Yesterday, the Treasury Department’s Financial Crimes Enforcement Network – known as “FinCEN” – announced that it had issued a final rule that permanently removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information to FinCEN under the Corporate Transparency Act. The rule will be effective upon publication in the Federal Register. Additionally, FinCEN will delete from its database information previously reported by US persons. Thanks to Weil’s Howard Dicker for alerting us!
Here are 12 FAQs about the final rule. The announcement shares these key points about what it does:
– adopts the exemptions set out in the interim final rule issued in March 2025, making the rollback of beneficial ownership reporting by U.S. companies permanent;
– exempts U.S. persons who have obtained FinCEN IDs from any obligation to update or correct the information they originally provided to FinCEN to obtain their FinCEN IDs;
– eliminates the requirement for foreign companies to report U.S. person “company applicants” (i.e., the individuals who helped those foreign companies register to do business in the United States);
– exempts foreign pooled investment vehicles registered in the United States from reporting the beneficial ownership information of a U.S person in control of the investment vehicle; and
– confirms that FinCEN will delete information about any individuals—company applicants, beneficial owners, or recipients of a FinCEN ID—that FinCEN reasonably believes is a U.S. person (e.g., the information is linked to a U.S. passport or U.S. driver’s license).
Under the final rule, foreign entities that are reporting companies will still be required to report beneficial ownership information for foreign individuals.
The announcement notes that guidance on FinCEN.gov will be updated to reflect the final rule.
In late July, the California Privacy Protection Agency announced its first sectoral audit – focused on “gig economy” platforms. CalPrivacy says this is the first in a series of sectoral audits that evaluate compliance with the California Consumer Privacy Act. CalPrivacy is especially focused on compliance with consumers’ rights to access and exercise control over their personal information.
This Freshfields blog says the audit signals a focus on effective governance and controls around privacy requirements, and that companies in other industries should treat it as a preview of coming attractions. Here’s an excerpt:
The distinction between a single-business enforcement focus and an industry review is notable. Where a traditional investigation asks whether a business has complied with applicable privacy laws—often triggered by a particular incident, complaint, or event—a sectoral audit explores how a business implements privacy obligations across its business functions and whether it achieves compliance on an ongoing basis. For example, regulators may look beyond simply checking whether businesses fulfilled access or deletion requests and instead evaluate whether a business has built the underlying architecture to maintain compliance. Specifically, regulators may look at how businesses:
– Receive, track, and fulfill access and deletion requests across systems
– Monitor and enforce statutory deadlines
– Establish privacy governance structures
– Allocate privacy compliance responsibilities across teams and departments
– Audit, document, and verify compliance with legal obligations.
In short, a sectoral audit looks past isolated compliance outcomes to examine the processes and accountability mechanisms that produce them.
The blog recommends testing whether privacy compliance is operationalized. Check out our “Data Privacy” Practice Area for other recent developments and resources on risk management.
We’ve posted the transcript for our recent webcast: “The SEC’s Proposal to Simplify Filer Status & Reduce Reporting Burdens.” This program featured Luna Bloom of the SEC’s Division of Corporation Finance, Howard Dicker of Weil Gotshal, Raquel Fox of Skadden, and Dave Lynn of Goodwin (and, of course, TheCorporateCounsel.net). They discussed:
– Overview and Policy Objectives of the Proposal
– Revisions to Filer Classifications and Definitions
– Expanded Accommodations and Scaled Disclosure
– Initial and Annual Determinations of Filer Status; Transition Rules
– Requests for Comments and Potential Changes to the Proposed Rules
– Considerations for Companies Considering Scaled Disclosure
– Relationship of the Proposal to Other SEC Initiatives
Members of TheCorporateCounsel.net 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.
The Center for Audit Quality, together with KRC Research, recently published this 24-page institutional investor survey on the use of artificial intelligence in research and analysis for investment decision making.
The survey was conducted in May 2026 and represents views from 100 investors with $500 million or more in assets under management (the appendix has a lot of detail about job titles, type of investor, etc.). It follows a CAQ survey that Dave blogged about earlier this summer on how investors felt about using GenAI in public company audits.
Here are a few key findings:
– Earnings calls are one of the most common “use case” – with 16% using AI all the time to analyze earnings calls transcripts, 45% using it often, 14% using it occasionally, 13% using it rarely, and 13% never. If you don’t have your math hat on, that means 60% of investors said they use AI tools “always” or “often” to analyze earnings calls.
– For company filings like 10-Ks and 10-Qs – 16% of investors are using AI to analyze filings all the time, 25% often, 33% occasionally, 13% rarely and 14% never.
– Investors are also using AI tools on risk assessment scenario analysis (49% always or often), financial modelling and projections (46% always or often), and screening investment opportunities (45% always or often).
