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Should the SEC Allow IPOs When Bylaws Require Arbitration of Federal Securities Claims?

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Davies Andrew Rhys
Andrew Rhys Davies


New York

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31 July 2018

The last time it confronted the issue, in 2012, the SEC effectively blocked the IPO of a U.S. company, Carlyle Group, whose governing documents required the arbitration of federal securities claims.

There has been renewed interest in whether the SEC should allow a U.S. company to conduct a registered initial public offering if its bylaws require shareholders to arbitrate federal securities claims. In April 2018, SEC Chair Jay Clayton said that resolving this knotty issue is not a priority for the Commission, but the Supreme Court’s May 2018 pro-arbitration decision in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018), may embolden an IPO candidate to force the issue.​

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