As much as I hate the government shutdown shenanigans, the closing of the SEC for extended periods of time is interesting for securities lawyers. This government shutdown was notable for the shift in the Staff’s position on the use of Rule 430A, which permitted IPOs to price during the course of the shutdown, which was something that was definitely not on my Bingo card for 2025. In retrospect, it will be useful to observe how things played out during the course of this shutdown once we get past the “hair on fire” phase. To that end, Cleary Gottlieb recently posted an interesting summary of the registration statement filings that omitted or removed the delaying amendment during the shutdown. The piece notes:
To assess how issuers are navigating the shutdown in light of this guidance, we reviewed registration statements on Forms S-1 and F-1 that removed the typical delaying effectiveness legend and affirmatively included the Rule 473(b) automatic-effectiveness legend and were filed between October 1 to November 6. This cohort represents issuers willing to move forward without formal SEC clearance, offering a practical glimpse into how the market is utilizing the auto-effectiveness pathway.
While the vast majority of S-1 and F-1 filings observed during this period continue to retain the standard delaying legend, our dataset identified 132 S-1 or F-1 registration statements including the exact wording of the automatic-effectiveness legend set forth under Rule 473(b) required for proceeding with this approach. Out of the total dataset, 71 were S-1/As and 33 were new S-1s, with 25 F-1/As and 3 new F-1s representing the remainder. The majority were amendments—approximately 73%. This finding suggests that many issuers originally on file with delaying legends prior to the shutdown elected to pivot to the automatic-effectiveness approach following the lapse in government funding (potentially having already addressed initial SEC staff comments).
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The number of companies relying on auto-effectiveness during this shutdown is significant compared to the last extended government shutdown (December 22, 2018 – January 25, 2019). Over that 34-day period, only 23 registration statements could be identified as including the Rule 473(b) automatic-effectiveness legend. This represents roughly one-sixth of the filings observed during the current shutdown (October 1 to November 6, 2025), and to our knowledge, none of the filings from 2018-2019 actually went effective.
I look forward to seeing more analytics along these lines once the shutdown is in the rear-view mirror, because the experience will be helpful the next time the federal government inevitably shuts down!
This week in the blog, I am taking some time to acknowledge and celebrate 50 years of The Corporate Counsel and all of the related publications. In response to feedback that I received on Monday’s blog, I shared with a reader my experience as a newly-minted lawyer working in the SEC’s Division of Corporation Finance who would anxiously await receipt of the dog-eared “circulation copy” of The Corporate Counsel, with my name always at the bottom of the circulation list! The practical guidance and discussion of unpublished Staff positions that differentiated The Corporate Counsel from other publications really served as my “window to the world” beyond the walls of Corp Fin, and helped me be a better regulator and securities lawyer.
As part of my tribute, I am looking back on some of my favorite articles that I contributed to The Corporate Counsel over the past 18 years. These articles are notable because they address very practical topics that frequently come up in any securities practice.
Today, I highlight an article from the March-April 2018 issue of The Corporate Counsel titled “Revisiting Form 8-K Filing Obligations under Item 5.02(e).” This article reflects my views that were formed as someone who was involved in the rulemaking process for Item 5.02(e) of Form 8-K at the SEC and then reinforced through years of advising clients on the disclosure issues that arise under this requirement. The article notes:
To this day, issuers grapple with the appropriate approach to disclosure required by Item 5.02(e) of Form 8-K, which generally requires current disclosure with respect to an issuer’s principal executive officer, principal financial officer or named executive officers (as such term is defined in Instruction 4 to Item 5.02 of Form 8-K), of any material new compensatory plan, contract or arrangement (or any material modification), including any material grant to award under such a plan, contracts or arrangement (or any material modification), except as discussed below. This disclosure is triggered upon entering into or commencing any of these types of plans, contracts or arrangements, rather than upon any of the other triggering events specified in Item 5.02 of Form 8-K. An instruction to Item 5.02(e) provides that grants or awards (or modifications) will not be required to be disclosed on Form 8-K if they are materially consistent with the previously disclosed terms of such plans, contracts or arrangements, and they are disclosed the next time the issuer is required to provide new disclosure under Item 402 of Reg S-K. The Staff has published several interpretations that have explained the disclosures that are expected to be provided under Item 5.02(e) of Form 8-K, recognizing that disclosure regarding a number of significant developments with respect to compensation arrangements with an issuer’s principal executive officer, principal financial officer and named executive officers is best suited in the executive compensation disclosure of the proxy statement, rather than in a Current Report on Form 8-K. Despite the Staff’s guidance, practice continues to vary in reporting material compensation developments under Item 5.02(e).
