Federal Forum-Selection Clause in Securities Act Claims Are Valid
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Federal Forum-Selection Clause in Securities Act Claims Are Valid

Purchaser of shares of stock in multiple Delaware corporations that launched initial public offerings brought a putative class action against the corporations seeking a declaratory judgment that the federal forum provisions (FFPs) in the certificates of incorporation, which designated federal courts as the exclusive forum for resolution of claims brought under the Securities Act of 1933, were facially invalid. The Delaware high court reversed a decision of the Delaware Court of Chancery and affirmatively endorsed the enforceability of the FFPs calling them, facially valid under a Delaware statute governing contents of certificate of incorporation, not in violation of the policies or laws of Delaware and consistent with full faith and credit principles. Experts agree this decision will have broad implications for securities litigation especially as other states consider whether to follow Delaware’s lead.

Salzberg v Sciabacucchi