As John previously shared, Corp Fin recently released new CFIs addressing beneficial ownership reporting, the proxy rules, Regulation Crowdfunding & the tender offer rules. John provided a brief summary of each new CFI in his blog, and now I thought we’d do a bit of a deeper dive on some of the more interesting ones. Starting with the CFIs on Rule 13d-3, here’s more info from Alan Dye’s Section16.net Blog on Questions 105.08, 105.09 and 105.10, which “address the circumstances under which a holder of a total return swap (TRS) would (or would not) be deemed the beneficial owner of shares of the reference security held or acquired by the bank counterparty to hedge its position” and “address indirectly the more pressing concern whether ownership of a TRS could cause the holder to become subject to Section 16 as a ten percent owner.”
Consistent with the SEC’s 2023 guidance included in the release adopting amendments to the Section 13(d)/(g) rules, Question 105.08 confirms that a party does not acquire beneficial ownership of the reference securities, including any securities the counterparty may hold to hedge its risk, if it enters into a standard TRS that settles exclusively in cash, only refers to a class of equity securities (as described in Rule 13d-1(i)(1)) for purposes of identifying a reference security, and does not confer any voting or investment power with respect to, or any right to acquire, any securities. The CFI helpfully addresses an ambiguity noted in my blog about the recently issued BofA no-action letter (addressing whether a TRS holder and its counterparty are a “group”). Question 105.08 also confirms that:
– Entry into a TRS, absent any arrangement that confers such power or rights outside of the terms of the swap, is not, by itself, evidence of a plan or scheme to evade the reporting requirements of Section 13(d) or 13(g) for purposes of Rule 13d-3(b).
– Entry into a TRS solely for economic exposure to the reference security, without more, also does not prevent the vesting of, or create a false appearance regarding, beneficial ownership as part of a plan or scheme to evade.
Question 105.09 confirms that entry into a TRS would confer beneficial ownership pursuant to Rule 13d‑3(b) only if it was used in connection with an “arrangement” to prevent the vesting of beneficial ownership by the holder as part of a plan or scheme to evade the reporting requirements of Section 13(d)/(g). For example, the Staff said, if a person uses a TRS as a means to direct the counterparty how to vote its hedge securities or to pre-arrange the acquisition of hedge securities, the person may be deemed a beneficial owner under Rule 13d-3(b).
Finally, Question 105.10 confirms that the Staff remains committed to the position articulated in its “amicus letter” to the district court in the CSX case that the “mental state” contemplated by the term “plan or scheme to evade” is “generally the intent to enter into an arrangement that creates a false appearance or an illusion contrary to the actual facts.” In the context of a TRS, the analysis should focus on “whether the person knew or was reckless in not knowing that use of the total return equity swap would create a false appearance or illusion that the person’s interest is economic alone.” For example, the Staff said, entry into a TRS “for the purpose or effect of indirectly acquiring the power to vote or a future right to acquire the reference equity security may be viewed as part of” a scheme to evade.
The “grab bag” also includes CFIs on activist fund structures and Schedules 13D and 14A. This Cleary blog explains:
The guidance targets a specific but increasingly common activism structure: special-purpose vehicles that raise capital from investors to buy a single issuer’s securities and conduct an activism or proxy campaign. Activists who form these vehicles must now name the underlying investors in their 13D and contested proxy filings.
It also gives specifics on each related CFI:
Under the guidance provided by CFI 110.09, an entity (such as a special purpose vehicle) formed specifically to raise funds to acquire the securities of a specific issuer and engage in an activism campaign at that issuer must disclose the identities of its investors under Item 3 of Schedule 13D (Source and Amount of Funds or Other Consideration). Item 3 requires reporting persons to name all parties to any transaction through which they obtained funds “for the purpose of acquiring, holding, trading or voting the securities” of the issuer. Because investors in a purpose-built vehicle contribute capital for exactly that purpose, filers must identify them in the Schedule 13D filing.
CFI 110.10 confirms that Instruction C to Schedule 13D does not limit the information that must be disclosed about the reporting person itself. Instead, Instruction C identifies additional persons (such as general partners and their controlling persons) about whom Items 2-6 information must also be provided.
