*

SEC to vote on possible IPO arbitration policy change

*

Change could shield companies from lawsuits, curtail

shareholder

rights

*

SEC also considers extending private fund disclosure

deadline

By Douglas Gillison

WASHINGTON, Sept 17 (Reuters) - Wall Street's top

regulator will on Wednesday consider a policy change that could

allow companies going public to force shareholders to resolve

disputes in private arbitration rather than through court

litigation, in a major shift that could weaken investor rights.

The Securities and Exchange Commission has a long-standing

unwritten rule that companies looking to make their Wall Street

debuts cannot tuck language into their charters and bylaws

requiring shareholders to bring claims of false statements or

fraud through confidential, case-by-case arbitration.

On Wednesday, the agency's top officials will vote on

whether to issue a statement on that policy, according to a

public notice, which did not provide more details on the scope

of the potential changes.

Corporate interest groups and Republicans have long

complained about what they see as the frivolous filing of

shareholder class action suits, and often advocate for the use

of mandatory arbitration to reduce the amount of litigation.

Consumer advocates and plaintiffs lawyers say court action

helps hold companies to account, gives small investors the

chance to recover damages they otherwise couldn't, and gives the

public access to evidence and legal reasoning that helps build

case law.

Ann Lipton, a former class action litigator now at the

University of Colorado law school, said the potential change

would be damaging to the public interest, noting law suits can

expose corporate misconduct among other things.

"It halts all development of the law and it halts all

insight into what companies are really doing."

During President Donald Trump's previous administration, the

agency considered the change but ultimately took no action. The

issue first gained prominence in 2012 when the SEC signaled it

would oppose an IPO planned by the private equity fund Carlyle

Group, which sought to require future shareholders to resolve

disputes in arbitration.

Senator Elizabeth Warren, the top Democrat on the Senate

Banking Committee, released a letter she wrote to the SEC

expressing concern about the potential change.

In a separate matter on Wednesday, the SEC is also due to

consider whether to extend for a second time the deadline for

private investment funds to comply with Biden-era regulations

requiring enhanced disclosures.

(Reporting by Douglas Gillison in Washington; Editing by Chizu

Nomiyama )