Yesterday, the SEC announced that its Small Business Capital Formation Advisory Committee will meet on Tuesday, July 21st at 10:00 am Eastern. Here’s the agenda for the meeting, which, as this overview from the SEC’s press release indicates, will continue the discussion about how to encourage more IPOs that began at the Committee’s last meeting:
Building upon ideas generated during the prior committee meeting, members will continue exploring ways to encourage more companies to go and stay public. The committee will consider ways to modernize the IPO process and potential regulatory reforms, including certain recently proposed SEC rulemakings aimed at reducing regulatory friction and facilitating capital formation in the public securities markets.
To facilitate discussion and deepen the committee’s understanding of the regulatory landscape, members will hear from SEC staff in the Division of Corporation Finance who will provide an overview of recent relevant rulemakings. Members will also hear from Daniel Zinn, General Counsel and Chief of Staff, OTC Markets Group, and Sue Washer, biotechnology consultant and former CEO of Applied Genetic Technologies Corporation, who will share their experiences and views on ways to further support small public company capital formation.
The meeting will be open to the public and will be live streamed on SEC.gov.
This Foley blog reviews a NACD chapter meeting with senior PCAOB officials during which the auditor inspection process was addressed. Topics addressed included how an inspection works, the QC 1000 audit standard, the PCAOB’s ongoing assessment of the use of AI tools by auditors.
The blog also highlights the fact that the while the results of a PCAOB inspection are shared with auditors, they won’t be shared with audit clients unless the directors ask questions about them. This excerpt from the blog shares some specific questions relating to PCAOB inspections and “hot button” issues at the PCAOB that it recommends boards ask their auditors to address:
– Was our company’s audit reviewed this past cycle as part of your firm’s annual inspection? What areas, and any findings? And if not us, were there findings on your firm’s audits of other companies in our industry?
– What is the auditor doing with AI on our audit? Under what controls? How are those AI-assisted judgments documented?
– What are we doing with AI? How is our own finance team’s use of it weighed in the audit’s risk review? Are we ahead of, even with, or behind our peers?
– Where does the accounting firm stand on QC1000? What is changing, and what gaps should we watch?
– Of the PCAOB’s usual problem areas, revenue, impairment, internal controls, deal accounting, which apply to us this cycle? And what is the firm doing about them?
The blog also says that CFOs and legal teams should be asking about AI-related issues as well, because the auditor’s use of AI and their own will be judged together.
Here’s the latest edition of our “Understanding Activism” podcast. This time around, Cleary’s J.T. Ho and I were joined by Joshua Black, Editor in Chief of Diligent Market Intelligence, to discuss Diligent’s recent activism publications. Topics in this 23-minute podcast include:
– Identification of the most prolific activists this proxy season.
– How to evaluate and weigh activist rankings.
– The dominance of settlements over proxy fights.
– The shift toward financial versus operational activism.
– The rise of digital campaigning by activists.
– Regional divergence in activism trends, especially Japan versus Europe.
– The increase in “sell the company” activism.
– The growth and evolution of short activism.
– Key takeaways from data on activism challenging M&A deals.
This podcast series is intended to share perspectives on key issues and developments in shareholder activism from representatives of both public companies and activists. We continue to record new podcasts, and they’re full of practical and engaging insights from true experts – so stay tuned!
We’ve all been blogging quite a bit about prediction markets in recent months. Many of those blogs have discussed the need for public companies to consider addressing issues associated with prediction markets in their insider trading policies. However, this BCLP blog says that recent enforcement actions highlight the need for companies to take into account the implications of prediction markets on other corporate policies & controls and procedures. Here’s an excerpt:
Even though wagers or participation in prediction markets may not necessarily involve trading in traditional securities, federal authorities view them as potentially implicating anti-fraud and related statutes – with focus on the use of material nonpublic or confidential information.
Companies should consider updating their controls and procedures, which were likely developed before the emergence of events contracts. Careful drafting will be important, including defined terms, scope of trading restrictions, and oversight for internal reporting, compliance and enforcement.
Codes of Conduct. Key areas of focus could include:
– Reviewing prohibitions on use of confidential information for personal gain – whether they capture new types of trading or betting.
– Consider expressly addressing prediction markets, as well as prohibiting betting or trading based on confidential information.
– Potential application of policies relating to conflicts of interest and reputational risk.
Insider Trading Policies.
– Consider addressing trading based on confidential information that may not involve securities, such as event-based contracts or otherwise not involving company stock.
– Consider whether to reference or include relevant provisions of the Code of Conduct in such policies.
– Any discussion of Rule 10b5-1 plans may need to be revised as it may not be clear how the Rule could work, if at all, for prediction market contracts.
Education.
Many employees may not recognize the relevance of compliance rules to prediction markets given the wide proliferation of betting on political, sporting and other public events.
– Consider whether to address these concerns in training materials, including examples of problematic event-based trades.
– Consider whether to address them in employee certifications.
The blog also points out that these issues may also be relevant to private companies and non-profits, since they often aren’t related to traditional transactions in securities. These enterprises would be prudent to undertake similar reviews of their own controls and procedures, codes of conduct, and policies relating to confidentiality, conflicts of interest or reputational risk, as well as codes of conduct.