It says that many filers had been disclosing only the general partner or manager of the vehicle, and that reading of General Instruction C had some support from case law. It also notes that the CFI doesn’t address the related issue of investment vehicles whose limited partners do not contribute capital earmarked for a specific target.
CFI 155.02 addresses a parallel question applicable to disclosure on Schedule 14A in the context of a contested election. Where an investment vehicle is formed for the purpose of raising funds to acquire securities and engage in a proxy solicitation to change the board composition at a specific issuer, the SEC Staff confirms that investors in that entity who contribute more than $500 are “participants” in the proxy solicitation under Instruction 3(a)(iv) to Item 4 of Schedule 14A. That instruction defines a “participant” to include any “person who finances or joins with another to finance the solicitation of proxies,” excluding only those who contribute $500 or less.
This interpretation aligns with the SEC Staff’s position in CFI 110.09 and extends the same logic to a proxy context.
Last, but not least, new CFIs address the delivery method for required disclosures in issuer and third-party tender offers. This Arnold & Porter alert has more:
Question 104.03 and Question 131.04: Exchange Act Rules 13e-4(e)(1) (issuer tender offers) and 14(d)-4(a) (third-party tender offers) list three methods to publish, send, or give the disclosure required by Rule 13e-4(d) and Rule 14d-6, respectively, to security holders for a tender offer in which the consideration offered consists solely of cash and/or exempt securities.
This requirement may be satisfied by issuing a press release (instead of the summary newspaper advertisement contemplated by the Rules) as soon as practicable on the tender offer’s commencement date through a widely disseminated news or wire service, which contains the disclosure required by Rule 13e-4(d)(3) or Rule 14d-6(d)(2), as applicable, as well as an active hyperlink to a website address where security holders may access the tender offer materials, letter of transmittal (if any), and any other documents relating to the offer, provided that: (i) the tender offer is not subject to Rule 13e-3; and (ii) the issuer or bidder, as applicable, mails or otherwise furnishes promptly the tender offer materials to any security holder who requests such tender offer materials pursuant to the press release or otherwise.
I recently purchased a t-shirt that boldly proclaims “I’m from the 1900s.” As with any other impulsive purchase, I am not sure if I will ever actually wear this shirt, but for some reason that message spoke to me at the time. It evokes a bygone era before we had blogs, e-mail, social media and artificial intelligence models capable of threatening to wipe out humanity. In other words, from afar, those seem like much simpler times. In fact, the electronic communications age had already arrived in force by the 1990s, when the SEC was grappling with the concept of electronic delivery of securities information that was previously transmitted in paper by snail mail. This resulted in a pair of Commission interpretive releases from the mid-1990s that still serve as the operative guidance to this day.
Yesterday, the SEC announced proposed new Regulation E-Delivery, seeking to bring the delivery of materials under the federal securities laws into more modern times. In a statement accompanying the proposal, Chairman Atkins notes:
The world has changed dramatically since many of our rules were first adopted. But, all too often, our regulatory framework has remained static. Default paper delivery results in a constant source of unnecessary expenses that are paid for by American investors and reduce their investment returns. In an age of artificial intelligence and blockchain technology, a default to paper delivery should be a relic, not a standard.
If adopted, Regulation E-Delivery would establish requirements and conditions under which essential information could be delivered electronically to investors and others without first obtaining their affirmative consent to do so. Currently, much of the required regulatory information is delivered in paper form unless the recipient affirmatively elects otherwise. The modernized approach, if adopted, generally would supersede the Commission’s decades-old, guidance-based e-delivery framework while preserving investors’ ability to receive delivery in paper on request. Importantly, it would substantially reduce paper, printing, and postage costs for issuers, intermediaries, and, ultimately, investors.
Under my chairmanship, we will not remain tethered to the tools or the temperament of a bygone era. Regulation E-Delivery is not merely a proposed administrative adjustment; it represents a meaningful advancement toward aligning our rules with the needs of today’s markets.
