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Rules & Regulations

SEC Commissioner Piwowar Supports Mandatory Arbitration Clauses

July 18, 2017

SEC Republican Commissioner Michael Pinowar expressed support for possibly allowing companies to tuck language into their IPO paperwork that would force shareholders to resolve claims through arbitration rather than in court, Reuters reports.


"For shareholder lawsuits, companies can come to us to ask for relief to put in mandatory arbitration into their charters. I would encourage companies to come and talk to us about that."


Pinowar made the remarks at the conservative-leaning Heritage Foundation just a few days after SEC Chair Jay Clayton signaled plans to scale back regulatory burdens that may be discouraging or delaying companies from going public. As part of that plan, Clayton invited companies to petition the SEC for exemptions from certain disclosure requirements.


While Clayton didn't specifically mention requests to include mandatory arbitration provisions in public offering documents, Piwowar said he thinks the issue falls more broadly into efforts by the SEC and its new Corporation Finance Division Director to be more collaborate in how it works with companies during the IPO review process.