One of the topics that we have not yet seen the Commission address through the rulemaking process is Rule 14a-8, the shareholder proposal rule. We have repeatedly heard from the Chairman and other SEC Commissioners that changes to Rule 14a-8 will be forthcoming, as the SEC seeks to address what it considers to be politicization of the annual meeting process. The first shot across the bow of Rule 14a-8 was the shift in the SEC Staff’s approach to exclusion requests this past proxy season, while Chairman Atkins laid out a path to considering whether precatory proposals could be excluded under Rule 14a-8(i)(1), which no companies followed during the course of the 2026 proxy season.
Liz recently noted on the Proxy Season Blog that a group of investors consisting of he US Sustainable Investment Forum (US/SIF), Interfaith Center on Corporate Responsibility, Freedom to Invest, the Shareholder Rights Group, and For the Long Term launched the website “Protect Shareholder Voice,” which hosts a petition urging the SEC to preserve the shareholder proposal rule. The petition states:
We write as retirees, pension beneficiaries, and individual and institutional investors whose savings depend on the integrity of America’s capital markets. We urge you to preserve the shareholder proposal rule as a cornerstone of property rights and free-market accountability.
Shareholder proposals are an expression of ownership. For eighty years, the ability of shareholders to raise questions before the companies they own has been one of the most effective free market-based checks on corporate mismanagement. The need for regulators to intervene is reduced when owners can speak directly. That is the genius of the system — and precisely what is at risk.
Shareholders have advanced sound governance of their companies through decades of governance reforms, adopted first through the shareholder proposal process and then as general market practice.
When investors ask a clothing retailer to account for supply chain vulnerabilities, they are protecting brand equity and long-term profitability. When they ask a pharmaceutical company to address legislative risk embedded in its earnings guidance, they are doing the analytical work that sound investing requires. When they flag water scarcity exposure for agricultural, beverage, semiconductor, or mining companies, they are surfacing risks that conventional financial filings routinely omit — risks that eventually become losses borne by ordinary shareholders.
Other investors have a right to inquire whether environmental or social commitments of a company are undercutting shorter term profitability. Regardless of the time horizons of investing, this is a critical right of investors to engage a fundamental American value — the marketplace of ideas.
If the shareholder proposal process is curtailed, the practical result is not quieter markets. It is a transfer of power: away from diverse owners, and toward a narrow class of the largest institutional players. Smaller investors — retirees, pension funds, individual savers — will lose one of the only shareholder protection tools scaled to their resources. Blind spots will accumulate. Risks that could have been surfaced early will compound, spreading across companies and sectors until they become systemic.
The boards and executives of public companies should answer to their owners. That principle is not progressive or conservative — it is foundational to capitalism.
We urge the Commission to honor its mandate to protect investors and maintain fair, efficient markets by keeping this rule intact.
Let America’s public companies be guided by their shareholders — not shielded from them.
Liz observes in her blog:
For companies, this is another reminder that any rollback of Rule 14a-8 is going to draw criticism and challenges. The petition floats talking points that – while somewhat ironically sounding like they were AI-generated – may resonate with some institutions and retail holders. Companies that believe the costs of putting shareholder proposals in the company’s proxy statement outweigh the benefits may want to gather data and anecdotes to help support that message and to help folks understand the nuances of Rule 14a-8 that may be problematic. Although the stated goal of SEC Chair Paul Atkins is to depoliticize annual shareholder meetings, it’s possible that things could get worse in that regard before they get better. . .
Back in April, I blogged about the PCAOB’s request for public comment seeking input regarding the PCAOB’s strategic priorities. The Council of Institutional Investors (CII) recently submitted a comment letter in response to this request, expressing varying levels of support for the strategic priorities outlined in the PCAOB’s request. For example, on the topic of how the PCAOB should consider deploying technology, including AI, to help further its investor-protection mission, CII notes:
CII continues to strongly support as a strategic objective of the Board the ongoing evaluation of developments in technology, including AI, and the consideration of the need for guidance, changes to PCAOB standards, or other action in light of the increased use of technology by registered audit firms and financial statement preparers and in furtherance of the Board’s investor protection mission.
