Category: Securities
Is the SEC facing a death by 1,000 cuts?
Bloomberg reports that staff from the Department of Government Efficiency is currently at the SEC, according to communications to SEC staff, who were “instructed to treat them as internal employees.” Bloomberg also reports that the “SEC has designated an internal team to work with DOGE,” including “the offices of the chief operating officer, the general counsel, human resources and enforcement.” According to the article, about 10% of the SEC’s workforce (arounds 500 staff members) have already ”accepted the government-wide buyout and deferred-resignation offers. The agency also intends to eliminate the leases for its offices in Los Angeles and Philadelphia, and the General Services Administration has also explored ending the Chicago office’s lease. The most-senior positions at regional offices have also been cut, though the individuals in those roles aren’t being forced out.” The Shadow SEC fear that they are “watching the SEC face a death by 1,000 cuts.”
Surprise—not! SEC votes to terminate defense of climate disclosure rules
Today, the SEC announced that the Commissioners had voted to end the SEC’s “defense of the rules requiring disclosure of climate-related risks and greenhouse gas emissions”—the climate disclosure rules. As you probably know, a number of challenges to the climate disclosure rule were consolidated as State of Iowa v. SEC in the Eighth Circuit, where briefs in the case had been filed. Then, in February, Acting Chair Mark Uyeda issued a statement advising that he had requested that the Court presiding over the litigation not “schedule the case for argument” in order to allow time for the SEC to rethink its position. And here it is: according to Uyeda, “The goal of today’s Commission action and notification to the court is to cease the Commission’s involvement in the defense of the costly and unnecessarily intrusive climate change disclosure rules.”
Will an opt-in mechanism resolve the melee over Delaware’s controversial SB 21?
As widely reported, the Delaware legislature has responded to increasing chatter and speculation about the intentions of some companies—as well as action in some cases—to change their states of incorporation from Delaware to other states by proposing new legislation, Senate Bill 21. That proposed bill would offer a process for boards to invoke safe harbor protection from litigation over potentially conflicted transactions for directors and controlling stockholders. The bill would also address Delaware’s provisions related to books and records. (For a brief summary of the bill, see this PubCo post.) At this point, the bill has passed the State Senate and been reported out of the Judiciary Committee in the Delaware House. As you probably know, however, SB 21 has been quite contentious. Now, a group of 26 corporate law and governance professors from universities worldwide—apparently representing a broad spectrum of political opinion—have submitted a letter proposing a “pragmatic solution that simultaneously renders much of the debate moot and aligns with Delaware’s longstanding commitment to contractarianism: an opt-in mechanism.” An amendment providing for that opt-in has been introduced.
Securities Act and FPI Exchange Act forms CDIs update
Corp Fin continues its project of updating CDIs. This new tranche relates to effectiveness of Form S-3 relative to timing of filing of Forms 10-K and proxy statements, allowing non-automatically effective Forms S-3 to be declared effective during the period between the filing of the Form 10-K and the definitive proxy statement. The CDIs also relate to foreign private issuer filings and withdraw a few CDIs to reflect the vacatur by a Federal court of the repurchase modernization rules. The new, revised and withdrawn CDIs are summarized below.
SEC approval now needed for formal orders of investigation
As discussed in this PubCo post, in February, Reuters reported that, under the new Administration, some SEC Enforcement staff have recently “been told that they will need to seek the Commission’s approval for all formal orders of investigation, which are required to issue subpoenas for testimony or documents,” marking a “change in procedure that could slow down investigations.” Previously, Reuters reported, authority to formally launch investigations had been delegated to Enforcement directors or other senior staff, including even supervising attorneys; during the first term of the current Administration, the “SEC required approval by its two enforcement [co-]directors to formally launch probes.” Now, that change in authority has been formalized: the SEC has amended its regulations to eliminate the delegation of authority to the Director of the Division of Enforcement to issue formal orders of investigation. That is, the SEC itself must approve these orders. The SEC release indicates that the amendment “is intended to increase effectiveness by more closely aligning the Commission’s use of its investigative resources with Commission priorities.”
