SpaceX Becomes The First Major IPO Issuer To Implement The SEC’s New Shareholder Arbitration Policy

Based on reports published around the IPO and the first day of trading, the SpaceX offering appears to have set or approached a remarkable number of records. Some are clear-cut “firsts,” while others are more accurately described as unprecedented milestones. In my view, the three most extraordinary records are:

1. Largest IPO ever ($75 billion raised);
2. Largest valuation ever for a newly public company ($1.77 trillion at pricing); and
3. Creation of the world’s first trillionaire as a direct result of an IPO.

For lawyers who focus on arbitration provisions and class action waivers, however, perhaps the most noteworthy milestone was SpaceX’s adoption of an unusual dispute resolution provision in its bylaws. Under certain circumstances, that provision requires stockholders to resolve disputes with SpaceX and related parties through binding arbitration rather than litigation in court.