BFA Partner Erin Woods was featured in the National Council on Teacher Retirement (NCTR) article titled, “The SEC Reverses Course on Mandatory Arbitration: What are the Implications for Institutional Investors.”
The article examines the U.S. Securities and Exchange Commission’s (SEC) recent decision to allow companies going public to include mandatory shareholder arbitration clauses in their governing documents, marking a significant policy shift that has drawn concern from institutional investors, pension systems, and securities litigation professionals.
This feature follows Erin’s participation in a panel discussion at the NCTR Annual Conference, titled “Investments and Corporate Governance.” The session, moderated by Kevin Catlett, Chief Investment Counsel of Utah Retirement Systems, addressed a range of issues related to corporate governance and securities litigation, including the SEC’s new arbitration policy and its implications for investors.
Erin discussed the potential consequences of mandatory arbitration for investors and the broader market:
“Requiring thousands of individual arbitrations is an inefficient process that will drag on for many years – much longer than a typical securities class action,” Erin said. “Different arbitrators will issue varying decisions that will remain confidential, thereby preventing transparency and accountability. This process will reduce investor confidence in the integrity of the U.S. markets and may ultimately discourage investment.”