In a Fact Sheet describing that proposal, the SEC notes:
Currently, many required regulatory disclosures and reports under the federal securities laws are delivered in paper format, unless the person with a right to receive these disclosures and reports affirmatively elects otherwise. Reg E-Delivery, if adopted, would be the Commission’s primary rule addressing e-delivery. It would generally supersede the Commission’s current guidance based e-delivery framework and would permit e-delivery as the default method of delivery to investors, clients, and others subject to certain conditions.
The Commission’s new e-delivery approach is designed to address concerns that issuers, market intermediaries and, ultimately, investors and other recipients of information under the federal securities laws may be bearing unnecessary costs and expenses associated with a default delivery method that no longer reflects the preference of most investors. Further, e-delivery offers the opportunity to provide recipients of required disclosures and reports with potentially more personalized, interactive, timely, and efficient experiences with disclosure than paper delivery. It also provides accessibility and retention benefits. The proposal builds on the Commission’s decades-old e-delivery guidance as well as the Commission’s understanding about investors’ use of and preferences for electronic media, including through recently conducted investor testing surveys.
Proposed Regulation E-Delivery would permit, but not require, covered entities to use e-delivery as the default method of delivery for covered information under specified conditions. The proposed regulation provides that a covered entity could rely on Regulation E-Delivery to satisfy its delivery obligations where: (1) the covered recipient has provided an electronic address; (2) the covered entity has provided a prominent disclosure to the covered recipient that it will send covered information to the electronic address provided; and (3) the covered recipient has not opted out of e-delivery.
Regulation E-Delivery would include a number of general requirements addressing the method and timing of e-delivery, as well as the ability to opt out, the ability to receive a paper version of covered information free of charge upon request. Proposed Regulation E-Delivery would also include specific requirements for those websites where the covered information is provided.
When you think about the fact that the guidance proposed Regulation E-Delivery would replace is from the mid-1990s, it definitely seems that we are due for a change!
Earlier this week, the SEC’s Office of the Advocate for Small Business Capital Formation and the Division of Corporation Finance co-hosted a virtual roundtable for the purpose of re-examining the IPO process and reassessing the framework for how companies of all sizes access public capital. As noted in the agenda for the program, the moderators were Courtney Haseley from the Office of the Advocate for Small Business Capital Formation and Ted Yu from the SEC Division of Corporation Finance, and the engaged with speakers from law firms, an investment bank, the NYSE and OTC Markets.
The panelists discussed the SEC’s current rulemaking agenda, and were generally supportive of the SEC’s proposal to permit companies to choose to provide semiannual reports rather than quarterly reports. The panelists noted that it is uncertain to tell at this point whether companies would embrace the semiannual reporting option if the rule proposal were ultimately adopted, noting that factors such as peer practices, contractual restrictions and capital-raising consideration would likely influence whether companies would choose the optional semiannual reporting approach. On the topic of capital raising, the panelists expressed support for the SEC’s recent proposal to reform the registered offering process.
The panelists also discussed ideas for improving the IPO process, and a number of topics were addressed. The panelists discussed how it would be helpful to eliminate regulatory differences between going public through an underwritten offering versus a de-SPAC or reverse merger process. They noted that the SEC should consider reducing or eliminating the 15-day waiting period from the time of making a public filing of a registration statement following confidential review to the launch of the IPO. The panelists discussed how the SEC might reconsider gun-jumping restrictions and other communications limitations in connection with the IPO process, as well as easing restrictions on the involvement of research analysts in the IPO process. Further, the group discussed the costs and effort necessary to get ready for an IPO, and in particular the impact of PCAOB requirements when preparing the required financial information.
This type of dialogue is always useful, and hopefully it will inform that SEC’s efforts as they proceed along the “Make IPOs Great Again” path.
I am wrapping up my week of focusing on our upcoming our 2026 Proxy Disclosure and Executive Compensation Conferences with a look at how we plan to cover the rapidly unfolding SEC regulatory agenda, which will be playing out in real time as we assemble in Orlando on October 12th & 13th.