This kind of feels like it might be looked back on as the moment when the AI craze officially “jumped the shark,” but for what it’s worth, here’s the latest out of Delaware, via this Spotlight Delaware article:
A Delaware committee that has been studying the business uses of artificial intelligence proposed legislation earlier this month to temporarily ease state regulations on companies deploying the fast-growing technology.
The proposed legislation would create a testing ground for companies to use what are called AI agents to autonomously complete business tasks typically done by humans. The AI agents would oversee whole business operations under the umbrella of a new kind of entity, called an Artificial Intelligence Company, or AIC.
Supporters say the resulting regulatory “sandbox” would allow Delaware to test how autonomous AI businesses operate, and provide lawmakers with key data to develop rules governing their use within the state’s prominent corporate franchise.
The legislation is likely to be introduced in the General Assembly next year.
The proposal is intended to help shield the owners of an AIC from liability for AI agents doing, well, AI agent stuff. Over on The Business Law Prof Blog, Ann Lipton questions whether this kind of entity would actually provide the intended liability protection. My concern is more fundamental – why would anyone want to create a legal entity designed to protect the owners of Skynet from liability?
Check out our latest “Timely Takes” podcast featuring Cleary’s J.T. Ho & his monthly update on securities & governance developments. In this installment, J.T. reviews:
As always, if you have insights on a securities law, capital markets or corporate governance issue, trend or development that you’d like to share in a podcast, we’d love to hear from you. You can email me and/or Meredith at john@thecorporatecounsel.net or mervine@ccrcorp.com.
The SEC recently issued its latest Reg Flex Agenda and boy, is there a lot! The list includes two items that are in the pre-rule stage, and a whopping 36 that are in the proposed rule stage. Everyone knows about the semiannual reporting, filer status, and registration reform proposals that the SEC has already put forward, but here are some other coming attractions that hare reached the proposed rule stage that you might find interesting:
Of course, the dates tied to these items are aspirational and signify general timeframes versus precise dates. As we always caution, while the Reg Flex Agenda provides insight into the SEC’s current rulemaking priorities, it isn’t a definitive guide for anyone trying to predict SEC rulemaking for purposes of specific board agendas, budget and workflow.
Yesterday, the SEC announced that Paul Knight has been appointed to serve as the agency’s Chief Operating Officer. Here’s an excerpt from the SEC’s announcement that provides information on Mr. Knight’s background:
Mr. Knight joins the SEC from JPMorgan Chase, where he most recently worked as the principal lead for driving growth across U.S. lines of business, after previously managing the program office for the Chase Bank expansion into 25 new states. Prior to his nearly 12 years at JPMorgan Chase, Mr. Knight served as a senior advisor and business manager at the U.S. Department of the Treasury from 2012 to 2014. Mr. Knight also previously served at the SEC from 2008 to 2012 in a variety of roles, including as the interim managing executive for the Division of Economic and Risk Analysis. He started his career during his college years working for a small business in his hometown of Annapolis, Maryland.
The COO oversees the SEC’s operational and administrative functions, and if you check out the Office of the Chief Operating Officer’s page on the agency’s website, you’ll get a sense for just how broad-ranging the COO’s responsibilities are.
Our 2026 Proxy Disclosure and Executive Compensation Conferences are just around the corner. Our conferences will be held on October 12th & 13th in person in Orlando and will also be available online for virtual participants. Our discounted “early bird” rate expires on July 24th, so you need to act fast to ensure that you don’t miss out!
With an agenda featuring two days of fast-paced, topical panels, an all-star speaker lineup, and Dave Lynn’s interview with Corp Fin’s Deputy Director Christina Thomas, attendees will receive critical insights into the latest SEC rulemaking initiatives and developments in governance, disclosure practices, activism & shareholder engagement, and executive compensation.
If you’ve been following our blogs, webcasts, podcasts and newsletters, you know that the SEC has turned on the rulemaking firehose – and the agency has indicated that there’s plenty more to come! This year more than ever, you can’t afford to miss the insights that our expert panelists will provide on the latest developments.
Register online at our conference page or contact us at info@CCRcorp.com or 1-800-737-1271. Do it today so you don’t miss out on our discounted “early bird” rate!
In prior blogs, I’ve criticized the SEC’s longstanding practice of publicly trumpeting every enforcement victory on its website while remaining silent about its defeats. In a recent LinkedIn post, David Chaiken pointed out that last week, the SEC departed from that practice when it issued a litigation release announcing the dismissal of enforcement proceedings against the former CEO of FirstEnergy. The release was short, direct, and didn’t pull any punches:
The Securities and Exchange Commission announced that on June 27, 2026, the Honorable J. Philip Calabrese, United States District Judge for the Northern District of Ohio, granted a motion to dismiss filed by Defendant Charles E. Jones.
On September 12, 2024, the SEC filed a complaint against Jones, the former CEO of FirstEnergy Corp.
In granting the motion to dismiss, the court found that the Commission’s complaint, as alleged, did not state a claim against Jones for violations of federal securities laws.
The Atkins SEC’s rulemaking and enforcement decisions have been controversial, to say the least, but I think everyone should applaud its transparency about the outcome in this case. A regulatory agency in a democracy should be more concerned about being transparent when it comes to its enforcement program than it is about cheerleading for it. I think it’s fitting that the announcement was made just before the 4th of July, and I hope this becomes a standard practice.
