Vanguard released its updated voting policies yesterday, continuing the trend of institutional investor voting policy announcements that started with the release of Blackrock’s voting guidelines last week. By comparison, last year Vanguard did not release its updated voting policies until January 31, so we are seeing them a full three weeks earlier in 2026.
Consistent with the previously announced reorganization of the firm into two separate investment advisors, Vanguard Capital Management and Vanguard Portfolio Management, the institutional investor has posted separate voting policies for each of the advisors. Global and U.S. policies have been released for Vanguard Capital Management, and global and U.S. policies have also been released for Vanguard Portfolio Management.
Stay tuned to our blogs this week for more analysis of the changes made to Vanguard’s voting policies for 2026.
As I noted in yesterday’s blog, capital formation is front and center for the Commission in 2026. The SEC recently announced that the Small Business Capital Formation Advisory Committee will meet on February 24. The meeting will be open to the public via webcast on www.sec.gov beginning at 10:00 am Eastern Time. The Sunshine Act Notice indicates that the topics to be covered include “matters relating to rules and regulations affecting small and emerging businesses and their investors under the federal securities laws.” We expect that a full agenda will be released at a time closer to the meeting date.
We recently posted the transcript for “The (Former) Corp Fin Staff Forum” webcast, during which Sonia Barros of Sidley, Meredith Cross of WilmerHale, Tom Kim of Gibson Dunn, Keir Gumbs of Edward Jones and I discussed the latest updates on the SEC rulemaking agenda, Staff interpretations and disclosure review from the Corp Fin perspective. The webcast covered the following topics:
– The SEC’s regulatory agenda for public companies and capital formation
– Recent Staff guidance and the implications for companies
– The SEC’s evolving approach to shareholder proposals and ESG matters
– The Corp Fin approach to filing reviews under new leadership
– What to expect from Corp Fin in 2026 and beyond
Members of the TheCorporateCounsel.net can access the transcript of this program. If you are not a member, email info@ccrcorp.com to sign up today and get access to the full transcript – or call us at 800.737.1271.
Turning the page on the calendar to 2026 inevitably prompts me to look ahead to what will undoubtedly be a very active year in our space, with the SEC sure to ramp up its rulemaking and interpretive efforts to address an ambitious agenda that has been covered in this blog over the course of 2025. Keeping in mind that rulemaking is a very time-consuming and labor-intensive process, here are my top five predictions as to what we might see coming down the pike in terms of rulemaking over the next few weeks and months:
1. As Meredith discussed last week, the 2026 National Defense Authorization Act will require Section 16(a) reports of officers and directors of foreign private issuers (but not ten percent owners) effective March 18, 2026. Given a number of complications that are noted in Meredith’s blog, the Commission may need to act quickly to adopt rules to facilitate the implementation of this legislation.
2. As I noted in the blog back in September, President Trump directed the SEC to consider ending quarterly reporting in a Truth Social post, and Chairman Atkins subsequently indicated that consideration of a proposal was a priority for the Commission. A good deal of the underlying work on this topic was done during the first Trump Administration, including a request for comment and a roundtable, so it is foreseeable that a proposed rule and form amendments could be imminent on these changes.
3. As I noted in the blog last month, the White House issued an Executive Order directing the Chairman of the SEC, the Chairman of the FTC and the Secretary of Labor to take a number of rulemaking and investigative actions with respect to proxy advisory firms. Given that these actions have been prioritized by the Administration, it may be the case that the Commission will seek to act quickly on this front, particularly given that work has undoubtedly already been undertaken to address the quagmire that currently exists with the SEC’s rules on this topic.
4. As a conservative estimate, I would say that it will typically take about six to nine months to go from proposing release to adopting release on any rulemaking initiative, so if the Commission wants to revise the executive compensation disclosure requirements, revisit Rule 14a-8 or otherwise make changes to proxy disclosure requirements in time for the 2027 proxy season, we should expect to see proposing releases from the Commission very soon. Last June, the SEC held a roundtable on executive compensation disclosure requirements and solicited comments, so it can be expected that preliminary work has been ongoing with this initiative.
5. Among the top priorities articulated by Chairman Atkins is capital-raising, and the Chairman and other Commissioners have discussed a wide range of potential regulatory changes to address this initiative. There has been a bit of a “chicken and the egg” conundrum in that Congress has also been working on some of these initiatives, but at some point the SEC can’t wait around for Congress to act and must move forward with its own proposals. As the political winds in Washington are shifting to distinctly variable, this may be an issue that the SEC and the Administration will want to showcase in the coming months leading up to mid-term elections. All of these signs point toward proposing releases in the near term.
