I’m happy to be reporting from sunny Coronado this week, for the Northwestern Pritzker School of Law Securities Regulation Institute. It’s pretty easy to be in high spirits when you’re enjoying ocean views. But why stop there? SEC Commissioner Mark Uyeda injected even more energy with his keynote address yesterday.
I interpreted Commissioner Uyeda’s remarks as permission to “dream big” when it comes to the comprehensive review of Regulation S-K that SEC Chair Paul Atkins announced earlier this month. In addition to stating that the Commission needs to refocus on financial materiality with the disclosure framework, Commissioner Uyeda recognized a few pain points that the Staff may review:
There are areas for improvement. For example, with regard to insider trading arrangements and policies under Item 408,[15] we could consider deleting the requirement in subparagraph (b) that mandates companies explain whether they have an insider trading policy or provide reasons if they do not. This would not change any underlying federal securities law obligations or liability thereunder, but would simplify disclosures.
Similarly, with regard to transactions with related persons under Item 404,[16] we could consider adjusting the de minimis threshold of $120,000 to a higher amount, which might better align the requirement with materiality considerations. Or we could consider replacing a static number with a more principles-based approach to materiality that has worked well in other contexts. Additionally, the narrative description of company policies under subparagraph (b) could be replaced with a requirement for companies to file their policies or make them readily available on their websites. This would maintain transparency while streamlining SEC filings.
In the cybersecurity area, we should re-consider our approach to the current mandated disclosures. We should consider whether Item 106[17] could be streamlined to simplify the narrative disclosures of cybersecurity policies and governance oversight. Our disclosure rules should generally not be the driver for what a company does or does not, but disclosure requirements such as these and others are likely shaming or indirectly compelling companies to change practices rather than eliciting material disclosure as to what the company is doing.
There are similar areas for potential improvement in Item 701 and disclosure of unregistered transactions.[18] We could evaluate whether the corresponding Form 10-K item, requiring a 3-year look-back for unregistered sales of securities by the registrant, could be eliminated or otherwise modified.
Simplifications could also be made to Item 201 for disclosures of the number of security holders and performance graphs. Perhaps we could delete the five-year graph of the issuer’s total cumulative return compared to a broad index and a line-of-business or peer group index under subparagraph (e). Given the wide availability of evaluative tools on the internet and mobile devices, do investors continue to need such disclosure?
And although not squarely within the scope of Regulation S-K, I would be remiss if I did not mention disclosure related to mine safety in Form 10-Q.[19] Surely, we can include such disclosure elsewhere than in a recurring quarterly filing—the most logical place would likely be in Form 8-K or Form SD. One important consideration is that each of these requirements feeds into evaluations under an issuer’s disclosure controls and procedures (“DCPs”), adding one more step in terms of identifying whether any transactions or events are reportable.
These are a few examples where we may be able to improve disclosure requirements to ensure they are relevant and efficient in the current regulatory environment. In the aggregate such revisions may reduce compliance burdens, improve our regulatory roadmap and—hopefully, minimize late nights spent by lawyers at public companies having nothing to do with mining but nonetheless wondering if they need DCPs for mine safety incidents.
He also addressed scaled disclosures, noting:
Over 40% of companies (42.5%) must comply with the full scope of the Commission’s disclosure requirements.[22] If the Commission were to reduce this number to approximately 20%, the total number of additional companies that would be able to provide scaled disclosure requirements would increase by almost 1,400.[23] From an investor protection standpoint, however, those 20% of the companies still subject to the full scope of our disclosure requirements would represent almost 93.5% of total market public float.
Commissioner Uyeda floated the notions of recalibrating the size thresholds and time periods for scaled disclosure eligibility, as well as expanding the use of Form S-3.
While this speech was subject to the standard disclaimer of being the Commissioner’s individual views, it’s well-aligned with remarks from Chair Atkins.