I particularly like this article because it focuses on how the regulatory history of the 2006 amendments to Form 8-K came about, as well as how the Staff’s subsequent interpretation of the disclosure requirement developed, and how all of that knowledge should influence one’s interpretation of the operation of a rule that is admittedly pretty hard to decipher on its face. This is why I often refer back to this piece whenever a tricky Item 5.02(e) interpretive question arises!
Overnight, we finally saw some movement in the Senate on the longest government shutdown in U.S. history. As this Axios article notes, last night the Senate voted 60-40 in an important procedural vote that signaled a bipartisan deal had been reached to fund federal departments and agencies for anywhere from a few months to the entire remaining fiscal year. The article states:
The final tally on the procedural vote was 60-40. Eight Democrats voted “yes” with Republicans, while Sen. Rand Paul (R-Ky.) was the lone GOP “no” vote. Sixty votes were required to advance the measure.
– Additional votes are needed before the package can be sent to the House where it also will need to pass before the government can reopen.
– It is not yet clear if Senate Democrats and Paul will allow the remaining voting process to be expedited or if they will force the multi-day process to play out in full.
While at this stage we have no certainty as to whether the measure will be successful or when a resolution could be achieved, much like the 2018-2019 shutdown, significant disruptions to air travel have prompted action by at least some in Congress. As we are now less than two and a half weeks away from the busy Thanksgiving travel window, there is a clock ticking on the ongoing negotiations.
What would an end to the government shutdown mean for the SEC? Once the agency’s appropriations are restored, the furloughed SEC Staff has historically been recalled to their jobs relatively quickly, and full-scale agency operations resume. Even when the agency is fully staffed, however, there is an inevitable delay caused by the backlog of work that has piled up during the time that the government was shut down, and navigating that delay creates uncertainty for issuers and market participants.
In the latest guidance that Corp Fin published on October 8, the Staff included the following two post-shutdown Q&As:
16. If I removed a delaying amendment from a registration statement or filed a new registration statement without a delaying amendment and the Division’s status changes to operational before the end of the 20-day period, may I request effectiveness of that registration statement on a date prior to the end of that period?
We will consider requests to accelerate the effective date of such registration statements if they are amended to include a delaying amendment prior to the end of the 20-day period and acceleration pursuant to Rule 461 is appropriate.
17. If I removed a delaying amendment or filed a new registration statement without a delaying amendment, do I need to add a delaying amendment when the Division’s operating status changes to operational?
In cases where we believe it would be appropriate for a registrant to amend to include a delaying amendment, we will notify that registrant.
As we noted in the blog after the 2018-2019 shutdown, Corp Fin issued a statement back then indicating:
The Division of Corporation Finance is returning to normal operations. In general, we anticipate addressing filings, submissions and requests for staff action based on when an item was submitted. In other words, absent compelling circumstances, we expect to address matters in the order in which they were received.
Our recollection is that, following the 2018-2019 shutdown, all of the issuers who filed registration statements without delaying amendments or amended registration statements to remove delaying amendments subsequently filed amendments to reinstate the delaying amendments once the SEC’s normal operations resumed, either as a result of the Staff’s prompting or out of a hope that the Staff would accelerate the effectiveness of the registration statement once the delaying amendment was restored. In general, the Staff who was still working during the course of that shutdown appeared to be monitoring the registration statements that did not have delaying amendments and acted quickly to reach out once the agency’s appropriations were restored.
The 2018-2019 shutdown also happened during the heart of the shareholder proposal no-action letter season, and the Staff had to dig its way out of a large number of requests. While our recollection is fuzzier on how this played out, we recall that issuer mailing deadlines were generally met by the Staff, despite the need to work through a considerable backlog. For more on the Rule 14a-8 experience during the last major shutdown, check out Meredith’s recent blog on The Proxy Season blog.
Based on our prior experience and the current guidance, here are my tips for navigating what will hopefully be a reopening scenario in the coming days:
1. If you have a registration statement outstanding, file an amendment to reinstate the delaying amendment once the SEC reopens. Absent further guidance from the Staff indicating that no such action is necessary (and anything is possible these days, folks!), it would be better to deal with the Staff with a delaying amendment in place than having to deal with the Staff under a potential stop order scenario.