We generally share the following view expressed by IAG Member Jen Sisson, CEO of the International Corporate Governance Network, in connection with the April 2026 IAG meeting discussion of the agenda item on “Artificial Intelligence”:
“AI means ‘the mechanics of how audits get done are going to change,’ . . . and the PCAOB needs to think about what it needs to do differently to respond.”
In addition, CII generally believes, consistent with our policy on Audit Committee Responsibilities Regarding Independent Auditors, that the PCAOB could also help further its investor protection mission by deploying technology, including AI, to make more accessible the public information they currently maintain about registered auditing firms. In that regard, we generally support the views of the Members of the IAG in their comment letter in response to this question:
“[W]e propose that the Board consider using AI to create an “answer-bot” or an AI search function so that investors and members of the public might be able to query the public database of inspection reports and other valuable information the PCAOB already possesses. AI has reached the point now where it can access and analyze structured and unstructured data. It also can embed necessary confidentiality restrictions. This use of AI could free up PCAOB staff time in responding to requests and trying to figure out what investors and the public want. In addition, it could unleash the power of crowds to identify interesting and impactful questions.”
It is with great sadness that I mark the passing of David Becker, who died on May 29, 2026 at the age of 78. David was truly a titan of the securities bar, and someone that I have admired throughout my career. The Commission issued a statement yesterday that noted:
The Securities and Exchange Commission notes with sadness the death of our former colleague David Becker on Friday, May 29. David faithfully dedicated a significant portion of his career to public service. With a deep knowledge of our securities laws, the Commission and the American people benefited from David’s leadership and expertise during his years as General Counsel under Chairmen Schapiro, Pitt, and Levitt. Beyond his command of complex legal and policy issues, David’s kindness, humor, and collegiality earned him the respect of his colleagues across the SEC and in the private sector. He received the William O. Douglas Award from the Association of SEC Alumni in 2019. On behalf of the entire agency, we extend our condolences to his family during this difficult time.
David served as General Counsel of the SEC from 2000 to 2002 and from 2009 to 2011, having first served joined the SEC as Deputy General Counsel in 1998. I most recently spoke with David at the SEC Historical Society’s program focusing on the SEC’s Office of General Counsel last Fall, and it was always great to hear his perspective on our practice and the regulatory environment. It is difficult to imagine a world without his thoughtful insights and calming presence.
David was a loving husband, father, and grandfather. As his obituary notes, he is survived by his beloved wife, five children and ten grandchildren. I offer my deepest condolences to David’s family and all of his friends and former colleagues.
What a long, strange trip it has been with the SEC’s climate-related disclosure rules!
On Friday, the SEC announced that it is proposing to rescind its own climate related disclosure rules, just a little over two years after those rules were adopted by the Commission. The SEC’s adoption of those rules back in March 2024 marked the culmination of well over a decade of active debate as to what role the SEC’s public company disclosure requirements could play in requiring companies to describe their climate-related risks and opportunities, but the contemplated disclosures never actually materialized as the disclosure rules were bogged down in litigation.
Over the course of the past two years, the fate of the SEC’s climate disclosure rules was far from certain. The litigation challenging the rules was consolidated in the U.S. Court of Appeals for the Eighth Circuit, and in March 2025, the SEC announced that it had voted to discontinue its defense of the climate-related disclosure rules. But the litigation did not go away, and the SEC subsequently provided a status update to the Eighth Circuit indicating that the Commission did not intend to review or reconsider the climate-related disclosure rules, and instead the Commission wanted the Court to continue the proceedings so that it could address the SEC’s authority to adopt the climate-related disclosure requirements. In September 2025, the Eighth Circuit ruled that the litigation should continue to be held in abeyance, noting that it was the SEC’s responsibility to determine whether the climate-related disclosure requirements should be rescinded, repealed, modified, or defended in litigation. Now the SEC has determined to go down the route of rescinding the rules, which requires the full notice and comment rulemaking process to strike the requirements from the SEC’s rulebook.