Of course, you should take all my predictions here with a grain of salt. For instance, back in September, I was sure that the Baltimore Ravens would win the Super Bowl this year. I could not have been more wrong about that!
The SEC’s Office of the Advocate for Small Business Capital Formation recently released and shared with Congress its 2025 Staff Report. This report highlights of the Office’s outreach and public engagements during fiscal year 2025, and provides data on small business capital raising. The Staff Report notes that, because the Commission does not presently have an Advocate to submit a statutory Annual Report to Congress as required by law, the Staff prepared the Staff Report in lieu of the required Annual Report. Some highlights from the Staff Report include:
1. Consistent with past experience, offerings exempt from registration pursuant to Regulation S and Rule 144A amounted to $1 trillion, while Rule 506(b) and Rule 506(c) offerings were $378 billion and $24 billion, respectively. Rule 504, Regulation A and Regulation Crowdfunding constituted a much smaller proportion of exempt offerings, collectively amounting to approximately $1.7 billion.
2. U.S. private companies raised 36% of all capital raised by U.S. companies, with U.S. public companies raising the balance of approximately $2.3 trillion in capital raised.
3. The median capital raise utilizing Regulation Crowdfunding was just $114,000, and more than half of the issuers raising capital under this exemption were under three years old.
4. From June 2015 to 2024, 93% of Regulation A offerings were Tier 2 (by amount sought).
5. Over the past five years, the amount of capital raised by venture capital funds has declined significantly, as fund managers have faced a challenging environment.
6. From 2014 to 2024, the number of companies remaining private eight years or more after receiving their first VC round has quadrupled.
7. While IPOs have remained historically low over the last three years, the number of offerings and offering proceeds have recently trended upward.
8. In 2024, IPOs by small companies represented 44% of all IPOs, but only 3% of total capital raised.
9. Since 2000, VC-backed companies accounted for 51% of all IPOs and 66% of technology IPOs.
10. During fiscal 2025, the Office of the Advocate for Small Business Capital Formation held 55 events with over 60 partner organizations, involving over 2,500 attendees. I was honored to participate in the 44th Annual Small Business Forum, which took place in April 2025.
As the Commission’s focus shifts toward rulemaking to enhance capital-raising opportunities for smaller businesses, all of the Office’s insights will undoubtedly be critical to that process.
For a recent episode of the “Mentorship Matters with Dave & Liz” podcast, Liz and I spoke with one of my most influential mentors, Meredith Cross, who is a partner at WilmerHale, a former Director of the SEC’s Division of Corporation Finance and a regular contributor to our webcasts and conferences. Check out this 27-minute podcast to hear:
1. The role that mentors have played in Meredith’s career.
2. Meredith’s advice to young lawyers seeking to pursue securities law as a career.
3. Challenges that Meredith has faced over the course of her career, and how mentors helped her overcome those challenges.
4. How mentorship in private practice compares to mentorship in the government.
5. Any particular considerations for women seeking mentors in the legal profession, as well as for women who are mentoring other women lawyers.
6. Notable developments over the course of Meredith’s career in terms of the advancement of women in the legal profession.
Thank you to everyone who has been listening to the podcast! If you have a topic that you think we should cover or guest who you think would be great for the podcast, feel free to contact Liz or me by LinkedIn or email.
During a speech yesterday at the New York City Bar Association, Brian Daly, Director of the SEC’s Division of Investment Management, shared his thoughts on the proxy voting landscape (subject to the standard disclaimer). He starts by saying, “I often hear investment advisers say that they feel compelled to vote on matters they do not deem important to their investment programs and that they would welcome more clarity that they need not vote all proxies.”
Citing the 2003 adopting release for the SEC’s proxy voting rule and 2003 guidance on proxy voting considerations, he gives some examples of situations where he thinks not voting may make sense.
Look, for example, at quantitative and systematic managers, who often operate models that merely seek exposures to identified sources of alpha. Many investment advisers managing quantitative and systematic strategies will even say that voting on board members, management policies, or on precatory social and political matters is irrelevant to their strategy and imposes costs without conferring any measurable benefit to investors.
Many mutual funds and ETFs purport to track a reference index, and the core mandate for the investment adviser is to replicate the performance of the reference index in the fund. [I]t may be appropriate for these categories of investment advisers (and the Boards that exercise oversight over this function) to consider whether taking positions on fundamental corporate matters, or on precatory proposals, is consistent with their investment mandates.
Ultimately, he says, “it is important that advisers and clients have a fair amount of latitude to decide what works in their individual cases […] Investment advisers that determine proxy voting is not required by, or may even be inconsistent with, their investment program should not be afraid to take that position.” He does acknowledge the alarm going off in all our heads (what about quorums?!), noting “investment advisers to passive or systematic strategies may deem some kind of neutral (or neutral-ish) voting policy to be essential for quorum and similar reasons.”