2. For those situations where a review of a filing was ongoing prior to the shutdown, it is highly likely that the Staff will pick up where it left off on that review, prioritizing pending registration statements and proxy statements. It may take some time to hear from the Staff on the status of the review after reopening, so contact the Staff to let them know your timing considerations.
3. For those registration statements and proxy statements filed during the course of the shutdown that did not go effective or have the 10-day waiting period run, respectively, the Staff is likely going to screen those filings and make a review determination on a first come, first served basis. If a filing is selected for full review, in all likelihood you will still have to wait approximately 30 days for the first round of comments.
4. If you did have a registration statement go effective or mailed a definitive merger proxy during the government shutdown, you still may hear from the Staff about your disclosure, particularly in a situation where there is an offering or solicitation that is still ongoing and the Staff determines that the disclosure should be supplemented.
5. If you submitted a no-action request or interpretive question before or during the shutdown, the Staff will get back to you in the order that the request or question was received, but it may take a little while to hear from them once the SEC’s operations resume. The same timing considerations that apply with respect to the review of filings will continue to apply in the context of no-action requests.
I encourage everyone to be patient with the Staff if and when the SEC’s full operations resume. I am confident that they will do their best to address the backlog as expeditiously as possible and in a professional manner. Remember, it is not their fault that the government was shut down for well over a month and they were furloughed with no pay during that time – this government shutdown disaster was brought to you solely by the duly-elected politicians!
This week in the blog, I want to take some time to acknowledge and celebrate 50 years of The Corporate Counsel and the constellation of publications that were created in its wake. While I have been associated with CCRcorp (and its predecessor Executive Press) for the past 18 years, I have been an avid reader of the publications for all of the 30 years that I have been practicing law. We all owe a deep debt of gratitude to Jesse Brill and Mike Gettelman for their efforts in launching The Corporate Counsel newsletter 50 years ago, with Vol. I, No. 1 dated November 1975. We had a chance to celebrate this incredible milestone last month at the October Conferences, and it was great to hear from Jesse about his memories of those early days. If you would like to hear more, check out my “Deep Dive with Dave” podcast from back in 2022.
As part of my tribute, I am looking back on some of my favorite articles that I contributed to The Corporate Counsel over the past 18 years. I especially like these articles because they address practical topics that come up from time to time in my practice, and I go back and refer to them frequently.
For today, I highlight an article from the September-October 2010 issue of The Corporate Counsel titled “The Requirement to File Revised Financials Ahead of a Shelf Filing — A Trap for the Unwary.” The article addresses the now long-standing Staff position that an issuer may need to retroactively revise its audited financial statements due to a subsequent change in accounting principle, the occurrence of discontinued operations after year-end, or as a result of a change in segment reporting after year-end. The Staff has said that revised financial statements (as well as affected disclosures, such as MD&A) must be on file (for Form S-3 incorporation by reference purposes) prior to filing of the registration statement. For this purpose, issuers file an Item 8.01 Form 8-K that puts the updated audited financial statements into the Exchange Act filing stream. The article highlights some of the practical implications of this Staff position:
The Staff’s retrospective revision approach to dealing with a change in accounting principle (as well as discontinued operations and a change in segment reporting) creates a potentially significant new impediment to timely getting an S-3 on file in anticipation of going to market soon thereafter. The need to file the retrospectively revised audited annual financial statements in advance of filing a new registration statement means that the auditors have to now look at the new financials and provide a new report and consent, a time consuming exercise that needs to be factored into the filing/offering timeframe (these dynamics, of course, can be especially intense in the context of a pending 1933 Act filing). Moreover, if retrospectively revised financial statements involve financial statements that were audited by a prior auditor, then the issuer needs to go to that prior auditor to get an updated report and consent from the former auditor which, in addition to cost and timing issues, may be problematic if there are any independence, PCAOB-registration or auditor existence issues (in which case, a re-audit would be necessary by the new auditor). [There is no need to file SOX Section 302 or 906 certifications with the retrospectively revised financial statements, because the financial statements are being filed under cover of Form 8-K and not with a Form 10-K or Q or as an amendment to a 10-K or Q. Issuers subject to XBRL filing requirements, however, must include in the 8-K the interactive data files that are required to accompany the traditional format financial statements.]
Stay tuned this week for some more highlights from my time contributing to The Corporate Counsel!