It is very clear from the proposing release and the statements of the Chairman and Commissioners that the current Commission is very much opposed to the climate-related disclosure requirements. The proposing release notes:
The Final Rules were a dramatic overreach of the Commission’s statutory authority and, independently, unsound as a matter of policy. Based on an incorrect view of the scope of its authority, the Commission determined that it was appropriate to prescribe dozens of pages of highly specific disclosure rules solely about climate-related matters and apply the bulk of those rules to virtually all public companies, regardless of size, industry, or specific circumstances.
The Commission’s Fact Sheet describing the proposed amendments summarizes the key policy reasons that the Commission is relying on to propose rescission of the rules now, including:
– They are unnecessary and inconsistent with a registrant-specific, materiality-based approach to disclosure.
– They stray well beyond the policy concerns of the federal securities laws.
– They impose substantial costs that are not justified by the informational benefits they may provide to some investors.
– They are at odds with the Commission’s policy objectives of facilitating capital formation and promoting public company status.
Chairman Atkins described his concerns with the climate-related disclosure requirements in his statement in support of the rulemaking:
I have been concerned about the 2024 Climate Rules for some time because of questions raised about the Commission’s authority to adopt them and the soundness of the policy basis to support them. Careful compliance with the statutes governing the exercise of the Commission’s authority and a comprehensive effort to review and reshape the current SEC public company disclosure requirements are key components of my agenda, and I believe serious consideration must be given to rescission of the 2024 Climate Rules to help accomplish both of those goals.
We must re-examine the costs, burdens, and benefits of disclosure mandates to make becoming and remaining a public company more attractive again. SEC disclosure obligations should comply with the Commission’s statutory authority, be guided by materiality as the North Star, avoid the practical effect of dictating corporate behavior, and be imposed only when the expected benefits justify the likely costs and burdens.
In his statement supporting the action, Commissioner Mark Uyeda noted:
The Climate Rule should serve as a cautionary tale to financial regulators that their expertise is narrow and their authority is not without limit. We should focus our regulations on matters within our areas of core competency and not attempt to interject our subjective judgment on topics minimally related to that which the legislature has tasked us to oversee. If Congress had wanted the Commission to regulate environmental emissions and other non-financial issues, then Congress knows how to direct the Commission to do so.
In her statement in support of the proposal, Commissioner Hester Peirce notes that “[a]dhering to a merit-neutral, materiality-centric disclosure framework is not only consistent with the SEC’s statutory authority, but also good for the health of our capital markets.”
The comment period on the proposal will remain open until 60 days after publication of the proposing release in the Federal Register. The rules themselves continue to be stayed and presumably the litigation challenging the rules will be held in abeyance while the rulemaking process plays out.
Public companies and their advisors have been struggling with what to disclose about climate-related matters in their SEC filings for decades now, and the SEC’s action on Friday to propose to rescind the 2024 climate-related disclosure requirements will not necessarily change anything about that struggle. While the line-item disclosure requirements of the SEC’s climate-related disclosure rules would have brought some certainty to that ongoing struggle, it was obviously never meant to be, as litigation and a change in Administration doomed any chance of those requirements seeing the light of day.
It is important to note that the SEC’s action to rescind the climate-related disclosure rules will take some time. The proposing release indicated that there will be a 60-day public comment period following publication of the proposing release in the Federal Register, and then it will inevitably take time for the Commissioners and the Commission Staff to consider those public comments and prepare an adopting release. All told, that process could take another six to nine months or so, such that adoption of the amendments rescinding the rules may not even happen this year.
