November 6, 2025
Summary by Bloomberg AI
- New York pension plans and other investors have called on the SEC to reverse a policy that lets companies push shareholders’ fraud claims into arbitration.
- The SEC’s action permits companies to insert clauses in their registration statements to force investors into arbitration instead of litigation to resolve securities fraud claims.
- Investor attorneys have slammed the move, saying “forced arbitration creates costly, uncertain, and inefficient proceedings that benefit no one” according to Michael D. Scott.
New York pension plans and other big investors have called on the SEC to reverse a new policy that lets companies push shareholders’ fraud claims into arbitration instead of litigation.
The Securities and Exchange Commission in September limited shareholders’ longstanding court access for a “costly, unproven, and unwieldy system of private arbitration,” New York city and state pension plans said in a Nov. 3 letter to SEC Chairman Paul Atkins. Chicago Teachers’ Pension Fund, Denver Employees Retirement Plan, and dozens of other institutional investors and advocates joined them in the letter.
The SEC’s action permits companies to insert clauses in their registration statements to force investors into arbitration instead of litigation to resolve securities fraud claims. The new policy isn’t binding on companies, but could “influence issuer behavior,” according to the Republican-led agency.
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“Forced arbitration creates costly, uncertain, and inefficient proceedings that benefit no one—not participants, not plan sponsors, and ultimately not the companies themselves,” Michael D. Scott, executive director of the National Coordinating Committee for Multiemployer Plans, said in a statement to Bloomberg Law on Wednesday. The pension plan advocate was among the signatories.
Read New York Pension Funds Ask SEC to Ax Curbs on Investor Suits.