Looking back at the nearly two decades of Proxy Disclosure and Executive Compensation Conferences that I have been a part of, I think that we have always done a great job of bringing you the latest insights on everything going on at the SEC that impacts your disclosures and engagement activities. As the political winds have shifted back and forth in Washington over the years, we experienced a very dynamic environment on the SEC front when planning many of our conferences, which definitely keeps things interesting for our conference planners, panelists and attendees! In fact, it seems like only yesterday that I was on a panel speaking about the SEC’s climate-related disclosure rules, only to have the SEC propose to rescind those rules just a month and half ago!
It is through this lens that I want to highlight for you all of our programming at the October Conferences that will be specifically focused on up-to-the-minute SEC developments:
1. We will kick off the first day of the October Conferences with my interview of Christina Thomas, who serves as Deputy Director of the SEC’s Division of Corporation Finance & Chief Advisor on Disclosure, Policy, and Rulemaking. Christina will share views on the latest developments and priorities for the Corp Fin Staff and expectations for the upcoming proxy season.
2. As I mentioned yesterday, the SEC All-Stars will convene at the Proxy Disclosure Conference to the set the stage with a focus on the big picture of the SEC’s rulemaking agenda when it comes to capital raising and public company regulation, delving into the filer status and semiannual reporting proposals, the registered offering reform proposal, some of the key Corp Fin policy changes and guidance that impacted the 2026 Proxy Season and the SEC regulatory focus on its “Make IPOs Great Again” campaign.
3. As I noted on Monday, our panel “The Fate of Shareholder Proposals” will engage in an in-depth discussion of the experiences with Rule 14a-8 during the unusual 2025-2026 proxy season, as well as the SEC’s efforts directed toward shareholder proposal reform.
4. At the Proxy Disclosure Conference, we have a panel titled “SRCs, EGCs & FPIs: What’s Next?” that will focus on the SEC’s semiannual reporting and filer status rulemakings, reviewing the proposed rules and public comments and sharing practical implications and key takeaways.
5. As I mentioned yesterday, the SEC All-Stars will get together at the 23rd Annual Executive Compensation Conference to discuss the SEC’s compensation-related rulemaking and guidance in 2026, including the SEC’s efforts to review and potentially change the executive compensation disclosure rules, as well as the impact of the SEC’s semiannual reporting and filer status rule proposals from a compensation perspective.
6. As I noted on Wednesday, the 23rd Annual Executive Compensation Conference features the panel titled “Your Compensation Disclosures: New & Improved (We Hope)!” that is built on our expectation that we will likely see a proposal to overhaul executive compensation disclosure requirements from the SEC in the Fall.
Throughout all of the other panels taking place over the course of our two days of conferences, you will hear additional perspectives on how the regulatory environment is influencing many other areas, including activism, ESG, perquisites, shareholder engagement, the use of technology, proxy advisory firms and so much more!
During this critical time when so many things are changing, you should come to our October Conferences so you can be fully informed as all of these developments unfold. If you sign up now, you can take advantage of our early bird discount, which is in effect until next Friday. You can register online at our conference page or contact us at info@CCRcorp.com or 1-800-737-1271.
With the SEC set to go down to just two Commissioners this year, Meredith recently revisited the quorum rule that governs action by the SEC Commissioners that we have referred to time and time again when the number of sitting Commissioners shrinks. I encountered the smallest Commission during my time in the practice during my first go-round at the SEC, when Chairman Levitt and Commissioner Wallman served as a two-member Commission. Broc Romanek recounted those days in his Cooley blog from last month, where he talks about the “Rule of 2” that allows for a quorum of two Commissioners during personnel shortages, vacancies or recusals.
I was therefore surprised to see in yesterday’s Daily Update from Securities Docket that the CFTC is getting along just fine with only one Commissioner, initiating eight rulemakings in the month of June with a very short-staffed Commission! The Bloomberg Law story referenced in the Daily Update notes:
The US regulator in charge of derivatives trading is rapidly proposing rules to establish its authority over prediction markets and digital assets, charging ahead with formal policies on big-ticket issues even as four out of its five commissioner seats remain vacant.
The Commodity Futures Trading Commission has initiated rulemaking on eight items since June, roughly doubling its output from the rest of President Donald Trump’s second term, according to a list of published proposals.
