Delaware Court of Chancery Declares Ineffective Exclusive Federal Forum Provision for 1933 Act Claims

In Sciabacucchi v. Salzberg, C.A. No. 2017-0931-JTL, 2018 WL 6719718 (Del. Ch. Dec. 19, 2018), the Delaware Court of Chancery (Laster, V.C.) held that a forum-selection provision in a Delaware corporation’s charter or bylaws which purported to govern external investor claims not involving the internal affairs of the corporation are not authorized under Delaware law. Thus, the Court declared ineffective a provision in a certificate of incorporation requiring any claim brought against it under the Securities Act of 1933 (“1933 Act”) to be filed in federal court. This decision clarifies the limits on the scope of forum selection provisions enacted by Delaware corporations. The 1933 Act bars any person from offering or selling securities except pursuant to a registration statement approved by the Securities and Exchange Commission (the “SEC”) or in compliance with an exemption. The 1933 Act grants private rights of action to purchasers of securities so…

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