USA – NEW YORK Law and Practice Contributed by: Sam Lieberman, Claiborne Hane and Ben Hutman, Sadis & Goldberg LLP
New York procedure is similar. In New York state court class actions under Article 9, a final judgment is appealable as of right to the Appellate Divisions of the Supreme Court. Orders that are final, “in effect determine[] the action” or affect substantial rights, such as approval or rejection of a settlement under CPLR 908, are also generally appealable as of right (CPLR Section 5701 (a)). Appeals from class certifica- tion decisions are more complex: depending on how the order is structured, a party may appeal as of right if the order “necessarily affects a substantial right” (CPLR 5701 (a)(2)), or else must seek permission to appeal via motion for leave. Further review by the New York Court of Appeals, the state’s highest court, is largely discretionary: the Court of Appeals may accept a case by leave of the Appellate Division or upon its own grant of permission. Only in rare circumstances – for example, a direct appeal where there is a con- stitutional question or a split among the intermediate Appellate Divisions – does a party gain access to the Court of Appeals as of right.
considered an obstacle to accelerating the effective- ness of a registration statement, because mandatory arbitration provisions could: • violate the anti-waiver provisions of Federal Securi- ties laws (eg, 15 U.S.C. Sections 77n, 78cc(a)) by waiving the right to bring a class action in court; and • harm the ability of investors to bring private securi- ties claims because arbitration could prevent or increase the costs of class actions. This prior SEC policy deterred public companies from adopting mandatory arbitration provisions, because they did not want to risk any SEC delay or rejection of their registration statement to publicly sell securities. By changing this policy, the SEC has opened the door for public companies to avoid class actions in court – or any form of class action – by adopting an enforceable mandatory arbitration provision. In announcing this new policy, the SEC’s new chair- person, Paul Atkins, explained that the SEC had deter- mined to apply recent US Supreme Court precedent broadly to conclude that neither the anti-waiver provi- sions of the federal securities laws nor the increased costs of arbitration operate to prohibit enforcing a mandatory arbitration agreement against investors. Although this Supreme Court precedent whereby “applying the anti-waiver provisions did not involve the precise issue of [company] issuer-investor man- datory arbitration provisions” (where a public investor does not have the opportunity to negotiate or even sign the agreement), the SEC nevertheless decided to apply the precedent broadly to this context (id at 12). Similarly, the SEC determined that a 2013 Supreme Court decision upholding a mandatory arbitration agreement and class action waiver in between credit card issuers and merchants, to bar antitrust class actions, should apply to the context of mandatory arbitration provisions for securities claims adopted by companies in selling their stock publicly (id at 15). The SEC reasoned that a higher (even prohibitive) cost of arbitration should not prevent the enforcement of an arbitration agreement, because the securities laws – like the antitrust laws – “do not guarantee an afford- able path to the vindication of every claim” (id) (quot-
4. Legislative Reform 4.1 Policy Development See 5.1 Impact of Key Trends . 4.2 Legislative Reform See 5.1 Impact of Key Trends . 5. Key Trends 5.1 Impact of Key Trends
A major recent reform is the 17 September 2025 policy statement of the US Securities and Exchange Com- mission (SEC) (Release No 33-11389), which changes the SEC’s policy to clarify that it will no longer con- sider whether a company has adopted a mandatory arbitration provision in deciding whether to accelerate the effectiveness of the company’s registration state- ment to publicly sell securities. This a major change that could have far-reaching implications by allowing public companies to avoid class actions. The SEC’s previous position for decades had been that a company’s mandatory arbitration provision is
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