As Meredith recently noted on The Advisor’s Blog on CompensationStandards.com, last Friday the Corp Fin Staff updated the Compliance and Disclosure Interpretations addressing Securities Act Rule 701, which exempts offers and sales of securities pursuant to a compensatory benefit plan by a private company to employees, directors, officers, consultants, advisers, and other individuals providing bona fide services to the company. Here are the updates to the relevant Securities Act Rules CDIs:
New Question 271.26 clarifies when companies must provide disclosure under Rule 701(e)(1)–(6) if the aggregate sales price of securities sold under this exemption during a consecutive 12-month period exceeds $10 million.
New Question 271.27 states that the Rule 701 exemption is lost for the entire offering during the 12-month period in which the $10 million threshold is exceeded if the issuer fails to provide the required Rule 701(e) disclosure within a reasonable period before the date of sale.
Other CDI updates from this batch address a number of other non-Rule 701 topics, including an updated CDI that addresses the definition of “ineligible issuer” (Securities Act Rules CDI Question 203.03 (redline)). A new CDI confirms that a new CIK is not required following a reorganization (Securities Act Forms CDI Question 101.06), and another new CDI indicates that the failure to check the SRC status box does not result in loss of SRC status or the ability to use SRC accommodations (Regulation S-K CDI Question 102.06).
We’ve recently posted another episode of our “Understanding Activism with John & J.T.” podcast. In this podcast, J.T. Ho and John were joined by Francis Stapleton, a managing director in Evercore’s strategic advisory practice. They discussed recent trends in activism. Topics covered during this 40-minute podcast include:
– Drivers of global surge in activism
– 2025’s surge in M&A-driven activism
– Evolution of experienced activists’ playbook
– Reducing vulnerability to CEO-targeted activism
– Dealing effectively with first-time activists
– The small-cap activism landscape
– Avoiding becoming a repeat activism target
– Preparing for M&A-driven activism in 2026
– Top priority for boards preparing for activism
This podcast series is intended to share perspectives on key issues and developments in shareholder activism from representatives of both public companies and activists. They continue to record new podcasts, and they’re full of practical and engaging insights from true experts – so stay tuned!
On Thursday, the SEC issued an order exempting insiders of some foreign private issuers from the rules that the SEC adopted one week prior under the Holding Foreign Insiders Accountable Act (HFIAA). Alan Dye covers this latest development on his Section16.net blog:
The SEC didn’t waste any time following through on Chair Atkin’s promise to determine whether directors and officers of foreign private issuers in certain jurisdictions should be exempted from the new Section 16(a) reporting requirements imposed by the Holding Foreign Insiders Accountable Act. (The HFIAA expressly authorized the SEC to exempt covered insiders from Section 16(a) if foreign laws already impose on them substantially similar requirements.) Yesterday, well in advance of the HFIAA’s March 18 effective date, the Commission issued an exemptive order exempting covered insiders if the issuer is organized under the laws of a “qualifying jurisdiction” and the insider is subject to reporting under a “qualifying regulation”.
The six qualifying jurisdictions are Canada, Chile, the European Economic Area, the Republic of Korea, Switzerland and the United Kingdom, and the six qualifying regulations are listed in the exemptive order. The exemption extends to insiders in a qualifying jurisdiction even if the insider is subject to the qualifying regulation of another qualifying jurisdiction (e.g., the issuer is organized in Canada but its securities trade in Germany).
To qualify for the exemption, insiders must report their transactions in English within two business days. If the jurisdiction in which reports are filed doesn’t accept filings in English, the exemption will still be available if the issuer posts an English language version of the report on its website by the end of the second business day after the report’s public posting.
A lot of FPIs can breathe a sigh of relief—their insiders won’t need to file a Form 3, by March 18 or at all.
For those insiders who were not relieved of their filing obligation by the SEC’s exemptive order, time is of the essence in getting ready for the March 18 effective date. As this Goodwin alert notes:
[T]hese reports must be filed electronically, which will require reporting individuals to obtain personal filing credentials by submitting a Form ID application in compliance with the EDGAR Next rules before they can file these reports. Form ID applications are subject to a variety of requirements that may be unfamiliar to directors and officers of FPIs. Form ID applications are also subject to review and approval by Securities and Exchange Commission (“SEC”) staff, which can take as little as several business days and as much as a week or more.
With just a week and a half to go until the effective date, submit your Form ID today if are obligated to file Section 16 reports! A sample Form ID has been posted in the Forms & Filings Handbook on Section16.net to get you started. If you do not have access to all of the amazing resources available on Section16.net, I encourage you to become a member today. You can contact us at info@ccrcorp, 800-737-1271 or fill out this form to get the ball rolling.
