I blogged earlier this week about proponents taking companies to court over decisions to exclude Rule 14a-8 shareholder proposals from the company proxy statement. Two of the three cases have now settled, with the companies agreeing to include the proposal in the proxy.

The NYC Comptroller announced its settlement yesterday – and emphasized that EEO-1 diversity disclosures are still an initiative:

In 2020, the Comptroller’s Office launched the successful Diversity Disclosure Initiative, encouraging America’s largest companies to voluntarily disclose their Consolidated EEO-1 Reports. The results have been overwhelmingly positive. As of 2025, roughly 80% of S&P 100 companies publicly disclose their Consolidated EEO-1 report, a comprehensive breakdown of the company’s workforce by race, ethnicity, and gender, an increase from about 14 in July 2020. The Comptroller’s Office, on behalf of the Funds, have reached agreements with major companies including the Home Depot, McDonald’s Corporation, Netflix, Nike, and Verizon Inc.

The disclosure of a company’s Consolidated EEO-1 Report is a cost-effective and meaningful way to provide investors with consistent information that allows for comparison of one company to that of its peers. Further, this disclosure imposes few if any additional costs on a company because companies like AT&T are already required to annually submit the report to the Equal Employment Opportunity Commission.

As I noted in my earlier blog, one factor to consider in exclusion decisions is whether the company has previously agreed to do the thing the proposal asks for – that appeared to be a factor in the NYC Comptroller case, even though the macro environment has shifted in the meantime. Another factor, apparently, is whether proponents will litigate – and that risk may be elevated now that there are two settlements on the books.

– Liz Dunshee

In other settlement news, Ross Kerber of Reuters reported yesterday that Vanguard had settled antitrust claims with Texas Attorney General Ken Paxton and other state AGs. Here’s more detail (also see this WSJ article):

Vanguard Group will pay $29.5 million and bolster its passive investing approach in order to settle a suit by 13 Republican state attorneys general claiming the fund manager and rivals violated antitrust law through their climate activism.

The suit in U.S. District Court in the Eastern District of Texas has been closely watched as a test of how far Republicans from energy-producing states would push Wall Street firms they accused of overemphasizing environmental matters.

BlackRock and State Street are co-defendants and aren’t part of the settlement. The claims were based on the investors’ membership in investor coalitions focused on climate change commitments, but the investors have already backed away from those. So, the settlement is premised on “passivity commitments.” Vanguard issued this statement – here’s an excerpt:

The terms of the agreement to settle this litigation reaffirm our longstanding practices and standards and the passive nature of our index funds. The settlement also recognizes our innovative Investor Choice program as a tool for empowering investors and bringing new voices into the proxy voting ecosystem. Investor Choice is the largest proxy voting choice program in the world, empowering 20 million index fund investors across more than $3 trillion1 in assets to make their voices heard.

It’s not entirely clear to me what “passivity commitments” means and whether it will affect how Vanguard votes. Maybe it just means the AGs are watching extra close and will swoop in if they see the asset manager support a climate-related shareholder proposal. At any rate, it’s worth noting that institutional investor support (or lack thereof) is another factor to consider in whether to put Rule 14a-8 shareholder proposals in the proxy.

– Liz Dunshee

The SEC’s 45th Annual Small Business Forum is coming up on Monday, March 9th from 1:00 to 5:00 pm ET. As Dave shared earlier this month, it’s happening at the SEC’s Headquarters – and there’s also a live webcast if you want to watch virtually. Here’s the registration page – for if you’re attending in person or want to be able to participate virtually.

The agenda includes a session on “Public Company Perspectives: Considerations for IPOs and Small Caps” – at 3:35 pm ET. That’s followed by a 25-minute “open mic” – not for jokes but for an audience opportunity to discuss policy recommendations. Email smallbusiness@sec.gov with your capital-raising policy ideas by noon on March 5th.