In the meantime, one important thing for companies and advisors to note from the proposing release is that the Commission relied on the 2010 guidance about climate-related disclosures as a basis for rescinding the new rules, stating:
When climate change or other environmental issues, including transition risk, have materially affected the operations or financial performance of a specific company, existing disclosure rules require discussion of the effects. Indeed, the Commission’s Guidance Regarding Disclosure Related to Climate Change lists a variety of specific existing disclosure obligations that, depending on the particular circumstances of a company, could require disclosure of climate change matters. For example, Item 303 of Regulation S-K requires, among other things, a company to disclose and discuss any known trend or uncertainty that has had a material positive or negative consequence for the company’s results of operations. The fact that existing disclosure obligations already serve to provide investors with material information about climate-related matters reinforces the conclusion that the Final Rules are not “necessary” to protect investors. Indeed, they may even serve to harm investors by eliciting information about climate-related matters that goes well beyond what a reasonable investor needs to make an informed investment decision.
The proposing release goes on to note:
Similarly, the Final Rules contrast with the approach taken by the Commission in the 2010 Guidance, when it explained that, in certain circumstances and for some companies, regulatory, legislative, and other developments related to climate change “could have a significant effect on operating and financial decisions.” 2010 Guidance at 6291. As such, the Commission’s existing disclosure requirements—like those that require disclosure of a registrant’s description of its business, legal proceedings, risk factors, and management’s discussion and analysis—might apply to climate-related issues. In contrast to the Final Rules, these prior initiatives are consistent with the Commission’s long-held recognition that types of information “which are of importance only in certain circumstances have generally not been made the subject of specific disclosure requirements.”
With these and other statements in the proposing release, the Commission clearly signals that the 2010 climate change guidance remains in effect (and likely will continue to remain in effect), such that consideration of climate-related issues is still an important element of the overall disclosure process. For example, the 2010 guidance highlighted four disclosure areas where climate-related disclosure issues may arise for public companies:
– Item 101 of Regulation S-K, which requires a company to disclose material effects of compliance with environmental laws that have been “enacted or adopted.”
– Item 103 of Regulation S-K, which requires a description of “any material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the registrant or any of its subsidiaries is a party.”
– Item 105 of Regulation S-K, which requires a company to discuss risk factors.
– Item 303 of Regulation S-K, which requires disclosure of “known trends, events, demands, commitments, and uncertainties” that are reasonably likely to have a material effect on a company’s “financial condition or operating performance.”
This leads us to conclude that while the SEC’s action to rescind the rules is pending – and probably even after the rules are rescinded – the status quo of the past 16 years will continue to prevail, and we will be left to our own devices to consider the materiality of climate-related matters under the existing framework of the SEC’s line item disclosure requirements, unless of course those line items also change as part of the SEC’s efforts to revamp the disclosure system.
Back in March, I blogged about the SEC’s historic memorandum of understanding with the CFTC, which was intended to guide coordination and collaboration between the two agencies. Last month, the SEC announced that it had entered into a memorandum of understanding with the National Futures Association (NFA), which is the industrywide, self-regulatory organization for the U.S. derivatives industry. The NFA has been designated by the CFTC as a registered futures association.
The MOU will enhance SEC and NFA staff’s ability to share information on matters of mutual regulatory interest such as emerging risks, examination planning, and financial markets’ conditions. The MOU will also provide for periodic meetings between staff. This improved coordination will further enhance the SEC and NFA’s ability to promote compliance with derivatives and securities laws, maintain the highest level of oversight quality, and minimize duplicative efforts.
“Regulatory bodies working together should not be a novel concept. It should be the norm. Coordination between regulatory organizations provides businesses a predictable, straightforward path to compliance and comprehensive protections for investors that build trust in our markets,” said SEC Chairman Paul S. Atkins. “This memorandum is another step in furthering the SEC’s efforts to streamline cooperation with other regulatory organizations and alleviate the potential for duplicative or conflicting oversight.”
“We look forward to continuing our coordination efforts with the SEC under this formal framework,” said NFA President and CEO Thomas W. Sexton. “We believe this memorandum represents an important milestone for NFA and will allow us to further foster our mission of protecting customers and ensuring market integrity.”