The SEC has announced the agenda for its next Investor Advisory Committee (IAC) meeting, to be held on Thursday, March 12 at 10:00 a.m. Eastern time at the SEC’s headquarters and via webcast. The IAC is tasked with advising the Commission on “regulatory priorities, the regulation of securities products, trading strategies, fee structures, the effectiveness of disclosure, and on initiatives to protect investor interests and to promote investor confidence and the integrity of the securities marketplace.”
The IAC’s agenda for Thursday focuses on some key issues that are high on the Commission’s priority list, including public company disclosure reform, proxy voting by funds and tokenization of equity securities. In a morning panel, the IAC will explore potential changes to quarterly reporting and amendments to Regulation S-K, focusing on “whether there are opportunities to reduce unnecessary disclosure burdens on public companies without compromising investor protection and capital formation.” The afternoon panel will address the topic of proxy voting by investment funds, delving into some issues relating to retail participation in proxy voting, including persistent quorum challenges and the costs associated with solicitation efforts, with a focus on identifying “potential avenues for modernization within the context of existing regulatory protections.” Finally, the IAC will consider a draft recommendation prepared by the Market Structure Subcommittee addressing the tokenization of equity securities.
The IAC’s deliberations and recommendations can be useful to the Commission as it considers a variety of rulemaking initiative that touch on these areas.
I was in the mountains of West Virginia on Saturday, and besides having absolutely no cell phone service as if I had fallen off the face of the Earth, I got to experience a high temperature of 83 degrees, which I must admit felt pretty good after the winter that we just experienced here in the mid-Atlantic. While the vernal equinox is still a couple weeks away, I will count that warm day in the mountains as the first day of Spring for me, because it by gave me hope that the long dark winter is almost behind us.
I would note that the temperature in Walkersville, West Virginia where I found myself was approaching the Saturday high of 87 degrees in Orlando, Florida, which is the site of our 2026 Proxy Disclosure and 23rd Annual Executive Compensation Conferences on October 12 – 13, 2026. As I lament more and more every year, the Spring and Summer really fly by these days, so we will be feeling that first hint of Fall weather before we know it! You still have a little under a month to take advantage of our 2026 PDEC Super Early Bird rate, which is a fantastic discount for what is shaping up to be a very important conference. Check out our conference page today, contact us at info@CCRcorp.com or call us at 1-800-737-1271 to get that Super Early Bird rate while the gettin’ is good!
Nasdaq has been on a roll for the last six plus months, submitting proposed rule changes to the SEC focused on tightening listing standards and purging the exchange of stocks that maybe shouldn’t be listed on an exchange anymore, or ever have been listed in the first place. In the latest filing with this theme, the exchange proposes to adopt IM-5101-4, “which will provide Nasdaq with the authority to delist a security where the Commission has previously suspended trading and Nasdaq determines it appropriate and in the public interest to do so.” The SEC has posted a notice for public comment. The background in the notice provides some context:
Nasdaq has recently observed problematic or unusual trading in certain listed companies, apparently effectuated through recommendations made to investors by unknown persons via social media to purchase, hold, and/or sell the securities. The Commission has expressed concern about this activity, and in some cases suspended trading in the securities, stating its belief that these recommendations appear to be designed to artificially inflate the price and volume of the securities and that the public interest and the protection of investors require a suspension of trading in the securities.
Nasdaq does not currently have authority to delist the securities of a company based on this type of third-party misconduct but believes that the ability for third parties to manipulate a security’s price can indicate that the security does not have sufficient liquidity, and the issuing company does not have sufficient market interest, for listing to be appropriate. Nasdaq therefore proposes to adopt new IM-5101-4 to provide additional authority to exercise discretion to delist a company from Nasdaq based on the potential for one or more third parties to engage in misconduct impacting a company’s securities where the SEC has implemented a temporary trading suspension.
The new authority is narrow — it only applies if the SEC has issued a suspension under Section 12(k). And even in those limited cases, Nasdaq will exercise case-by-case discretion to delist based on whether the listed securities may be susceptible to manipulation, assessed based on a laundry list of factors:
– Where the company is located, whether a person or entity exercises substantial influence over the company and, if so, where that person or entity is located
– Whether the public float, share distribution and trading patterns raise liquidity concerns
– Social media activity designed to influence price and demand
– Whether material announcements explain recent trading activity
– Whether the company has recently issued securities
– Concerns about the company’s auditors, underwriters, law firms, brokers, clearing firms, or other professional service providers
– The experience of the company’s management and board
– Any FINRA or SEC referrals
– The existence of a recent going concern audit opinion
– “Other factors” that raise concerns about management, the board, shareholders or advisors
– Other material information
If this list looks familiar, these are based on the qualitative factors Nasdaq considers (from IM-5101-3) to assess whether the company’s stock is susceptible to manipulative trading by unaffiliated third parties when determining whether to apply its new limited discretion to deny initial listing, even where the company meets all the initial listing requirements.
