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SEC keeps options open for mandatory shareholder arbitration

Joe Mont | March 6, 2018

Every few years, going back to at least the 1980s, a trial balloon is floated on the topic of whether the Securities and Exchange Commission should allow companies to impose mandatory arbitration for shareholders.

This time around, a suggestion came by way of relatively new SEC Chairman Jay Clayton with remarks amplified by coverage by Bloomberg.

Clayton testified before the Senate Banking Committee recently that any such move would take significant time to hash out among the full Commission, if only to dispel illusions that such a change would come quickly, if at all.

Clayton would very likely, however, have at least one vote in favor of it. The most recent debate began in the summer of 2017 when Commissioner Michael Piwowar spoke at the conservative Heritage Foundation and took the opportunity to urge pre-IPO companies to try including mandatory shareholder arbitration provisions in corporate charters should they so choose.

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