That includes one last month to crack down on war-related bets, as the agency challenges states over who regulates prediction markets that allow users to bet on reality TV results, the midterm elections, and more.
Part of the CFTC’s rulemaking push includes increased harmonization with the Securities and Exchange Commission, which listed dozens of proposals in its semiannual regulatory agenda this month following a slow start to the second Trump administration.
Although both Wall Street regulators typically flex their rulemaking powers across administrations, the CFTC is doing so at a rapid pace that’s likely accelerated by its unusual single-member leadership, with Chairman Michael Selig serving alone at the top, agency veterans said.
“The speed in which the rules are coming out, and just the pace of it, is something I don’t think we’ve ever seen before,” said Elizabeth Lan Davis, a Davis Wright Tremaine LLP partner and former CFTC attorney.
“Every week there’s now two or three more rules proposed or a request for comment,” she said.
You have got to hand it to Chairman Selig for pulling off some one-man-band level of activity to keep such a robust rulemaking agenda on track!
With the MLB All-Star Game now behind us (way to go American League!), it is only fitting that I mention the SEC All-Stars panels that we will be featuring at the 2026 Proxy Disclosure Conference and the 23rd Annual Executive Compensation Conference. You know the drill by now – these Conferences will be taking place on October 12th & 13th in Orlando, Florida and via a live, nationwide webcast.
Now, I count my blessings every day that CCRcorp sees fit to group me with the talented bunch of former SEC officials that we call the SEC All-Stars. It makes me feel like I am part of the Justice League or something like that. At our conferences each year, the SEC All-Stars are tasked with setting the stage for the panels to come, providing their perspectives on the key issues that will be discussed throughout the rest of the two days of programming. These panels are truly a great opportunity to hear from practitioners who are at the top of the profession, and who can draw on years of experience dealing with regulatory matters at the SEC and advising clients in private practice.
Kicking things off on October 12th at the 2026 Proxy Disclosure Conference, we have our first All-Stars panel titled “The SEC All-Stars: Proxy Season Insights.” On this panel, I will be joined by Michele Anderson from Latham, Sonia Barros from Sidley, Tamara Brightwell from Wilson Sonsini, David Fredrickson from Covington and Lona Nallengara from A&O Shearman. During this panel, we discuss the big picture of the SEC’s rulemaking agenda when it comes to capital raising and public company regulation, delving into the filer status and semiannual reporting proposals, the registered offering reform proposal, some of the key Corp Fin policy changes and guidance that impacted the 2026 proxy season and the SEC’s continuing focus on its “Make IPOs Great Again” campaign. We will also take audience questions, so start thinking about your questions today!
On the next day at the 23rd Annual Executive Compensation Conference, I will be joined by yet another group of SEC All-Stars, this time for the panel “The SEC All-Stars: Executive Pay Nuggets.” This line-up of All-Stars includes Mark Borges from Compensia and CompensationStandards.com, Brian Breheny from Skadden, Meredith Cross from WilmerHale, Ron Mueller from Gibson Dunn and Jennifer Zepralka from Mayer Brown. On this second day, we will be focused on the SEC’s compensation-related rulemaking and guidance in 2026, including the SEC’s efforts to review and potentially change the executive compensation disclosure rules, the impact of the SEC’s semiannual reporting and filer status rule proposals from a compensation perspective, the key developments with proxy advisory firms and proxy voting and the impact of those developments on compensation design and engagement and the exciting world of prediction markets, including the steps that companies should be taking now. We will also be taking audience questions, so come prepared for this panel as well.
Suffice it to say that these All-Stars panels will packed with practical insights and perspectives that you will not want to miss, and they will be the perfect prelude to a much deeper dive on many of these topics throughout the rest of the 2026 Proxy Disclosure and Executive Compensation Conferences.
Keep in mind that the clock is ticking on securing your early bird rate for the October Conferences – you now only have a little over a week to act, because the early bird offer expires on July 24. As you may have seen subtly suggested in one of my prior blogs this week, you can register online at our conference page or contact us at info@CCRcorp.com or 1-800-737-1271.
