On October 9, SEC Chairman Paul Atkins delivered keynote remarks at a corporate governance event, addressing a range of topics including public company disclosures, shareholder proposals, and securities litigation. In his speech, Atkins stated he was disappointed with recent amendments to Delaware’s General Corporation Law, via SB 95, that he asserted (i) prohibit mandatory arbitration for federal securities law claims by “permitting forum selection,” and (ii) bar corporations from adopting fee-shifting provisions that would allow such corporations to recover legal expenses from unsuccessful shareholder suits.
Atkins argued that these changes “effectively eliminated Delaware as an option for incorporation” for public companies seeking to manage litigation costs through arbitration or fee-shifting. He noted that while such provisions were “not without controversy,” they could offer benefits such as quicker payments to harmed shareholders, reduced litigation costs, and fewer frivolous lawsuits. Atkins concluded his discussion of SB 95 by urging Delaware lawmakers to revisit these prohibitions, suggesting such a move could position Delaware as a leader in securities litigation reform.
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