– Liz Dunshee

Brand new and very timely, this “AI Use by Lawyers” Handbook covers all sorts of terrain – from AI jargon to ethics, use cases, workflows, effective prompting, what to review before sharing AI content with clients – and much more. Brought to you by Meredith and Meaghan, it delivers 25 pages of practical guidance. If you just want to dive into the prompting basics & tips, check out the corresponding checklist.

Both of these resources are available in our “Artificial Intelligence” Practice Area.

– Liz Dunshee

Yesterday, an online prediction market platform announced that it has been actively investigating potential insider trading activity on its platform. To shed let on how it identifies violations and enforces its rules, it shared details from two cases it recently closed.

With prediction markets taking off, there has been a decent amount of commentary lately on whether there are guardrails to keep things fair. Analytical tools are even popping up to find unusual activity – not unlike how the SEC uses data analytics to flag suspicious trades. And with our members being so on top of things, it was only a matter of time before someone asked about it in our Q&A Forum. Here’s Question #12,966:

I had a question regarding the rise of the predictions market and possible interaction with the federal securities laws. Specifically, I am thinking about a public company’s Insider Trading Policy and whether we should be suggesting any changes to these policies to consider actions by employees/actors in predictions markets.

Of course, we know that SEC Rule 10b-5 requires a trade “in connection with the purchase or sale of any security”. I am pretty sure that participation in a predictions market is not a security.

I am thinking of CFTC’s Rule 180.1 which is modeled directly after Rule 10b-5, and prohibits “any manipulative device, scheme, or artifice to defraud” in connection with any swap or contract of sale of a commodity. Do you think there is reason to believe that prediction market contracts are classified as “commodity interests” rather than securities, that they may technically fall outside the SEC’s reach, and may be within the reach of the CFTC?

Indeed, the prediction market that made yesterday’s announcement about insider trading is regulated by the CFTC and referred the cases to that agency. Bloomberg’s Matt Levine explained it this way:

There is, perhaps, a three-tiered system of insider trading enforcement on prediction markets:

1. Kalshi itself bans insider trading, more strictly than the US stock market does; if you trade with any insider knowledge at all, and they catch you, they can ban you from the site and confiscate some of your money.

2. The CFTC bans insider trading on prediction markets, but less strictly than the stock market; the CFTC will only come after you if you have “misappropriated confidential information in breach of a pre-existing duty of trust and confidence to the source of the information.” But if they do come after you, they can probably do more to you than Kalshi can. (Bigger fines, banning you from exchanges other than Kalshi, etc.)

3. The US Department of Justice has some obvious interest in nontraditional insider trading, and has brought wire fraud cases against insider sports gamblers and insider nonfungible token traders. If the DOJ comes after you, they can put you in prison, which Kalshi can’t. I don’t know exactly what makes prediction-market insider trading a crime, though. In the sports gambling case, the DOJ argued that the insider bettors committed wire fraud by violating online sportsbooks’ terms of service, which seems like a stretch to me. But if that is the rule, then betting $200 on your own political candidacy, in violation of Kalshi’s rules, might also be a crime? It’s possible that the criminal insider trading rules cover more than the CFTC’s rules; it’s possible that the Justice Department would prosecute some trades that the CFTC would allow.

Here’s how John responded to our member’s question (in part):

That’s an interesting question. I’m far from an expert in commodities regulation, but it strikes me that some adjustment to existing insider trading policies may be advisable (or at least worth thinking about) in order to address insider trading in prediction markets. While the CFTC generally has jurisdiction over prediction markets, if they are used to manipulate securities markets, it’s my understanding that the SEC has the authority to get involved.

John also noted that the SEC has pursued “shadow trading” enforcement theories in the recent past, so perhaps there could be some tie-in to securities enforcement there (keep in mind that practice varies in terms of whether to prohibit shadow trading in company policy). At this point, though, it seems like the connection to securities trading is more indirect. So, for most companies, it may just be a matter of corporate policy – i.e., prohibiting employees from misusing confidential information. On the other hand, Bloomberg also recently reported this:

Roundhill Investments has asked the US Securities and Exchange Commission for permission to launch six ETFs that would let investors wager on US election outcomes through standard brokerage accounts — the most ambitious attempt yet to bring prediction markets into mainstream finance.