You may be wondering why we don’t pit the two All-Star teams against each other in a heated competition, such as an epic rap battle or a dance-off. Well folks, we try to keep things pretty highbrow at the October Conferences, that’s why we don’t ever have any things like puppet shows and game shows during the programming.
Speaking of SEC All-Stars, we recently posted the transcript for our “Proxy Season Post-Mortem: The Latest Compensation Disclosures 2026” webcast on CompensationStandards.com, during which I was joined by Compensia’s Mark Borges and Gibson Dunn’s Ron Mueller to discuss the “lessons learned” from the 2026 proxy season that companies can start carrying forward into the next proxy season. Among the topics that we discussed were:
– Today’s Incentive Compensation Challenges
– The State of Say-on-Pay During the 2026 Season
– Experience with Proxy Advisors’ New Pay-for-Performance Analyses
– Shareholder Engagement Challenges & Responsiveness Disclosures in 2026 Proxy Statements
– BlackRock, State Street, and Vanguard Stewardship Approaches in 2026
– Compensation Clawbacks: Evolving Disclosures and the Coming Three-Year “Lookback”
– The 2026 Shareholder Proposal Process; Executive Compensation-Related Shareholder Proposals
– Proxy Advisors: Status of Lawsuits and Regulation
– Waning Proxy Advisor Power, the Rise of AI, Emerging Institutional Investor Policies and Managing Divergent Shareholder Views
– What’s To Come: Musings on Recent SEC Rule Proposals
Members of CompensationStandards.com can access the transcript of this program. If you are not a member, email info@ccrcorp.com to sign up today and get access to the full transcript – or call us at 800.737.1271.
Back in March, John noted that the EEOC had issued two technical guidance documents following up on President Trump’s executive order targeting private sector DEI programs. The guidance contained in those two documents raised several specific areas of potential concern, including diverse interview slate policies, employee resource groups with membership restrictions, segregated training and programming, and mentoring or networking programs limited to members of protected classes. This EEOC guidance emphasized that no general business interest in diversity will justify race-motivated employment actions, and also clarified the EEOC’s position on how Title VII applies to other aspects of workplace DEI initiatives and practices.
Over on the PracticalESG blog, Zach Barlow recently noted that the EEOC has announced that it is rescinding its prior long-standing regulatory guidance on voluntary affirmative action programs. This guidance worked within the Civil Rights Act’s Title VII and clarified when employers can take voluntary actions to improve employment opportunities for underrepresented groups. Zach notes:
A recent Sheppard memo discusses the steps that employers should take to reassess programs and ensure compliance in the new regulatory environment:
“Monitor federal and state developments. Rescinding the Guidelines does not affect obligations arising under state or local law. Employers should assess local requirements to ensure compliance.
Assess existing affirmative action programs. Employers should identify all programs, policies, or practices that reference, rely on, or were structured under the Guidelines or that otherwise take race, sex, national origin, or other protected characteristics into account in hiring, promotion, or other employment decisions.
Evaluate legal justifications independently. With the EEOC Guidelines no longer available, employers maintaining voluntary affirmative action measures should assess whether those measures can be independently justified under applicable legal precedent.
Engage counsel before enforcement forces the issue. Employers that assess their programs now—before a charge, complaint, or litigation challenge—will be better positioned to make informed decisions about program design, modification, or discontinuation. Sheppard’s Labor and Employment team is actively monitoring these developments.”
Employers with affirmative action programs can no longer rely on the almost 50-year-old guidance. Now programs must be assessed in light of the EEOC’s current stance. The EEOC has published much on what it considers to be “illegal DEI.” Employers should familiarize themselves with these statements and craft strategies to protect diversity within their organizations and ensure compliance with the government’s interpretation of civil rights law.
These developments will continue to shape public company DEI programs and the disclosure that companies provide regarding these programs in their annual reports, proxy statements and sustainability reports.
If you do not have access to the complete range of benefits and resources on PracticalESG.com, be sure to sign up now by contacting us at info@ccrcorp.com or 800-737-1271 for assistance.
