The last few months have seen rapid and dramatic policy change at the Securities and Exchange Commission (SEC) that institutional investors, including pension funds, should pay attention to.

The SEC has stated that the goal of these changes is to promote capital formation by increasing flexibility for public companies, but critics say the changes may significantly limit investors’ access to information and their ability to hold the companies in which they invest accountable.

This blog will look at three recent changes implemented or in progress at the SEC and discuss the implications for multiemployer pensions and their fiduciaries.

1. Arbitration of Shareholder Claims

On September 17, 2025, the SEC issued a policy statement stating that it would no longer delay approval of registrations with provisions that make arbitration of shareholder claims mandatory.

Background

One of investors’ main tools for holding public companies accountable is the ability to bring class action lawsuits for violations of federal securities laws. The Private Securities Litigation Reform Act (PSLRA) requires a highly structured and efficient process to try and recover investors’ losses if they believe that a public company has misled investors or manipulated the stock market. In a class action suit, a single investor or small group of investors takes leadership of the case; all other investors are passive class members who can recover a portion of losses if the case is successful, without the burden of participating in litigation.

In arbitration, a dispute is resolved in a private, confidential forum, without the procedural safeguards of a traditional court proceeding. Arbitrators are not required to follow legal precedent or rules of evidence, which can create a highly unpredictable environment where two shareholders bringing the same lawsuit may reach wholly different outcomes. While there are some scenarios where arbitrations proceed as a class or collective action, those proceedings are increasingly rare. Many companies that favor forced arbitration try to preclude class or collective arbitrations, meaning that every investor or fund that wanted to bring a claim to recover for securities fraud would have to proceed alone. Supporters of arbitration of shareholder claims argue that it saves companies significant time and money; opponents note the loss of the deterrent impact of large class actions and the sunlight that comes from public court proceedings.

Historically, the SEC has upheld the class action process and pushed back on corporate efforts to force mandatory arbitration of shareholder claims. In the past, the SEC has expressed concern that mandatory arbitration of shareholder claims violates state law and may violate federal law. Specifically, if a company was trying to go public and included a mandatory arbitration provision in its registration materials, the SEC would have essentially delayed approval. As a result, companies either did not include those provisions or eventually dropped them.

Fiduciary Considerations

The SEC’s new policy statement has sparked significant concern from institutional investors. They claim that without an efficient, centralized method to challenge securities fraud, every pension fund will need to conduct its own investigations and litigate its own cases or give up the ability to recover any funds lost to fraud. Because they no longer have the concern of having to face a single, major class action that can achieve a major recovery, some companies may be emboldened to engage in misstatements, omissions or fraudulent activity, knowing that they face less risk of consequence, contend critics.

Fiduciaries may benefit from periodic updates from counsel or a knowledgeable advisor on whether any companies are trying to impose mandatory arbitration of shareholder claims; as of the time of this article, only one small company has taken that step. If this becomes a trend—or a more prominent and heavily traded company takes this step—fiduciaries may wish to consider a process for identifying whether companies in which they invest are utilizing mandatory arbitration and, if so, whether any steps need to be taken to monitor for or pursue potential securities claims.

2. Shareholder Proxy Proposals

Typically, spring is the start of proxy season, where the majority of public companies hold their annual shareholder meetings and file their DEF 14A proxy statements with the SEC. The proxy is a key opportunity for shareholders to vote and express their views on issues such as executive compensation, board member elections and shareholder proposals. On November 17, 2025, the SEC announced that it would no longer provide its views or a substantive response to no-action requests for the upcoming proxy season, with a limited exception for no actions based on certain state law issues.

Background

In addition to litigation, shareholders can express concerns and their priorities to the companies in which they invest by making nonbinding proposals. Frequent topics for proposals include opposition to executive pay packages; requests to separate the board chair and CEO positions or eliminate dual-class voting; and requests for the company to provide disclosures on issues like political lobbying, human capital management or plans for navigating environmental issues. If the proposal meets certain criteria, including that it was filed timely and relates to an appropriate topic, the company must include the proposal on its proxy for a vote by all shareholders. Historically, if a company received a shareholder proposal that it thought was improper and did not want to include on the proxy, it would go to the SEC for an advisory opinion that it could take no action on the proposal—hence, referred to as the “no-action” process. The no-action process allowed the SEC to referee these disputes, which many viewed as a way to ensure that companies and shareholders alike had a fair process.

In its November announcement, the SEC stated that if a company submitted a no-action letter and stated that it had a reasonable basis to exclude the proposal based on the applicable regulation, prior published guidance or judicial decisions, the SEC would confirm in writing that it could exclude the proposal based on that representation. Critics say this essentially gives blanket approval to what are typically complex, debatable questions of law and policy.

Fiduciary Considerations

Investors and many companies alike have expressed concern about the change. Investors have heightened concerns about their proposals being improperly omitted. Public companies and their advisors are concerned that the unpredictable environment may lead to burdensome litigation. The SEC stated that its abandonment of the no-action process is for the current proxy season due to “current resource and timing considerations.” It is not clear whether the SEC will extend this practice in future years or revert to the past protocol.

Fiduciaries of institutional funds that are typically engaged in making shareholder proposals may wish to pay particular attention this year to how companies respond. In addition, as fiduciaries consider how to vote their proxy and any policies or guidance they provide proxy advisors or related consultants, they may wish to consider how companies have reacted to this situation. For instance, a fund may wish to discuss with its advisors whether—for those companies in which the fund has significant holdings or a particular concern about long-term value—the fund should create a process to determine whether proper proposals have been omitted and how (if at all) that bears on the fund’s view of the company’s leadership and its vote on issues like executive compensation and director elections.

3. Reducing Frequency of Public Reporting

This fall, the SEC stated that it is fast-tracking a proposal to reduce the frequency of public company reporting.

Background

Since 1970, public companies have been required to release financial data and other material information to their investors on a quarterly basis. Quarterly reporting is unique to the U.S. stock market among global markets and is viewed by many as a feature that makes the U.S. markets more stable and protective of investors.

A shift away from quarterly reporting creates concern among investors, analysts and others about not having access to critical, timely information on companies in which they invest and industries they are following. Some, however, have viewed quarterly reporting as a burdensome imposition that holds companies back.

This fall, SEC Chair Paul S. Atkins stated that it was “time for the SEC to remove its thumb from the scales and allow the market to dictate the optimal reporting frequency based on factors such as the company’s industry, size and investor expectations,” according to a Bloomberg News article.

Fiduciary Considerations

A proposed rule for public comment is expected in early 2026. A formal rulemaking process typically takes more than a year. Given the significance of this proposal and high interest from shareholders, companies, academics and related institutions, fiduciaries can expect a vigorous debate on the issue with robust comment. Fiduciaries who are interested in expressing a view or staying abreast of the debate may wish to coordinate with their legal counsel or organizations working on behalf of multiemployer plans. In the event the rule is enacted, fiduciaries may consider speaking with their consultants and managers about what, if any, impact the rule has on investment strategy or anticipated outcomes.

Conclusion

As the saying goes, the only constant is change, and it’s anticipated that this will continue to be true for multiemployer plans and their fiduciaries in the year to come with respect to SEC regulations. As always, attention to core fiduciary principles, maintaining good processes, and seeking advice and consultation from counsel and educated advisors on key issues impacting the plan will serve plans well.