I’m not sure whether that changes things. This is a complex and evolving area, and I’ll look forward to hearing from someone who’s analyzed it more closely!

– Liz Dunshee

Yesterday, the SEC posted notice that it has extended its deadline to act on Nasdaq’s proposal to expand trading hours for listed equities and exchange-traded products to 23 hours a day, five days a week. The SEC says it will act on the proposal by April 13th – an extension from the original date of February 27th.

Nasdaq first revealed its efforts towards extended trading last spring – and submitted the proposal to the SEC in December. John blogged about pushback at that time.

In the meantime, the SEC has approved extended trading on NYSE Arca – to 22 hours per day, 5 days a week. The SEC also approved the “24X exchange” in 2024 – which offers trading 23 hours a day, five days a week.

Here are the comments that have been submitted so far (only 7 as of the time of this blog). You can submit comments on this form.

– Liz Dunshee

Yesterday, the SEC’s Enforcement Division announced “significant updates” to its Enforcement Manual, which was last revised in 2017. The Enforcement Manual isn’t binding – but it operates as a guide for the Enforcement Division Staff. So, it’s helpful in the sense that it outlines the process for investigating federal securities law violations. Those processes are important to investigation targets, both to know what may be coming and to determine defense strategies and some disclosure decisions.

In general, the latest changes are aimed at making the investigative process more predictable and transparent. The Division’s announcement summarizes the key updates (also see this Reuters article):

1. Ensuring a uniform Wells process: The updated Enforcement Manual emphasizes the importance of open, informed, and thoughtful dialogue between SEC staff and potential respondents and defendants, with the goal of producing better outcomes and ensuring the fair and timely resolution of investigations and recommendations of possible enforcement actions.

– To encourage this dialogue and facilitate greater consistency in the Wells process, the Enforcement Manual updates provide that recipients of a Wells notice will ordinarily receive four weeks to make Wells submissions. The update also gives guidance on what makes a Wells submission most helpful to the staff and the Commission. The updated Enforcement Manual provides that Wells meetings will be scheduled within four weeks of receipt of a Wells submission and will include a member of senior leadership within the Division.

– The processes and timelines set out in the updated Enforcement Manual are intended to ensure that the Division acts promptly to achieve the Commission’s three-part mission while also allowing parties affected by an enforcement investigation to learn more quickly whether the staff will recommend closure of an investigation or an enforcement action, as well as help ensure efficient use of Commission resources.

2. Facilitating simultaneous consideration of settlement recommendations and waiver requests: The updated Enforcement Manual reflects that the Commission recently restored its prior practice of permitting a settling party to request that the Commission simultaneously consider an offer of settlement and any related request for a Commission waiver from automatic disqualifications and other collateral consequences that result from the underlying enforcement action. By providing potential parties to an SEC action with greater visibility into the collateral effects of a settlement, these updates conserve Commission resources, enhance the transparency of its processes, and protect investors by driving significant efficiencies in the resolution of investigations.

3. Additional Updates to the Enforcement Manual: The updated Enforcement Manual details the Division’s framework for evaluating cooperation, including the impact of cooperation on civil penalties. It also includes: changes intended to encourage more consistent internal collaboration, updates regarding the formal order process, an updated framework for referrals to criminal authorities, and other changes intended to conform the Enforcement Manual to current best practices within the Division.

– Liz Dunshee

This one flew under our radar! In January, Corp Fin published Form D FAQs. According to remarks that Commissioner Mark Uyeda delivered at yesterday’s Small Business Capital Formation Advisory Committee meeting, the FAQs are intended to consolidate existing guidance and are designed to be a “one-stop shop” to quickly address frequent questions posed to the Staff about Form D.