In discussing how to vote, he concludes that determining the right amount of the process to delegate to proxy advisors is situationally dependent and should be determined between advisers and clients. But he cautions:
If an investment adviser routinely follows a proxy advisor’s stock recommendations without a tailored engagement or independent analysis, is this “reasonable inquiry?” Maybe, but it is certainly worth thinking about. And, to go back to the first question, if the voting process is so burdensome that it requires extensive external resources, why is the adviser voting at all?
But there are many others in the BIS content library and our “Investor Voting Policies” Practice Area. There are a number of changes to the Voting Guidelines worth noting, as this Cooley blog highlights. Some general commentary and global changes seem to be more confirmatory / semantics:
BIS explicitly affirms compliance with the SEC’s February 2025 guidance on Schedule 13G eligibility, stating that it does not engage with portfolio companies “for the purpose, or with the effect, of changing or influencing control of any company.”
“Generally, BIS supports the vote recommendations of boards and management at companies with sound corporate governance and that deliver strong financial returns over time.” BIS has replaced “vote against” with “not support” when describing potential voting actions and, in most cases, has shifted from normative to more neutral, factual language when characterizing company actions (e.g., changing “where the board has failed to facilitate …” to “where the board has not facilitated …”).
Other global changes seem to be more meaningful:
BIS has also updated language throughout its policy to emphasize its focus on “financial” value and performance (e.g., replacing “long-term shareholder value” with “long-term financial value” and noting there should be a clear link between exec pay and “operational and financial performance” rather than simply “company performance” which encompassed both financial and non-financial results in last year’s policy).
That said, the policies address stakeholder impact:
BIS may express concerns about board oversight of material risks related to key stakeholders (employees, business supply chains, clients and consumers, regulators, and the communities in which they operate) through director votes or shareholder proposal support where the board, in BIS’s assessment, is not acting in shareholders’ long-term financial interests.
Then there are some specific policy areas with new language.
The term “diversity” no longer appears in BIS’s policy, nor does the S&P 500 board diversity data that was included in last year’s policy. References to “diversity” have been replaced with language like “various experiences, perspectives, and skillsets,” and references to “professional and personal characteristics” have been replaced with “qualifications.”
BIS no longer asks companies to disclose their approach to DEI and workforce demographics. Instead, to understand a company’s approach to managing risks and opportunities associated with human capital, BIS wants disclosures on matters such as “workforce size, composition, compensation, engagement, turnover, training and development, working conditions and health, safety and wellbeing, among other possible topics.”
BIS notes that standardized disclosure of sustainability-related data “supports investors in making informed decisions,” highlighting ISSB standards, IFRS S1 and S2, as one approach to standardization it finds useful, but further notes that it does not mandate any specific disclosure framework companies should use.
BIS expanded its discussion of shareholder proposals, reaffirming its case-by-case analysis and providing further guidance on its approach, including that its analysis “considers whether a shareholder proposal addresses a material risk that may impact a company’s long-term financial performance,” that it does not support proposals it views as “inconsistent with long-term financial value or that seek to micromanage companies,” and that it considers the “legal effect” of the proposal (i.e., advisory vs. legally binding).
For updates on the compensation side of things, Liz covered those on CompensationStandards.com yesterday.
TL; DR: Despite many language changes, there aren’t too many seismic shifts here beyond trends that were already percolating last proxy season. But keep in mind that things are more complex than they seem. As Liz reminded us yesterday, BlackRock and other big asset managers have split the voting functions for their index and active stewardship teams, so there’s a separate set of Global Engagement & Voting Policies and Engagement Priorities for 2026 for BlackRock’s actively managed funds. You’ll need to drill down on holdings to assess the impact of both sets of policies.
As Dave shared in mid-December, the Staff of the SEC’s Division of Trading and Markets issued a no-action letter to the Depositary Trust Company (DTC) to provide relief under various provisions of the Exchange Act for DTC’s pilot version of the DTCC Tokenization Services. These services would allow DTC Participants to elect to have their security entitlements to DTC-held securities recorded using distributed ledger technology, rather than exclusively through DTC’s current centralized ledger. This Mayer Brown alert describes how the DTCC Tokenization Services pilot program works in detail. Here’s a snippet:
Subject Securities. The scope of token‑eligible securities is limited to: (i) securities in the Russell 1000 Index at the time the Preliminary Base Version launches as well as any additions to the index thereafter and notwithstanding the subsequent removal of any securities from the index; (ii) U.S. Treasury securities; and (iii) exchange‑traded funds tracking major indices such as the S&P 500 and Nasdaq‑100.
