Consistent with our prior posts on this topic (see our posts " Mandatory Arbitration", " Coalition of State Treasurers Oppose Mandatory Arbitration" and " Mandatory Arbitration Provisions") the Securities and Exchange Commission appears to be deferring taking any view on the inclusion of mandatory arbitration provisions in public company bylaws. Chair Clayton's recent comments on mandatory arbitration provisions came in the context of an inquiry from a company that sought guidance from the Staff of the Division of Corporation Finance regarding excluding a shareholder proposal from its proxy statement. Under Rule 14a-8(i)(2), the company sought to omit from its proxy statement the shareholder proposal and the company argued that the proposal, were it to be adopted, would result in a violation of both federal and state law. In this particular instance, the Division stated it would not recommend enforcement action if the company were to exclude the proposal based on its arguments that it would violate applicable (New Jersey) state law. However, the Staff of the Division expressly noted that it was not opining on whether the proposal, if implemented, would violate federal law. Chair Clayton reaffirmed his belief that "any SEC policy decision on this subject should be made by the Commission in a measured and deliberative manner." See his remarks here.
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