Speaking of impact and examples, I think we all have a general sense of just how impactful both proposals will be if adopted. But when you start thinking about the ‘Specifics, Bob,’ I think the benefits to public companies are even more evident. For example, this Davis Polk alert identifies these examples:
IPO companies. Say you are a biotech that is an EGC and an SRC, and you just went public. Under the proposal you are already eligible to use Form S-3 to raise additional capital. And a year out, you have the ability to file a Form S-3 that is automatically effective. If there is an open market window at the beginning of March and you don’t have audited financials yet for the prior fiscal year – you can still go out and do an offering, subject to banks being comfortable with the comfort package, since those would no longer be required that early for a NAF.
Non-WKSIs. An existing public company that’s been reporting for 12 months but currently does not qualify as a WKSI because it does not meet the required thresholds under the current definition would be able to file an automatically effective shelf, immediately raise capital and pay the SEC registration fees at the time of a takedown as opposed to when it files the registration statement. If that same company also shifts from accelerated filer to NAF status under the filer status proposal, it would combine expanded capital-raising flexibility with scaled disclosure obligations, including executive compensation-related disclosures.
ICFR auditor attestation cost savings. For current accelerated filers that would transition to NAF status under the proposed filer status reform, the elimination of the ICFR auditor attestation requirement alone could yield meaningful compliance cost savings. A newly public company would not become subject to the section 404(b) ICFR auditor attestation requirement until at least 5 years after its IPO, regardless of the size of its public float.
deSPACed companies. A company that goes public through a deSPAC transaction would no longer be considered an “ineligible issuer” under Securities Act Rule 405, which means it would be eligible to use Form S-3 like a traditional IPO company provided it meets the other eligibility criteria under the form. It would also benefit from other flexibility, including the ability to use free writing prospectuses like traditional IPO companies and be eligible for SELI and ELI status just like traditional IPO companies, unlike the current framework where WKSI status is not available until at least three years after closing of the deSPAC transaction. Notably, the proposals do not seek to amend either Rule 144(i) or Rule 145. Rule 144(i) currently imposes a rolling 12-month current public information requirement for persons seeking to rely on Rule 144’s safe harbor in reselling securities issued by a deSPACed company, and that requirement never falls away no matter how long the company has been an SEC registrant. Rule 145 currently deems statutory underwriter status on certain parties involved in a deSPAC transaction. So, deSPACed companies would continue to be treated differently in these two respects.
Filer status determination. While companies would continue to assess their filer status annually, they would not be at risk of falling in or out of a particular category based on where their public float was on June 30 of a given year, given the requirement that the relevant threshold be met for two consecutive years. This would give a company visibility into any changed reporting obligations in advance and more time to prepare for any internal controls or other changes it would need to put in place. And it would effectively just need to determine whether it is a LAF or not, a binary choice which in itself brings welcome simplification.
That last one is huge! And on Form S-3 eligibility, no baby shelf! That alone is a game-changer for a lot of companies and their bankers and advisors.
The SEC has announced the agenda for its next Investor Advisory Committee (IAC) meeting, to be held on June 4 at 10 a.m. ET at the SEC’s headquarters and via webcast. The meeting will consist of two panels:
Speaking of quarterly v. semiannual reporting, we will be hosting a webcast later that day at 2 pm ET: “The SEC’s Semiannual Reporting Proposal: Considering the Alternatives.” Our panel of SEC experts – Skadden’s Brian Breheny, WilmerHale’s Meredith Cross, Gibson Dunn’s Tom Kim and Goodwin’s (and our own) Dave Lynn – will discuss the SEC’s semiannual reporting proposal and explore the practical implications of a shift to semiannual reporting for issuers, auditors, underwriters and the markets.