Corp Fin Director Jim Moloney also took to the stage at SRI yesterday. Another breath of fresh air! Of course, Jim had to be somewhat careful in what he could say, but he was candid and consistent with Commissioner Uyeda. Here are a few takeaways:
– Jim is working hard to refocus the Corp Fin Staff on activities that move the needle, such as clearing the shutdown-related registration statement backlog
– Corp Fin has worked through about half of the backlog, but new registration statements are also continuing to get into the queue. The Staff is focusing review resources on filings with substantive disclosures that matter to investors, and less on “basic” filings like universal shelf registration statements, etc.
– The Staff is aiming high with its Reg S-K review. Jim didn’t move from California to DC to move a few commas. When it comes to simplifying regulations, think more “Ozempic” and less “nip & tuck.”
– They posted job openings last week for a “strike force” of sorts – he’s looking for folks with real-world experience to participate in the Reg S-K review.
– Help the SEC help you. Don’t wait to react to a proposal, help jumpstart it. Submit comments in advance to inform the proposal, which you can do through this public form or by emailing rule-comments@sec.gov with “CLL-15” included in the subject line.
– The Staff is also receptive to suggestions for interpretive guidance. If you think there should be a CDI, draft it up in track changes and send it in.
– The SEC is open for business. It’s not “giving away the store,” they’ll be doing things thoughtfully. But there’s a drive to enhance investment options in public markets, by encouraging more companies to go and stay public.
One thing Jim suggested yesterday was that the issuer community gather feedback through surveys, which can help inform the questions posed in an eventual proposal. It’s important to note that other constituents will also be gathering their own feedback and submitting perspectives – but SRI is mainly an issuer audience, so the remarks were geared towards that.
Anyway, I’m here to do my part. We’ve blogged about the government’s “suggestion box” for deregulation, and we’ve solicited views on your favorite and least favorite Reg S-K items. But let’s take a more conceptual look. Where is the juice not worth the squeeze?
Please participate in this anonymous poll to weigh in on what could “move the needle” on decisions to go public and stay public. Are there line items that are boilerplate and that your investors have never asked about? Are there requirements that are resource intensive, burdensome, and not material? This list excludes Item 402 compensation disclosures since those are subject to a separate review effort. Check all that apply – and drop me an email if you have other suggestions:
On Friday, Corp Fin published a bunch of updates to its Compliance & Disclosure Interpretations for Securities Act Sections and Securities Act Rules – including withdrawals, revisions, and brand new interpretations.
The updates modernize the CDIs to reflect that a number of them had become obsolete with the adoption of Securities Act Rule 152 back in 2020. As Dave has noted, that Rule provided welcome certainty for integration issues that had been a source of stress for many years. Other updates provide clarity on determining accredited investor status. Here’s more detail (with links to the new and revised CDIs, and paraphrasing the topics):
– The CDI addresses sales to individuals under Rule 506(b) of Regulation D, following a general solicitation under Rule 506(c). This depends on whether the issuer established a substantive relationship with such prospective purchasers prior to the commencement of the Rule 506(b) offering. Because the issuer solicited the prospective investors through the general solicitation in the prior Rule 506(c) offering, the issuer cannot rely on Rule 152(a)(1)(i). The CDI describes factors to consider.
– This CDI doesn’t give a bright-line cleansing period for investors previously solicited under a general solicitation, which is an issue raised in a letter request that John blogged about last summer. It does say that being an existing investor may constitute a preexisting relationship. Perhaps we will hear more about this at SRI this week.
– The CDI explains that the mere fact that a registration statement is effective, in and of itself, does not automatically raise integration concerns under Rule 152.
– The refreshed CDI states that following an unsuccessful shelf takedown, an issuer may complete the offering privately, provided that the issuer complies with the general principle of integration in Rule 152(a).
3. Section 152. Rule 155 – Integration of Abandoned Offerings
– Withdrew Question 152.01 (superseded by Rule 152)
– Withdrew Question 152.03 (superseded by Rule 152)
4. Section 212. Rule 415 – Delayed or Continuous Offering and Sale of Securities – Withdrew Question 212.06 (superseded by Rule 152)
5. Section 255. Rule 501 – Definitions and Terms Used in Regulation D – Revised 255.06
– This CDI relates to looking through to natural persons when determining accredited status of entities, the update clarifies language and adds a reference to Note 1 of Rule 501(a)(8).
