Partner Alfred L. Fatale III is the author of “SpaceX’s IPO Asks Investors to Surrender More Than They Realize,” published by FT Adviser.  In this insightful article, Alfred examines how SpaceX’s IPO has become a proving ground for corporate governance and shareholder rights.

As the first major IPO to incorporate mandatory shareholder arbitration—following a significant policy change by the SEC—SpaceX presents new considerations for investors and advisers.  Alfred emphasizes that investors should “understand precisely what they are buying and what remedies they may be signing away” if they invest in SpaceX.

Alfred examines how SpaceX’s combination of exclusive forum selection, mandatory arbitration, and a class action waiver could limit the avenues available to investors seeking to protect their interests.  He notes that, in 2024 alone, securities class-action settlements returned $3.7 billion to harmed investors, compared with just $345 million recovered through SEC enforcement.

Alfred also considers how SpaceX’s governance and voting structure, which concentrate control in one person rather than across shareholders, could further limit accountability.

Together, these provisions raise a critical question: Who is watching out for shareholders?  

While states and courts may ultimately determine whether SpaceX’s bylaws hold up, Alfred notes that the responsibility currently falls on investors and advisers.  Investors “should dig into how a company resolves shareholder disputes and how its governance is structured” and weigh those considerations “alongside growth prospects, valuation and every other factor that goes into a decision to buy.”