– Dave Lynn
Please note that there will be no blog tomorrow in observance of Veteran’s Day. We wish to express our deepest gratitude to our veterans for their unwavering service to our country.
I don’t know about you, but I feel like this year has been a sort of tipping point in terms of the importance of state laws and regulatory initiatives. From the corporate law perspective, the “DExit” conversation has been forcing me to pay attention to more than just the Court of Chancery and the DGCL – even beyond the “primary” challengers of Nevada and Texas.
All that to say, it seems fitting that 2025 also marks 75 years for the Model Business Corporation Act. This paper from Steven Haas and Jonathan Lipson – published by the ABA Corporate Laws Committee – walks through the MBCA’s history and responsiveness to changes affecting companies – such as technology updates, the financial crisis, and pandemic-era issues.
According to the ABA’s MBCA Resource Center, 36 jurisdictions have adopted some form of the MBCA. The white paper explains why that’s a good thing – here are a few paraphrased reasons:
1. It’s a free-standing statute that can be enacted in its entirety or tailored as appropriate. It’s a “model” – rather than a “uniform” – statute.
2. It’s designed to be modern, complete, flexible, and relatively simple. Experienced lawyers drafted the MBCA and regularly review and update it – so states can rely on that work product instead of reinventing the wheel.
3. The MBCA is regularly updated to reflect corporate law developments, including judicial decisions, new federal or state laws, evolving corporate governance practices, new technology, and the changing needs of businesses.
4. The Model Act distills numerous corporate law issues into “black letter” law – including when there is not judicial precedent. This helps increase certainty in planning transactions. The black letter approach also reduces the need to rely on common law, which is particularly valuable to jurisdictions that lack a large body of judicial precedent or experienced business courts.
5. There’s an “Official Comment” – and annotated statute – that provide valuable guidance in interpreting the MBCA. You can also look at courts in other states to see how they’ve interpreted the MBCA. These extra resources are key if you’re an associate in an MBCA jurisdiction, where the commentary around your state’s statute may not cover every issue. (Ask me how I know…)
6. The MBCA allows for a lot of private ordering, through articles, bylaws and shareholder agreements.
If you’re wondering why we waited until November to celebrate the Model Act, it’s not just because the relevance of state law exceeded what we may have expected back in January, or that this paper only recently came to my attention. It’s also because I’m focused on birthdays this week. My middle child turned 8 earlier this week, and – as I’ve previously shared – it’s the only time of year he gets our full attention!
There’s been a noticeable shift in the SEC enforcement environment this year. John shared that the “September surge” didn’t materialize in 2025 – and as predicted when SEC Chair Paul Atkins took the helm, the Enforcement Division has been more focused on individual bad actors and “bread & butter” types of offenses. This Bloomberg article gives stats:
The SEC brought at least 91 new enforcement suits from Inauguration Day through the end of September, down from 126 actions filed during the same period in 2024, according to Bloomberg Law’s review of agency litigation releases and filings.
The overall drop comes as Atkins’ enforcers focus more on individual offenders than household name companies.
“The types of entities that have been under scrutiny in the Atkins administration have been SEC registrants, registered investment advisers, and broker-dealers,” said Haima Marlier, a partner at Morrison & Foerster LLP and former senior trial counsel at the SEC.
Nearly 33% of enforcement actions brought under this administration so far have focused on offering fraud or insider trading, up from 26% during the same period last year.
The shutdown and staffing cuts are probably also affecting the SEC Enforcement Division – but don’t get rid of your compliance program just yet. Earlier this week, FINRA announced a $10 million fine on a financial services firm for improper client gift practices. Over on the Radical Compliance blog, Matt Kelly shared recordkeeping and compliance lessons from that enforcement action that apply across industries and regulators.
In this 24-minute episode of our Women Governance Trailblazers podcast, Courtney and I spoke with Dottie Schindlinger – who is Executive Director of Diligent Institute and recently co-authored “Governance in the Digital Age: A Guide for the Modern Corporate Board Director.”
Dottie has been a real trailblazer with technology in the boardroom, founding BoardEffect back in 2009 and growing it into the basis for tools used by many boards today. We discussed:
1. Dottie’s career path in building technology platforms for boards and helping boards oversee technology risks and opportunities.
2. How directors and their advisors can stay informed in a time of rapid change.
3. Governance frameworks and ethical guardrails, including board AI usage frameworks, that balance stakeholder protection with strategic innovation.