Now, I’m assuming that the majority of companies with these trading suspensions have serious and ongoing problems, and delisting makes sense. But keep in mind that the SEC’s trading suspensions are usually for up to 10 trading days (although there are implications thereafter), while the delisting decision is not temporary. And while some of the factors listed above seem to get to the likelihood that people directly involved with the company might be engaging in the manipulative misconduct, Nasdaq clarifies that the actual manipulative misconduct that triggers the suspension and delisting discretion in the first place might be by completely unaffiliated third parties:
Nasdaq Staff may use this authority even where the problematic or unusual trading appears to be driven by third parties with no known connection to the company, and even where Nasdaq Staff cannot determine whether the company or any associated individual was involved, if Nasdaq determines it is appropriate and in the public interest to do so.
“Concerns related to the company’s advisors” is now a risk factor for both initial and continued listing. Is prior involvement with a company that had problematic trading activity now like the “black spot” from pirate lore? Micro-caps, when vetting potential service providers, look beyond regulatory issues and suss out whether they’ve been involved with securities with problematic trading activity. Service providers, do the same when vetting potential clients. (Maybe diligence their other service providers.)
A little over a year ago, NYSE announced plans to launch NYSE Texas, a fully electronic equities exchange, headquartered in Dallas, formed by reincorporating and renaming NYSE Chicago, which has been operating for almost a year now. This Winston blog suggests that listings are most suitable for dual-listed issuers, noting NYSE Texas’s listing rules exempt companies already listed on NYSE or Nasdaq from many of its requirements, and explains what is needed for listing. The exchange provides an example of the required Original Listing Application for reference, but says that issuers seeking a dual listing should contact NYSE to guide them through the review and application process. NYSE provides a list of securities newly listed (63 companies) or dual-listed (103 companies) on NYSE Texas.
Meanwhile, Nasdaq has followed suit. Yesterday, Nasdaq officially launched the Nasdaq Texas exchange. Nasdaq Texas was recently established by converting Nasdaq BX, Inc. to a Texas LLC and renaming it, after which it filed for and received approval to remove the exchange’s old listing standards and adopt new listing standards that are substantially similar to the rules that pertain to the Nasdaq Global Market. Initially, Nasdaq Texas is only home to dually listed companies, but it intends to transition to a primary listing exchange in the future. There’s a special listing application for companies seeking to dual-list, and Form 8-A filings have been starting to appear on EDGAR in the last few days. Nasdaq highlights these limited requirements and financial incentives:
Requirements:
– Be listed on a U.S. national exchange (Nasdaq or NYSE)
– Meet Nasdaq Global Market standards (e.g., $4+ stock price, financial & governance criteria)
– SEC-registered equity security
– Texas affiliation encouraged
Cost & Incentives:
– $0 application fee and $0 annual listing fee for the first year (pending SEC approval) – $30,000 credit toward Nasdaq IR & advisory services (pending SEC approval). – No added compliance burden or trading fragmentation – Unified liquidity (no new ticker) – Full Nasdaq platform access
While it seems like a relatively easy lift, I’m curious what benefits dual-listed companies have seen so far and whether the juice is worth the squeeze. A number of recognizable names are dual-listed or dual-listing, so clearly, some large-cap companies decided it would be worthwhile.
The NYSE has sent its annual compliance guidance to NYSE-listed companies to remind them of their obligations on a variety of topics and summarize developments since last year. Liz has shared some reminders from the letter on the Proxy Season Blog and on The Advisors’ Blog on CompensationStandards.com that I wanted to highlight here for readers who may have missed those — since presumably NYSE has identified these as commonly overlooked requirements. Here are two:
– [T]he Timely Alert/Material News policy also applies in connection with the verbal release of material news during the course of a management presentation, investor call, or investor conference. The fact that any such presentation is conducted in compliance with Regulation FD does not mean that the listed company is exempt from compliance with the Timely Alert/Material News policy in connection with any material news provided in the course of the presentation.
– A listed company is required to file a SLAP to seek authorization from the Exchange for a variety of corporate events, including: Issuance (or reserve for issuance) of additional shares of a listed security; [OR] Issuance (or reserve for issuance) of additional shares of a listed security that are issuable upon conversion or exercise of another security, whether or not the convertible security is listed on the Exchange […] No additional shares of a listed security, or any security convertible into the listed security, may be issued until the Exchange has authorized a SLAP. Such authorization is required prior to issuance, regardless of whether the security is to be registered with the SEC, including if conversion is not possible until a future date. The Exchange requests at least two weeks to review and authorize all SLAPs. It is recommended that a SLAP be submitted electronically through Listing Manager as soon as a listed company’s board approves a transaction.
