and risk if shareholders are required to bring individual arbitrations, which could not be litigated and resolved on a classwide basis.”
“Many investors, including the Council of Institutional Investors and CalPERS have expressed strong opposition to the inclusion of mandatory arbitration provisions. In 2020, only 2.4% of shareholders supported a stockholder bylaw proposal to require arbitration of shareholder claims, indicating that the largest shareholders, including T. Rowe Price and Vanguard, opposed the proposal, as did management. Adoption might trigger the interest of activists, potentially leading to proxy contests or other actions challenging management and the board. It may be uncertain how investors respond to IPOs that include such provisions, including any effect on pricing or interest.”
“While Supreme Court precedent applying the Federal Arbitration Act (FAA) has allowed mandatory arbitration clauses of federal and state claims including under the securities laws, those decisions have been relied on by contracting parties’ agreeing to arbitration, as in customer agreements with securities brokerage firms. While corporate bylaws and charters could possibly serve that function, it may be more difficult to demonstrate this if the provision was unilaterally adopted by the board without a shareholder vote after an IPO. As a result, early adopters may face litigation challenging such provisions.”
Matthew Close, O’Melveny & Myers vice chair and co-chair of the Securities Litigation practice, Law.com, September 22, 2025
“Make no mistake, companies that move forward on this… will attract lawsuits challenging these provisions.”
Gibson, Dunn & Crutcher LLP, September 19, 2025
“[I]n an age of mass arbitration threats and the absence during arbitration of certain procedural protections of the Private Securities Litigation Reform Act, companies would need to carefully evaluate the pros and cons of a mandatory arbitration process.”
Sidley Austin LLP, 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.”
“In federal court, companies have the full panoply of Private Securities Litigation Reform Act protections (including a heightened pleading standard and a discovery stay pending a motion to dismiss).6 The federal judiciary generally has substantial experience adjudicating these cases, while the quality of decision-making of an arbitration panels can be more varied.”
Douglas Greene, Baker Hostetler Securities and Governance Litigation Chair, July 24, 2017
“These unmanageable and unpredictable economics would disrupt D&O insurance purchasing decisions and cost. Under the current system, D&O insurers and brokers can reliably predict the risk a particular company faces based on its size and other characteristics. A company can thus purchase a D&O insurance program that fits its risk profile.”
“These arbitrations would be unmanageable. Each plaintiffs’ firm would recruit multiple plaintiffs to initiate one or more arbitrations—resulting in potentially dozens of arbitrations over a disclosure problem. ... In a world without securities class actions, the adversary would be far, far worse—a collection of plaintiffs and plaintiffs’ firms with no set of rules for getting along. Securities-disclosure arbitrations would cost multiple times more to defend and resolve.”
“Indeed, executives who do their best to tell the truth really have nothing to fear under the securities laws. The law gives them plenty of protection, and the predictability of the current system allows them to understand their risk and resolve litigation with certainty. There are certainly problems with the current system, but...they primarily stem from the splintered structure of the defense bar and the skyrocketing legal fees charged by the typical defense firms—not from the litigation itself.”
“The world of securities litigation with securities class actions is far safer for companies and their directors and officers than it would be without them. Predictability of the process and outcomes are key to a manageable system of resolving securities disclosure disputes. Mandatory arbitration would disrupt both process and outcomes.”