4. Key topics for board agendas right now.
5. Dottie’s advice for the next generation of women governance trailblazers.
To listen to any of our prior episodes of Women Governance Trailblazers, visit the podcast page on TheCorporateCounsel.net or use your favorite podcast app. If there are governance trailblazers whose career paths and perspectives you’d like to hear more about, Courtney and I always appreciate recommendations! Drop me an email at liz@thecorporatecounsel.net.
Meredith blogged last week about the first operating company to close an IPO during a government shutdown. As Meredith had noted, that company had gone public based on a registration statement that it filed on October 6th – which was before Corp Fin updated its shutdown FAQs to say:
Rule 430A allows for the omission of certain information, including pricing and price-dependent information, from the form of prospectus filed as part of a registration statement that is declared effective. Because the staff is not available to review or accelerate the effectiveness of registration statements during the shutdown, we will not recommend enforcement action to the Commission if a company omits the information specified in Rule 430A from the form of prospectus filed as part of a registration statement during the shutdown and such registration statement goes effective, either during or after the shutdown, by operation of law pursuant to Section 8(a) of the Securities Act.
Late last week, another IPO priced – the first to rely on this updated FAQ, providing a price range in its Form S-1/A that was filed on October 10th and went effective by operation of law 20 days later, under Section 8(a) of the Securities Act. Here’s an excerpt from a Cooley case study about how it played out:
Though a couple of weeks delayed, Navan was still able to price its IPO in October and raise $923.1 million – one of the largest tech IPOs of 2025 – debuting on Nasdaq under the ticker NAVN on October 30, 2025. And importantly, despite the continuing government shutdown, Navan proceeded with a traditional roadshow and pricing.
This IPO confirms that some companies and their deal teams may be able to use Corp Fin’s updated FAQ to get across the finish line during the government shutdown – at least a couple more IPOs have priced this week, which is great news! But it also sounds like it’s a carefully orchestrated process and the stars have to align in the right way.
Earlier this week, the U.S. Travel Association sent a letter to Congressional leaders calling for an end to the government shutdown, which at 37 days is now the longest shutdown in history – surpassing the 35-day shutdown in 2018-2019. Over 500 companies signed the letter, which of course warns of disruption to the travel industry. Sure enough, as reported by Reuters and other outlets, the FAA is now planning to order a 10% cut in flights. With federal workers going unpaid and the general public experiencing the impact, we have to wonder, “When will it end??”
On the securities front, even though we’re very happy to see recent IPO activity defying the “shutdown odds” – that’s likely to get more difficult if the Staff isn’t able to get back to work in the near future.
That’s because Staff plays a key role in the IPO process by reviewing registration statements. Even if folks don’t agree with every comment or want the Staff to be speedier, in the big picture, everyone involved in registered offerings tends to appreciate and rely on the Staff’s review – making it unlikely companies and banks will be eager to go through with IPOs using registration statements that hadn’t gotten very far in the review process.
I hope the Staff returns soon, and I have a feeling they’ll be focused on efficiency when they do.
If the shutdown continues, the Staff’s absence may also end up affecting SEC Chair Paul Atkins’ ambitious rulemaking aspirations. We know from the Spring 2025 Reg Flex Agenda (published in September) that Chair Atkins wants to create a framework for crypto assets, modernize disclosures, make it easier to go and be a public company, reform the shareholder proposal process, and more. That’s a lot!
While rulemaking typically isn’t considered an “essential” function that continues during a government shutdown, this Bloomberg article recaps the creative ways that Chair Atkins has been paving the way for these priorities, even with the Staff on furlough. Here’s an excerpt:
The Securities and Exchange Commission under the Trump appointee in July urged a federal court to toss Biden-era climate reporting requirements, in part to avoid the lengthy rulemaking that would be needed to undo them. The SEC in September then advised companies they can funnel investors’ fraud claims into mandatory arbitration, without new rules. Atkins also suggested in a speech this month that companies could block votes on shareholders’ environmental and social proposals now, using existing Delaware law.
Companies have welcomed these updates – and many of them have been issued in formats that we’ve grown used to through the years, like CDIs and SLBs. But the article points out that while these paths can get the job done in the short-term, a new administration would be more likely to unwind things that didn’t go through the standard notice & comment period. That swinging pendulum is another thing we’re reluctantly growing accustomed to!