Tokenization of Book-Entry Entitlements. A DTC participant with a Registered Wallet will be able to instruct DTC to tokenize the participant’s Book-Entry Entitlement to certain eligible securities (“Subject Securities”), as described below, currently credited to the participant’s account (“Account”) on DTC’s centralized ledger system. DTC will then debit the Subject Securities from the Account and credit them to a Digital Omnibus Account – an account on DTC’s centralized ledger that reflects the sum of all Tokenized Entitlements held in all Registered Wallets. Using its Factory system (a software system maintained by DTC), DTC will mint and deliver to the DTC participant’s Registered Wallet a token that represents the participant’s security entitlement to the Subject Securities (“Token”).
Transfer of Tokens. Any DTC participant with a Token will be able to transfer the Token directly to the Registered Wallet of another DTC participant. No instructions to DTC to effectuate the transfer will be required. To avoid “double spend”, Subject Securities credited to the Digital Omnibus Account cannot be transferred from the account until the corresponding Token is burned. As a result, the DTC participant holding a Tokenized Entitlement to a Subject Security will not be able to transfer its beneficial ownership of the Subject Security through instructions to DTC to make changes to its centralized ledger. Rather, such participant must effectuate transfers by transferring the Token on the blockchain, or by instructing DTC to burn or convert the Token.
DTC Tracking and Official Record. DTC will track in near real-time any transfer of Tokens from one Registered Wallet to another Registered Wallet utilizing LedgerScan, an off-chain software system that resides in a public cloud, to track the movement of the Tokens, including the Registered Wallets in which they are held, by scanning the underlying blockchains. LedgerScan will make a record of the Tokenized Entitlements according to the Tokens that are held in each participant’s Registered Wallet(s). For purposes of recording Tokenization Entitlements, LedgerScan’s off-chain record will constitute DTC’s official books and records.
Registered Ownership. Registered ownership of the underlying securities will remain in the name of Cede & Co., DTC’s nominee.
De-Tokenization. A DTC participant may instruct DTC to credit any securities represented by Tokenized Entitlements back to its Account (i.e., convert the Tokenized Entitlement back to a Book-Entry Entitlement in the Account). Upon acceptance of such instruction, DTC will (i) burn the Token in the participant’s Registered Wallet, (ii) debit the securities from the Digital Omnibus Account, and (iii) credit the securities to the participant’s Account.
Yesterday, the WSJ reported that JPM’s asset management group will immediately stop using proxy advisory firms and instead use an internal AI-powered platform to analyze data from the more than 3,000 shareholder meetings it votes at each year — plus provide recommendations to portfolio managers and manage votes. JPM believes it is the first large investment firm to stop using proxy advisors entirely. This is all the more evidence that, as Liz said yesterday on CompensationStandards.com, we’re moving into our “fragmentation era” for investor votes. I worry that this is a “be careful what you wish for” situation, in that the potentially increased flexibility likely comes with more work and potential surprises.
It also means that it’s more important than ever to draft for the “bots,” which has been a recurring topic at our annual conferences over the last few years. Weil’s Howard Dicker shared a prescient recommendation during the panel “Proxy Disclosures: 12 Things You’ve Overlooked” at our 2023 conferences:
Within seconds of you filing your proxy statement on EDGAR, some [. . .] constituencies are using artificial intelligence (“AI”) to, among other things, give a rating, make a recommendation, prepare a summary or report, and write news stories. Maybe even also to vote their shares automatically or to prepare a “fight” letter.
The takeaway is that not only should public companies be considering their varied constituencies, but companies also should be considering the AI technology that some of these constituencies are using. For example, academics and some analysts and investors have long performed computerized “sentiment analysis” on corporate disclosure documents, and some public companies have tried to make their disclosures more “friendly” to these algorithms. At an increasing pace AI is expected to become more sophisticated and its use more prevalent by these constituencies. Companies should take notice of this development, for the proxy statement and all other company disclosures.
Liz expanded on what it means to draft for the bots during the panel “The Proxy Process: Avoiding Surprises – On Time, On Budget & On Value” at our 2025 conferences. She suggested:
– Be cautious about excessive repetition of positive terms and vague disclosures that do not align with business performance. An overly optimistic tone can undermine trust with human readers and will be flagged by newer AI tools.
– Monitor how your disclosure performs in AI models, as their output can have a real-world impact on market sentiment and risk. Don’t overuse terms that signal uncertainty – such as “might” or “possible” – which may cause AI models to predict weak performance.