As Liz noted, NYSE has highlighted SLAPs for at least two years running on the letter’s front page, and this requirement tends to catch some folks by surprise in the context of equity plans. Possibly because, unlike NYSE, Nasdaq only requires the submission of a Listing of Additional Shares when establishing or materially amending an equity plan without shareholder approval (i.e., an inducement plan) under Rule 5250(e)(2).
Here’s another sleeper issue from the annual letter (at least I hadn’t focused on this yet). And while it’s in NYSE’s annual letter, this issue is relevant across exchanges, and particularly relevant now, given the prior blog on yesterday’s launch of Nasdaq Texas.
With the SEC’s transition to EDGAR Next, listed companies must provide delegation on EDGAR Next for the applicable Exchange Account in advance of any Form 8-A filing […]
Such delegation is needed and required for the Exchange to submit its certification on behalf of the company’s EDGAR account. In addition, delegation must also be provided if there are any guarantors associated with the issuer’s Form 8-A filing.
You may not file a lot of Form 8-As if you don’t do many IPOs or exchange-listed debt or preferred stock offerings. But they’ve also been filed by companies dual-listing their equity on NYSE Texas or Nasdaq Texas. The certification is a simple letter from the exchange to Corp Fin confirming that it received a copy of the issuer’s Form 8-A12(b) and has approved the related securities for listing.
In addition to implications for disclosure outside the financial statements — including risk factors, MD&A, non-GAAP and legal proceedings — there are also potential financial statement implications of the SCOTUS decision in Learning Resources v. Trump. This KPMG alert highlights one time-sensitive one: that the SCOTUS ruling is a subsequent event evaluated under ASC 855 for companies that have imported goods that were subjected to IEEPA tariffs and had not yet issued financial statements for a closed fiscal period by February 20.
ASC 855 requires companies to evaluate events that occur after the balance sheet date but before financial statements are issued (or available to be issued) to determine whether those events require recognition or disclosure.
ASC 855 also distinguishes between two categories of subsequent events:
Recognized (Type 1) subsequent events provide additional evidence of conditions that existed at the balance sheet date and require adjustment to the financial statements.
Nonrecognized (Type 2) subsequent events relate to conditions that arose after the balance sheet date and do not require adjustment, but disclosure is required if the event is material and omission would be misleading.
Determining whether a subsequent event is Type 1 or Type 2 requires judgment.
We believe it is acceptable to treat the Supreme Court’s decision as a nonrecognized (Type 2) subsequent event in financial statements that have not yet been issued as of February 20, 2026.
That means companies should disclose the decision and its implications as a subsequent event if the decision “is expected to have a material effect on the financial statements when recognized, or not disclosing it would otherwise result in the omission of material information.”
Such disclosures may address, for example, the potential effect on existing and future tariff exposure, supply chain arrangements, liquidity or ongoing or anticipated legal proceedings. Any estimate of financial effects is based on information known as of the date the financial statements are issued (or available to be issued), and companies should avoid speculative or overly forward‑looking statements. As with all subsequent events analyses, conclusions should be grounded in company‑specific facts and circumstances.
Companies should also consider whether related disclosures are required under other US GAAP topics, such as ASC 275 on risks and uncertainties, ASC 205-40 on going concern or ASC 450 on contingencies.
It’s now to the point that I’m having a hard time keeping the Rule 14a-8 litigation straight. Liz shared last week that a trio of proponent lawsuits had sprung up, and two of those three cases had settled by the end of the week. The third case concerning a political spending proposal is ongoing. And Law Prof Ann Lipton recently shared an update on LinkedIn. A hearing was scheduled for yesterday, and the Court ordered the company to send a witness to testify about its record collection and retrieval capabilities for compiling information regarding political contributions. It also “urged the parties to work together to draft a compromise shareholder proposal” that satisfies the proponent’s request while alleviating burdens on the company.
In the meantime, two new proponent lawsuits were filed this week. One involves a proposal submitted to an insurance company by As You Sow and seeks “a report to assess whether pursuing claims for compensation against parties responsible for climate change could reduce losses, benefit shareholders, and help preserve affordable homeowners insurance.” The company plans to exclude the proposal for ordinary business and micromanagement reasons under Rule 14a-8(i)(7). Another involves a proposal submitted to a retailer by the Comptroller of the State of New York requesting assessment of deforestation risks in the company’s private-label brands. Weeks earlier, the NYS Comptroller had written a letter to 10 shareholder proposal recipients calling for “good faith” engagement.
One of these lawsuits appears to have been filed before the incoming Rule 14a-8(j) notice was posted to the website or the Corp Fin Staff issued a response. (At least, I can’t find either.) While the SEC Staff’s response letter in the other lawsuit was from January 15. We’ll continue to track the more granular on the Proxy Season Blog and in our “Proxy Season” Practice Area.