6. Section 256. Rule 502 – General Conditions to be Met
– Withdrew Question 256.01 (superseded by Rule 152)
– Withdrew Question 256.02 (superseded by Rule 152)
– Withdrew Question 256.34 (superseded by Rule 152)
7. Section 260. Rule 506 – Exemption for Limited Offers and Sales Without Regard to Dollar Amount of Offering
– New Question 260.39 – This new CDI clarifies that in a Rule 506(c) offering, an issuer can use different methods to verify the accredited investor status for different investors.
As Meredith shared today on DealLawyers.com, Corp Fin also updated CDIs on business combinations, tender & exchange offers, and proxy rules (e.g., broker searches).
These include an interesting update on exempt solicitations, saying that the Staff will object to voluntary filings. Check out Meredith’s blog and the CDIs for more detail.
Last but not least, the Corp fin Staff published a CDI on Friday to clarify when a spun-off company could omit historical compensation disclosures in subsequent filings. Check out Meredith’s blog on CompensationStandards.com for more on this one.
Membership on the board of the PCAOB has long been one of D.C.’s most lucrative gigs, and in his statement on the appointment process for new board members last summer, SEC Chairman Paul Atkins made it clear that he intended to take a hard look at board compensation in the SEC’s evaluation of the PCAOB’s 2026 budget request. The PCAOB tried to read the room and proposed a 20% cut in board compensation when it submitted its budget request for the upcoming year.
Yeah, nice try guys. Yesterday, the SEC approved a PCAOB budget for 2026 that slashes the compensation of the PCAOB’s chair and its other board members by 52% and 42%, respectively. Like they say, “that’ll leave a mark.” Anyway, here’s what Chairman Atkins had to say about the reductions in his statement on the budget:
In 2007, during my final vote on a PCAOB budget before leaving the Commission, I highlighted two main concerns, which I will briefly revisit now.
The first concern was the high salaries of the PCAOB Board members, prompting me to reject the budget that year. I highlighted then that “[t]he SEC can and must provide objective oversight with respect to the Board’s salaries. If we do not oversee those, nobody else can.”This budget, I believe, addresses this first concern, reducing the chairman’s and other Board members’ compensation by 52 percent and 42 percent, respectively. This action demonstrates a clear commitment to aligning PCAOB Board pay more closely with the ethos of public service that reinforces trust, demonstrates fiscal responsibility, and affirms the honor of stewardship over the capital markets.
Chairman Atkins said his second main concern in 2007 was the PCAOB’s lack of a strategic plan, which the SEC subsequently required the PCAOB to implement. Development of an updated strategic plan is one of the Chairman’s top priorities for 2026.
Allianz’s 2026 Risk Barometer identifies the following as the top five risks facing global business in 2025: cyber incidents, artificial intelligence, business interruption and supply chain disruptions, changes in legislation and regulation, and natural catastrophes. Climate change dropped out of the top 5, while AI made its first appearance at #2. Here’s what Allianz has to say about the risks associated with AI:
AI climbs to its highest-ever position of #2, up from #10. Both cyber and AI now rank as top five concerns for companies in almost every industry sector. As AI adoption accelerates and becomes more deeply embedded in core business operations, respondents expect related risks to intensify.
Close to half of respondents believe AI is bringing more benefits to their industry than risks. However, a fifth say the opposite, while the remainder believe the jury is still out. Education, retraining, and upskilling initiatives are the main actions being taken by companies in response to increasing AI adoption in the workforce. Organizations also need to implement the right risk management and governance frameworks to successfully capture AI opportunities.
The report explains what accounts for AI’s rapid rise on the list of global risks facing business:
AI is the big mover in the Allianz Risk Barometer 2026,” explains Michael Bruch, Global Head of Risk Consulting Advisory Services, Allianz Commercial. “Its rapid evolution and adoption are reshaping the risk landscape, making it a standout risk for businesses worldwide. Yet in many ways, it could be seen as just another risk to add to the growing list of challenges for businesses. However, AI’s transformative potential means it cannot be underestimated. As the results show, many of the top perils are interconnected and highly complex risks that will impact every organization in 2026.
