Feb. 11, 2019
A Victory for Investors: SEC Won’t Stop Johnson & Johnson From Rejecting a Shareholder Arbitration Proposal That Might Be Illegal
Statement of Lisa Gilbert, Vice President of Legislative Affairs, Public Citizen
Note: Today, the U.S. Securities and Exchange Commission (SEC) issued the “no action” letter to Johnson & Johnson that Public Citizen called for (PDF) in 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.
The U.S. Securities and Exchange Commission (SEC) did the right thing by deciding not to take action against Johnson & Johnson and protecting investors against forced arbitration. While this is a significant victory, investors need real and lasting protections, which is why Congress must immediately ban forced arbitration. This issue will not go away because corporate interests will continue to hound the SEC to restrict the rights of investors. We must ensure that the SEC continues to allow investors to hold corporate wrongdoers accountable.