Since they’re relatively concise, here are the 12 FAQs in full:

1. Question: When must an issuer file a Form D?

Answer: Rule 503 of Regulation D (17 CFR 230.500–508) requires an issuer that offers or sells its securities in reliance on the Regulation D exemption[1] to file the Form D notice online using the SEC’s EDGAR (Electronic Data Gathering, Analysis, and Retrieval) system. There are three possible exemptions under the rules comprising Regulation D: Rule 504, Rule 506(b), and Rule 506(c). An issuer that offers or sells its securities in reliance on Section 4(a)(5) of the Securities Act of 1933 also must file a Form D.

A company must file the Form D notice within 15 calendar days after the first sale of securities in the offering. For Form D, the date of first sale is the date on which the first investor is irrevocably contractually committed to invest. If the due date for the Form D falls on a Saturday, Sunday or holiday, the due date is the next business day. An issuer may file a Form D before it has sold any securities. The SEC does not charge any filing fee for a Form D notice or amendment. In addition, paper filings of Forms D are not accepted.

2. Question: What Commission or staff guidance is available on how to answer specific item requirements of Form D?

Answer: The PDF version of Form D available on the SEC website provides general instructions on filing a Form D and amendments, as well as specific item-by-item instructions for the form.

The Commission also provided guidance on each of the items of Form D when it adopted the electronic Form D in Release No. 33–8891 (Feb. 6, 2008). Staff in the Division of Corporation Finance has also provided interpretive guidance on Form D in certain Compliance and Disclosure Interpretations (specifically Securities Act Rules C&DI Nos. 257.02–257.08 and Securities Act Forms C&DI Nos. 130.01–130.15), which provide interpretations in a question-and-answer format in an effort to clarify how staff would interpret or apply certain rules and regulations in specific situations.

3. Question: How do I find a Form D filed on EDGAR?

Answer: All Form D filings, including their accession numbers, are publicly available on the SEC website under search filings . You can also navigate to the filing search from any SEC website page by going to the top left-hand corner and clicking on “Search Filings,” and then clicking “Search Filings” in the drop down menu.

4. Question: How does an issuer obtain access to EDGAR in order to file a Form D?

Answer: New EDGAR filers will need to submit a Form ID to request access to EDGAR. The SEC has a dedicated web page that provides instructions on how to obtain EDGAR access. For questions about these instructions, including difficulties in obtaining a CIK or EDGAR access, contact SEC filer support at (202) 551-8900 and choose Option No. 4.

Once a company has a CIK number and EDGAR access, it can submit Form D and other SEC filings by logging into the EDGAR system. To file a Form D, visit the SEC’s Online Forms Login page and log in. Once logged in, choose “Form D” under “Make a Filing” in the top left corner.

Once logged in, the filer will have only one hour after its last keystroke to complete a Form D filing. Therefore, it is important to gather all the information needed to complete the filing before logging in. The company can compile the information by referring to the PDF version of Form D.

5. Question: What are the consequences of filing a Form D late?

Answer: Rule 503(a) of Regulation D requires the filing of a Form D no later than 15 calendar days after the first sale of securities in an offering conducted in reliance on Regulation D. However, that requirement is not a condition to the availability of the Regulation D exemptions under Rule 504, Rule 506(b) or Rule 506(c). Rule 507 states some of the potential consequences of the failure to comply with Rule 503.

Issuers who did not file a required Form D within the required 15 calendar day period should make a good faith effort to file the Form D as soon as practicable.

6. Question: When are amendments to the Form D required?

Answer: An issuer may file an amendment to a previously filed notice at any time.

An issuer must file an amendment to a previously filed notice for an offering:

– to correct a material mistake of fact or error in the previously filed notice, as soon as practicable after discovery of the mistake or error;

– to reflect a change in the information provided in the previously filed notice, except as provided below, as soon as practicable after the change; and

– annually, on or before the first anniversary of the most recent previously filed notice, if the offering is continuing at that time.

