Bloomberg broke a terrific story Wednesday, disclosing that the Carlyle Group, a private equity fund planning a $1 billion initial public offering of "common units" in its partnership, has amended its registration statement to include a provision mandating that investors surrender their right to sue and instead submit to individual arbitration. Am Law's Litigation Daily followed up with really smart analysis, noting that the bold move by Carlyle's lawyers at Simpson, Thacher & Bartlett is an almost inevitable extension of the U.S. Supreme Court's 2011 opinion in AT&T Mobility v. Concepcion. The Mayer Brown lawyer who won that case for AT&T told the Lit Daily's Susan Beck that mandatory shareholder arbitration has been under debate since even before Concepcion .

But it's important to remember that Carlyle has to get past the Securities and Exchange Commission before its IPO can reach the market. And the SEC, according to Columbia Law School securities law professor John Coffee, has historically looked askance at attempts to impose arbitration on shareholders. Coffee said that for 30 years, the agency has resisted corporate attempts to amend their charters to ban shareholder suits and require arbitration. (Bloomberg cited the SEC's rejection of a 1990 IPO by a savings-and-loan that had such a clause in its charter.)

In fact, in accord with the 2010 Dodd-Frank Act, the SEC is now studying mandatory arbitration agreements between investors and brokers, which the Supreme Court green-lighted in its 1987 decision in Shearson/American Express v. McMahon. (Like the Concepcion decision, Shearson gives great deference to the Federal Arbitration Act.) Dodd-Frank amended both the Exchange Act of 1934 and the Investment Advisors Act of 1940 to permit the SEC to "prohibit, or impose conditions or limitations on the use of, agreements that require customers or clients of any broker, dealer, or municipal securities dealer to arbitrate any future dispute." The law calls on the agency to conduct a study on mandatory arbitration and recommend changes; Dodd-Frank also directs the new Bureau of Consumer Financial Protection to study and report on the issue.

If a different Obama administration agency is a guide, the SEC and CFP will side with investors who want to sue rather than arbitrate against their brokers. As I've reported, earlier this month the National Labor Relations Board stood up staunchly for the rights of employees to bring class-action suits, despite Concepcion . (Some federal judges have come to similar decisions since Concepcion , according to the Litigation Daily.)

But the SEC and CFP studies required by Dodd-Frank will address only arbitration agreements between investors and brokers, not between stockholders and the businesses they own a piece of. There's no Dodd-Frank provision regarding those disputes because there is apparently no publicly-traded U.S. corporation that requires such a concession from its shareholders.

If Carlyle somehow becomes the first business to squeak past the SEC with a mandatory shareholder-arbitration clause, it may well be because Carlyle isn't going to market with ordinary shares. Carlyle is not a corporation; it's a partnership. Instead of stock, it's planning to sell "common units" in its partnership. The private equity fund's registration statement says that unit-holders have very restricted rights under Carlyle's partnership agreement. They should not expect to influence business decisions, may face a repurchase demand on unfavorable terms, and have to accept that the general partner has limited fiduciary duties to them. They can't, for instance, claim a conflict of interest under state laws. They can't insist on compliance with SEC or NASDAQ corporate governance requirements because, as a partnership, Carlyle expects to be exempt. And they can't sue, but must agree to arbitrate disputes.

Will Carlyle pass SEC muster because mandatory arbitration is required in a partnership agreement and not a corporate charter? Coffee, of Columbia Law, said the private equity group may be trying to test the SEC's will and perhaps eventually try its luck at the U.S. Court of Appeals for the D.C. Circuit. I emailed an SEC spokesman for comment, but didn't immediately hear back.

(Reporting by Alison Frankel)