The survey gives this additional color on how AI tools are used to review company filings:
– Extracting specific financial or operational metrics – 60%
– Summarizing key sections like the MD&A, risk factors, etc. – 58%
– Comparing filings across similar companies in the same industry – 50%
– Identifying inconsistencies between narrative and financials – 48%
– Comparing filings across time periods for consistency or significant changes – 47%
– Synthesizing insights across multiple disclosures – 46%
– Identifying anomalies or red flags – 45%
– None of the above – 2%
Companies are already using AI to quality-check filings, but this investor-sourced list might help with your prompts.
Yesterday, the SEC announced that it will hold an open meeting this Friday, August 14th, at 10 am ET to consider whether to issue a release proposing new rules to create a tailored offering regime for certain investment contracts involving crypto assets. The meeting will be held in person at the Commission’s headquarters and by webcast on www.sec.gov.
Here’s the Sunshine Act Notice. Here’s the agenda – confirming it’s just the one item – and stating that Jim Moloney, Sebastian Gomez Abero, and others from Corp Fin will be there.
On Friday, the SEC announced that it had filed a joint stipulation to dismiss, with prejudice, claims against Terren Peizer, which were premised on alleged misuse of a Rule 10b5-1 trading plan. In a parallel DOJ case, the defendant had been sentenced last year to 42 months in prison and $17.9 million in fines and forfeitures – but he was later pardoned by the President.
The case was unique because it took issue with the lack of a significant “cooling off” period between the time the former executive entered into the Rule 10b5-1 plan and the first transaction under the plan. As we’ve noted in our past commentary, it would be unlikely for this fact pattern to recur now that Rule 10b5-1 requires a 90-day “cooling off” period for directors and officers. The Commission stated in the joint stipulation and its related announcement that its decision to dismiss this civil action does not necessarily reflect the Commission’s positions in any other case.
Last week, the US Department of Justice announced withdrawal of a 1987 letter to ISS that had indicated that – at the time of the letter – the DOJ had no current intention to bring action under the antitrust laws to enjoin the establishment and operation of ISS. The announcement says that circumstances have changed. Here’s an excerpt:
ISS and Glass, Lewis & Co. LLC (“Glass Lewis”), control more than 90 percent of the proxy advisory market and their clients’ holdings represent a significant ownership stake in the United States’ largest publicly traded companies. As a result of this concentration of market power, ISS and Glass Lewis have tremendous influence in corporate governance matters and, based on their market dominance, shape the policies of America’s largest companies.
At the time that the Antitrust Division issued its 1987 BRL to ISS, proxy advising as an industry was in its infancy. The Letter noted that, based on the understanding that ISS “will offer advice only on matters relating to the exercise of voting rights on issues of corporate governance, and that ISS will not provide advice or engage in discussions with respect to the corporate operations or business activities,” the Department of Justice “ha[d] no current intention to bring action under the antitrust laws to enjoin the establishment and operation of ISS.” The 1987 BRL did not address corporate consulting services, which ISS now offers in connection with proxy voting services. ISS’s business model is now in direct conflict with the language in the Letter. ISS is, in fact, now providing advice with respect to corporate operations. In so doing, ISS wields enormous influence over corporate governance issues and policies through its proxy voting services.
The letter continues:
Indeed, the representation at the time that ISS would not “provide or engage in discussions with respect to the corporate operations or business activities” may run contrary to ISS’s business model today. The 1987 BRL expressly qualified the Antitrust Division’s enforcement position to exclude services directed at corporate operations or activities. The Department of Justice has since clarified that while antitrust safe harbors for passive investment protect most beneficial corporate governance advocacy, they do not protect the use of commonly held stock in competitors to encourage market-wide reductions in output or other anticompetitive conduct.[1]
To be clear, proxy advising is not inherently problematic and the lawful exercise of voting rights pursuant to a proxy advisor recommendation does not raise competition concerns. The Antitrust Division is withdrawing its 1987 BRL because the Letter does not reflect ISS’s current business practices or the Antitrust Division’s view of those practices. Moreover, the concentration of market power in the proxy advisory market raises significant competition concerns.
It appears that while proxy advisors may be winning a battle right now at the state level, they haven’t won the war. And broadly speaking, the “war” over how companies are influenced is still being waged on multiple fronts – including against institutional investors that may join topic-based coalitions to urge companies to act in certain ways. The “clarification” that the DOJ cited in its announcement was provided in connection with the Texas v. BlackRock litigation, which Vanguard settled earlier this year but continues against the other defendants.
As we head into the second week of August, many people are thinking ahead about fall activities like back-to-school and, of course, Government Shutdown Season. I was pleased to see that Senators are thinking about this too – passing a bill over the weekend that would fund the government until December 11th. If there’s one thing our lawmakers might be able to agree on right now, it’s that they don’t want to be talking about a shutdown during midterm elections!
That said, the House also has to approve this version of the bill, so a functional government is not a done deal quite yet. This Politico article has more detail:
The House and Senate have now each passed different bills aimed at averting a shutdown at the end of the fiscal year. The House bill would fund the government through Dec. 4.
The Senate legislation sets up a year-end standoff over the Trump administration’s controversial plan to put political appointees in charge of approving federal grants. The bill would block the administration from finalizing that rule during the length of the stopgap — and lawmakers are already expecting a December brawl over the issue.