An issuer is not required to file an amendment to a previously filed notice to reflect a change that occurs after the offering terminates. An issuer is also not required to file an amendment to a previously filed notice for a change that occurs solely in the information set forth in Rule 503(a)(3)(ii) and the General Instructions to Form D. The changes that do not require an amendment to a previously filed Form D notice are changes to:

– the address or relationship to the issuer of a related person identified in response to Item 3;

– an issuer’s revenues or aggregate net asset value;

– the minimum investment amount, if the change is an increase, or if the change, together with all other changes in that amount since the previously filed notice, does not result in a decrease of more than 10%;

– any address or state(s) of solicitation shown in response to Item 12;

– the total offering amount, if the change is a decrease, or if the change, together with all other changes in that amount since the previously filed notice, does not result in an increase of more than 10%;

– the amount of securities sold in the offering or the amount remaining to be sold;

– the number of non-accredited investors who have invested in the offering, as long as the change does not increase the number to more than 35;

– the total number of investors who have invested in the offering; and

– the amount of sales commissions, finders’ fees or use of proceeds for payments to executive officers, directors or promoters, if the change is a decrease, or if the change, together with all other changes in that amount since the previously filed notice, does not result in an increase of more than 10%.

An issuer that files an amendment to a previously filed notice must respond to all items of the Form D with current information as of the date the amendment is filed, regardless of why the amendment is filed.

7. Question: When must an issuer file an amendment to an earlier filed Form D versus a new original Form D?

Answer: An amendment to a Form D is required if the offering is continuing and one of the three triggering events requiring an amendment occurs. These triggering events are described in question 6 above and also in the General Instructions to Form D. The issuer’s offering is continuing if the issuer is engaged in an ongoing effort to offer and sell its securities, regardless of whether it has successfully sold any securities.

A new Form D is required to reflect the first sale of securities in a new and distinct offering in reliance on Regulation D. Rule 152(d)(1) provides guidance as to when a Regulation D offering is deemed terminated or completed and Rule 152(c)(2) provides guidance on when a Regulation D offering is deemed to commence. An issuer should also consider Rule 152(b) if it ceased its selling efforts and then recommenced efforts to offer and sell its securities.

8. Question: When conducting a Regulation D offering, do I have to comply with state securities regulations (often called blue sky laws)?

Answer: While the SEC regulates and enforces the federal securities laws, each state has its own securities regulator who enforces what are known as “blue sky” laws. A company selling securities must comply with both federal statutes and regulations and state securities statutes and regulations in the states where securities are offered and sold.

Offers and sales of securities conducted in reliance on Rule 506(b) and Rule 506(c) are not subject to state registration and review. However, those offerings are subject to both state anti-fraud authority and state requirements that may require the issuer to file a notice and a consent to service of process with the states. In addition, issuers must pay any fees required by the states. Companies should contact state securities regulators in the relevant states for further guidance on compliance with state securities law.

More information on compliance with state securities laws is available on the website of the North American Securities Administrators Association (“NASAA”). Information about NASAA’s Electronic Filing Depository database that allows filers to electronically submit their state notice forms and corresponding filing fees to participating state securities regulators is available.

9. Question: Who may sign the Form D?

Answer: Form D must be signed by a person who is duly authorized by the issuer. This requirement is described in Rule 503(b)(2). Signatures must comply with Rule 302 of Regulation S-T.

10. Question: Can an issuer withdraw or delete a Form D filed on EDGAR?

Answer: Generally, no. Once filed, the Form D will be publicly available on EDGAR and generally cannot be withdrawn. In very rare cases the staff may remove a Form D filing from EDGAR if it meets the requirements of Rule 15 of Regulation S-T (17 CFR 232.15). Please consult EDGAR’s How Do I Correct or Delete a Filing for further information.

11. Question: Can an issuer request confidential treatment for any information required by Form D?

Answer: No. An issuer cannot request confidential treatment for any information required by Form D.

12. Question: How should an issuer address Item 12 “Sales Compensation” of Form D if the information requested by this item is not applicable to its Regulation D offering?

