This week, the U.S. Securities and Exchange Commission (SEC) issued the “no action” letter to Johnson & Johnson, something that FAN coalition members have advocated for since December. The letter states that the SEC will take no action against Johnson & Johnson if the company excludes from its proxy materials a shareholder proposal that would force investor disputes into mandatory arbitration. The SEC’s staff made this determination after the New Jersey attorney general asserted that the arbitration proposal would violate state law.
This is a major victory for Main Street investors, but vigilance is still required. Some SEC commissioners and corporate interests are still pushing the SEC to allow industry to place a forced arbitration clause in investor documents. Until Congress passes a bill prohibiting forced arbitration, the threat remains. The FAN coalition will continue to advocate for congressional action to protect all investors from being forced into secretive arbitration proceedings.
The SEC statement is here.