A bipartisan coalition of lawmakers is looking to crack down on Chinese forced labor by exposing Uyghur forced labor in public company supply chains. A new bill proposed in the House of Representatives will require public companies to provide new SEC disclosures listing the following documentation:
“With respect to an issuer, the documentation described under this paragraph is documentation showing whether the issuer or any affiliate of the issuer, directly or indirectly, contains within its supply or production chain—
(A) goods, wares, articles, or merchandise sourced from or through the XUAR, or mined, produced, or manufactured wholly or in part by forced labor identified by mandate of section 2(d)(2)(B)(iv) of Public Law 117–78, including:
(i) the industries contained on the ‘Illustrative List of Industries in Xinjiang in which Public Reporting has indicated Labor Abuses may be Taking Place’ in Annex 2 of the ‘Xinjiang Supply Chain Business Advisory’ (published July 13, 2021) and any successor list; and
(ii) all products listed within ‘high-priority sectors for enforcement’ by the Forced Labor Enforcement Task Force pursuant to Public Law 117–78; or
(B) goods, wares, articles, or merchandise that are mined, produced, or manufactured by an entity engaged in labor transfers from the XUAR or forced labor.”
The Uyghur Forced Labor Prevention Act (UFLPA) was a major piece of human rights legislation in the U.S. It imposed a rebuttable presumption that certain categories of goods produced in China’s Xinjiang region were produced using forced labor. This presumption made these materials very difficult to import into the U.S.
The new disclosure regime pulls the same categories identified in the UFLPA and extends disclosure obligations to companies with such goods in their supply chains. Notably, this law does not limit disclosures to the supply chains of goods imported into and sold in the U.S. This means that multinationals will be obligated to disclose their forced labor exposure globally, even if those supply chains don’t touch U.S. markets. Additionally, the law will require companies sourcing high-risk products to obtain third-party verification of their disclosures.
Who knows where this will go, but if passed, the SEC would have 180 days from the law’s effective date to implement new rules for Uyghur forced labor disclosures.
Last Friday, the SEC announced settled charges against Foot Locker (which has since been acquired) for allegedly violating Rule 21F-17 – the whistleblower protection rule – by including problematic language in separation agreements. Without admitting the findings in the order, Foot Locker consented to the entry of a cease-and-desist order and to pay a $148,000 civil penalty.
According to the SEC’s order, from at least July 2020 through June 2024, approximately 148 departing Foot Locker employees, who were senior executives, directors, and employees in finance, legal, supply chain, and operations, signed separation agreements in order to receive severance payments. The order finds that the agreements contained a provision that purported to waive employees’ rights to receive whistleblower awards from the Commission.
The order includes the offending language:
This Agreement and General Release does not prevent you from filing a charge or participating in an investigation or proceeding conducted by a government agency, including the Securities & Exchange Commission, the Equal Employment Opportunity Commission, the Department of Justice, or comparable state or local agency. However, by signing this Agreement and General Release, you understand and agree that you are waiving the right to receive any award of monetary or other benefits or any other legal or equitable relief whatsoever resulting from any such charge or proceeding by you, anyone else on your behalf, or otherwise, unless this Agreement and General Release is invalidated. You agree to waive such personal relief even if it is sought on your behalf by an agency, governmental authority or a person claiming to represent you and/or member of a class.
Like in prior enforcement actions, the action was brought despite no indications that Foot Locker ever sought to enforce the provision or that it actually did impede reporting, and Foot Locker phased out the award waiver provision in its separation agreements in 2024.
This Debevoise alert says this enforcement action “continues a line of enforcement actions against public and private companies for including language in employment agreements, company policies, and other materials that the Commission has interpreted as having a chilling effect on potential whistleblowers in violation of Section 21F of the Dodd-Frank Act and Exchange Act Rule 21F-17(a) thereunder.” We’ve seen a lot of those actions during other administrations, but the alert continues:
The action serves as a reminder that while the current Commission may be less active in bringing cases involving violations of Rule 21F-17(a), the enforcement staff will continue to pursue instances in which companies include language in their agreements that the staff views as clearly violative.
Public and private companies should review their current employment contracts, separation agreements, and other documents across their businesses to ensure they do not contain language that could be read as prohibiting, discouraging or otherwise interfering with any protected SEC whistleblowing activities. Companies should also ensure that any prior versions of documents with such language are no longer in use.