Answer: When the information solicited by Item 12 of Form D is not applicable to an issuer’s Regulation D offering because the issuer has not or does not expect to pay directly or indirectly any commission or other similar compensation in connection with the sale of its securities in a Regulation D offering, the issuer should not enter any information in any of the fields under Item 12 of Form D and should proceed directly to Item 13.

While the info in these FAQs isn’t necessarily new – and it’s important to remember the FAQs are simply Staff guidance, not Commission-approved rules – it’s another example of the effort that the Staff is making to improve clarity and predictability. As Commissioner Uyeda noted, Reg D plays a significant role in capital formation for small businesses. Sometimes the “little things” can go a long way.

– Liz Dunshee

The January-February issue of the Deal Lawyers newsletter was just sent to the printer. It is also available online to members of DealLawyers.com who subscribe to the electronic format. This issue includes the following articles:

– So, You Think You Can (Deal) Jump?

– Delaware Chancery Litigation Over Continuation Vehicle Transaction Highlights Considerations for GP-Led Secondaries

– Just Announced: The 2026 Proxy Disclosure & 23rd Annual Executive Compensation Conferences

The Deal Lawyers newsletter is always timely & topical – and something you can’t afford to be without to keep up with the rapid-fire developments in the world of M&A. If you don’t subscribe to Deal Lawyers, please email us at info@ccrcorp.com or call us at 800-737-1271.

– Liz Dunshee

A trio of proponent lawsuits have sprung up in the past week, which was one of the predicted outcomes for this year’s Rule 14a-8 process. This Cleary memo summarizes the complaints and potential consequences. Here’s an excerpt:

On February 17, 2026, two separate lawsuits were filed challenging company decisions to exclude shareholder proposals from their 2026 proxy materials. A third lawsuit followed just two days later, on February 19, 2026. These cases mark the earliest examples of litigation under this season’s revised Rule 14a-8 no-action letter process.

The first two lawsuits, filed in federal courts in New York and Washington, D.C., both challenge exclusions based on the ordinary business exception under Rule 14a-8(i)(7). One involves a group of New York City pension funds challenging AT&T Inc.’s exclusion of an EEO-1 workforce diversity disclosure proposal; the other involves the Nathan Cummings Foundation challenging Axon Enterprise, Inc.’s exclusion of a political spending disclosure proposal. The third lawsuit, also filed in federal court in New York, involves a procedural dispute over whether PepsiCo, Inc. properly notified an individual shareholder represented by People for the Ethical Treatment of Animals (PETA) of alleged deficiencies in the proposal submission.

All three companies filed exclusion noticesi with the SEC and included the unqualified representation required by the Commission—namely, that each company has a reasonable basis to exclude the proposal based on the provisions of Rule 14a-8. While the SEC has yet to react, and may not given prior statements, these lawsuits offer useful lessons for companies navigating exclusion decisions this season. This alert focuses on the first two lawsuits, though the emergence of a procedural challenge underscores that litigation risk extends beyond substantive questions of excludability.

I blogged about one of the initial lawsuits last week on the Proxy Season Blog – along with other risks that companies may want to consider when deciding which path to take this year on Rule 14a-8 shareholder proposals. The Cleary memo details the parade of horribles that companies could have to contend with if a court grants a mid-season injunction to order inclusion of a previously excluded proposal in a proxy statement. It also looks at the procedural history of the cases to-date, to try to draw lessons for the rest of us. Here are the high points of the suggested takeaways:

– Provide detailed, company specific analysis in (j) notices – but know it’s not a complete shield

– Consult data to inform your exclusion strategy – how close does your situation track with no-action precedent?

– Track past settlements, withdrawals or commitments made to proponents

– Engage with proponents before excluding

– Consider the full spectrum of risks

As the Cleary team notes, the SEC’s lighter touch this year has not made the exclusion calculus any simpler. We’re continuing to track updates on the Proxy Season Blog and in our “Proxy Season” Practice Area.

– Liz Dunshee