Acting SEC Chair Uyeda presents blueprint for SEC rulemaking processes
Yesterday, Acting SEC Chair Mark Uyeda delivered remarks to the Investment Company Institute’s 2025 Investment Management Conference. While much of his presentation was specific to investment companies, the theme of his remarks had a more general application: a revised—revived?—blueprint for SEC rulemaking processes. This is certainly not the first time that Uyeda has been critical of the SEC’s rulemaking process (see, e.g., this PubCo post and this PubCo post), but now, as Acting Chair, his words may carry more weight as both a reflection of his intentions as Acting Chair and a harbinger of the Administration to come. Among Uyeda’s objectives—“to set forth a blueprint for restoring the Commission’s rulemaking processes to the ‘gold standard’ among regulatory agencies.”
SEC approves Nasdaq proposal to modify initial listing requirements related to liquidity
In December of last year, Nasdaq proposed a rule change to modify the initial listing requirements related to liquidity. More specifically, Nasdaq proposed to change Listing Rules 5405 and 5505 to require that a company seeking to list on the Nasdaq Global Market or Nasdaq Capital Market in connection with an IPO or to uplist to Nasdaq from the OTC in connection with a public offering “satisfy the applicable minimum Market Value of Unrestricted Publicly Held Shares (MVUPHS) requirement solely from the proceeds of the offering.” That would mean that previously issued shares registered for resale would no longer be counted as unrestricted publicly held shares in the calculation of MVUPHS. The proposal was amended in February of this year. The SEC has now approved the amended proposal on an accelerated basis.
Government shutdown maybe?
Based on the news reports from this morning, it seems unlikely that the threatened government shutdown will come to pass. Nevertheless, although the shutdown appeared doubtful, just this morning, Corp Fin posted an Announcement Regarding Pending Registration Statements and Offering Statements. As a cautionary measure, until the shutdown is fully resolved by a vote, it may make sense for those with pending registration statements to take a look.
Corp Fin issues new and revised Securities Act CDIs—primarily Reg A and Reg D
Corp Fin has just issued a slew of new and revised CDIs regarding the Securities Act and related rule and forms—primarily Reg A and Reg D. Some are updates that relate back to the 2020 amendments designed to harmonize and simplify the patchwork universe of private offering exemptions. (See this PubCo post.) There are also a few CDIs related to Reg Crowdfunding. And, in a burst of housekeeping, Corp Fin has also withdrawn a number of mostly ancient CDIs. The highlights here are two new CDIs under Rule 502: New Question 256.35 and New Question 256.36. CDI 256.35 outlines factors that should be used—and how they should be used—in applying a reasonableness standard to assess accredited investor status. CDI 256.36 reflects a new no-action letter describing how, in a high minimum investment offering, an issuer could reasonably conclude that reasonable steps have been taken to verify accredited investor status—new guidance that is expected to simplify the private offering process. The CDIs are summarized below and, for revised CDIs, a ink to the prior version is included.
Shadow SEC argues for retention of SEC independence
At the end of last year, in this post on the CLS Blue Sky Blog, two leading authorities on securities law, Professors John C. Coffee, Jr. and Joel Seligman, made some predictions about SEC regulation under the new Administration. (See this PubCo post.) In light of their concerns about the potential changes to the SEC under the new Administration, they announced their intent to form a “Shadow SEC,” composed of acknowledged experts in securities regulation, intended to encourage debate through the presentation of “cogent and factual arguments”: “Such a shadow body—more scholarly than political—might frame issues in fuller detail and offer less drastic alternatives.” Although “[c]larity and objectivity will not always win,” they suggested, “sometimes they might. That is enough to justify the effort.” In Shadow SEC: The Value of an Independent SEC, the Shadow SEC takes on the February 18 Executive Order, which sought to rein in the independence of “independent” federal regulatory agencies, such as the SEC, by ensuring that they all operate under the President’s authority and supervision. (See this PubCo post.) Not surprisingly, they had some concerns.
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