The good news from a capital formation and securities lawyer perspective, is that even if we do experience another shutdown this fall, the SEC has shown a willingness to mitigate shutdown-related obstacles that may prevent nearly final IPOs from getting across the finish line. But just because there’s a way to get things done doesn’t mean that it’s ideal. The size of the backlog coming out of last year’s record-breaking shutdown is probably not something that folks are eager to repeat…
Here’s something I blogged last week on The Proxy Season Blog for members:
I blogged earlier this summer about academic research showing that “mirror voting” could diminish the influence of “passive” funds. Mirror voting is a type of “proportional voting” where – loosely speaking – non-voting shares are cast in favor of or against a proposal in the same proportion as the votes cast by other shareholders who actually voted.
It slipped by us that the Texas Stock Exchange has filed a 63-page proposal to require proportional voting for uninstructed shares. The proposal would eliminate broker discretionary votes for uninstructed shares – and the routine/non-routine dichotomy that often seems to cause confusion – and replace it with a uniform vote allocation process for all matters. Specifically:
The Exchange proposes to amend Rule 13.003 to establish a mandatory process for the proportional allocation and voting of uninstructed shares held by Members of the Exchange on behalf of beneficial owners of TXSE-listed equity securities. Specifically, the proposed rule would require a Member to vote uninstructed shares at shareholder meetings and to allocate votes on each proposal in proportion to voting instructions received from beneficial owners for whom such Member holds shares in the applicable TXSE-listed security, subject to the exclusions and methodology set forth in the proposed rule.
The proposed rule reflects the principle that voting outcomes on matters up for a vote at TXSE-listed companies should be determined by the voting instructions of participating beneficial owners, with such instructions applied uniformly to the voting of uninstructed shares for every matter submitted to a shareholder vote. By replacing broker discretionary voting with a formula-driven allocation tied to instructions actually submitted, the proposed rule eliminates the exercise of broker discretion over shares in which the broker has no economic interest and also eliminates the inconsistent and proposal-dependent treatment of uninstructed shares produced by the framework currently in place in the market, while preserving all existing shareholder voting rights.
The proposal also says that – if approved and implemented – the rule change could improve companies’ ability to achieve a quorum and reduce solicitation costs. In late July, the SEC designated a longer time period – till September 9th – to take action on the proposal. Here are the comments that have been submitted to-date – including:
– This 12-pager from the Investment Company Institute that offers preliminary views on this complex issue
– This 8-page letter from SIFMA that “supports the goal of proportional voting to improve quorum and retail representation but has significant concerns about the proposed rule’s operational feasibility” and includes a number of recommendations
In her blog, University of Colorado Law prof Ann Lipton offers this thought on what the change would mean for voting tallies:
I believe [the proposal] means that in situations that require a majority of all outstanding shares to vote in favor – mergers, charter amendments, and the like – nonvotes would no longer be “no” votes, and a majority of voting shares would be able to swing it.
The TXSE just went fully live at the end of July, following its phased roll-out. This is certainly one way to make a splash!
If you’re a member, you can subscribe to either daily or weekly email updates from The Proxy Season Blog, to stay up-to-speed on shareholder proposals, annual meetings, institutional investor policies and engagements, proxy advisors, voting mechanics, and more.
President Trump’s decision to institute a new tariff regime to replace the one that the SCOTUS tossed makes the DOJ & DHS’s new “Resource Guide for Trade Fraud Enforcement” a must read for any company engaged in international trade. This BakerHostetler memo provides an overview of the Guide and discusses some of the key compliance issues that companies should address. This excerpt discusses the central role that the False Claims Act is plays in the Trump administration’s trade fraud enforcement efforts:
The Guide provides a public roadmap for how federal agencies are likely to evaluate trade fraud, customs violations and supply chain misconduct. For companies that import goods, rely on third-party brokers, purchase from overseas suppliers, or resell imported products, the practical message is clear: customs compliance failures may now be evaluated through a broader enforcement lens that includes civil False Claims Act liability, criminal prosecution, forfeiture and whistleblower-driven reporting.
Although the Guide surveys a broad range of enforcement tools, its examples and enforcement discussion underscore a central point for companies engaged in international trade: the False Claims Act has become one of the government’s most significant vehicles for pursuing customs fraud, tariff evasion and duty underpayment cases.
The Trade Fraud Task Force also announced that it has surpassed $1 billion in civil and criminal recoveries, penalties, forfeitures and publicly charged losses since its August 2025 launch, emphasizing DOJ’s intent to treat customs fraud as a serious civil and criminal enforcement priority rather than a routine administrative compliance issue.
The memo goes on to identify some key takeaways for companies that result from the adminstration’s use of the FCA as its primary enforcement tool. These include the need to test supply chain due diligence against the demanding FCA standards, the importance of customs documentation that shows the analysis underlying the basis for the company’s decisions and the due diligence it conducted, and the potential to reduce damages through early disclosure of violations.