If you’re looking to stay on top of the evolving risk environment for AI and other emerging technologies, be sure to subscribe to our free “AI Counsel” Blog.
It’s been kind of a slow news week, and that’s always a signal for me to search the Internet to see if there’s anything new going on with America’s most entrepreneurial hip-hop artists, The Wu-Tang Clan. They almost never let me down, and they came through again this week.
In my most recent Wu-Tang Clan update, I mentioned the ongoing litigation between PleasrDAO, which acquired the only copy of The Wu-Tang Clan’s “Once Upon a Time in Shaolin” from the DOJ a few years ago, and the album’s original owner, convicted fraudster Martin Shkreli. The gist of the lawsuit is that although Shkreli was prohibited from copying the one of a kind LP, he allegedly did, and PleasrDAO sued him.
In an apparent effort to throw sand in the gears of that lawsuit, Shkreli filed a motion to add RZA and Cilvaringz to the case. As this excerpt from Billboard’s article on the case notes, the judge wasn’t impressed with Shkreli’s effort:
Last fall, Shkreli made a surprise move: he said the case could not be resolved unless RZA and Cilvaringz were forced to participate in the case. He claimed they had “conflicting interests in the same property,” and that the case would need to wade into the original purchase agreement for Once Upon that he had inked with the musicians back in 2015.
But on Monday, Judge Chen said that claim was clearly “unpersuasive.” She said that nobody was seeking to deprive RZA and Cilvaringz of any rights, and that Shkreli’s attorneys were trying to “manufacture” such a situation with an argument that “cherry-picks” details: “Thus, the court finds that Shkreli has not met his burden of proving that Diggs and Azzougarh are necessary parties.”
You’d think that by now Martin Shkreli would have learned not to disrespect The Wu-Tang Clan (see 2nd blog). After all, they don’t say “Earth spins, Wu wins” for nothing.
Over on RealTransparentDisclosure.com, Broc Romanek blogged about a recent Labrador Transparency Report reviewing 2025 proxy statement risk oversight disclosures and recommending potential enhancements for companies to consider as they prepare their 2026 proxies.
The report says that risk oversight disclosures have fallen into a bit of a rut, with companies generally following the same standardized format. These disclosures typically start with a matrix showing board and committee oversight of key risks and management’s role. That’s followed by description of the company’s ERM program and more detailed discussion on the board’s oversight of more significant risks.
Does that sound familiar? Yeah, I thought so. Anyway, Broc excerpts some suggestions from the report on how companies might do a better job on these disclosures:
1. Rethink the Traditional Committee Oversight Matrix: Many companies cite the desire to streamline text and remove duplication in their proxy statements. We recommend taking a look at your Committee descriptions and Risk Oversight disclosures to see how they overlap. Similarly, think about whether key risks are overseen by the Board or a singular committee, or whether there is a more cross-functional approach.
2. Show an Integrated Approach to Risk Throughout the Company: The traditional Board/Committee/management oversight graphic often includes only a high-level overview of the role of management in managing risks, with a separate discussion on the ERM process. Two Dow 30 companies take a different approach, incorporating a crisp, easy-to-digest graphic that shows their top-down/bottom-up risk management governance structure.
3. Reflect Better Alignment Between Risk, Strategy and Sustainability: Growing anti-ESG backlash and the current political and legal environment have caused companies to rethink whether and how they report on sustainability-related topics in their proxy statements and annual reports on Form 10-K. We recommend, however, taking a step back from the rhetoric and examining the interrelated nature of sustainability, risk management, strategy and competition, and long-term value creation.
With respect to this final point, the report cites a 2024 Harvard Business Review article arguing that corporate leaders should address sustainability issues that “have the most impact on the bottom line” and identify the most material negative impact their company is having on society, and then make significant investments to develop practical solutions. It also notes a PwC report recommending that companies integrate sustainability into their ERM process.
