As Meredith noted in the blog back in early March, Nasdaq had proposed to adopt IM-5101-4, which would provide the exchange with the authority to delist a security in a situation where the Commission has previously suspended trading of that security under Exchange Act Section 12(k), and Nasdaq determines that it is appropriate and in the public interest to proceed with the delisting. The Nasdaq proposal was not approved by the Commission as it was originally submitted, and on April 16, 2026, the Commission designated a longer period within which to take action on the proposed rule change. Nasdaq submitted a superseding amendment on May 21, and the Commission published a notice and order to solicit comments on the amendment yesterday. The Commission specified that the rule change will go effective on the thirtieth day after the date of publication of notice in the Federal Register.
The Commission’s notice describes Nasdaq’s proposal, as amended, as follows:
The Exchange proposes to adopt Nasdaq Rule IM-5101-4 to provide that where a security exhibits trading activity that is indicative of potential manipulation, and the Commission has implemented a temporary trading suspension of that security pursuant to Section 12(k) of the Act (“Section 12(k) suspension”), the Exchange may exercise its authority under Nasdaq Rule 5101 to delist the security when it determines that doing so is necessary to protect investors. As proposed, the Exchange would be permitted to exercise the discretionary authority even when the security and the listed company otherwise satisfy all applicable Nasdaq listing standards at the time of determination.
The Exchange states that it would exercise its discretion to delist a company on a case-by-case basis, and in applying that discretion, it would consider whether the listed securities may be susceptible to manipulation based on factors related to concerns the Exchange and other regulators have identified with companies that previously were the subject of problematic or unusual trading, including considerations related to the company’s advisors (including auditors, underwriters, law firms, brokers, clearing firms, or other professional service providers that are currently or have in the past worked for the company). In particular, in making the determination to delist a security, the Exchange will consider all relevant facts and circumstances [including a list of specified facts and circumstances described in the SEC’s notice].
Proposed Nasdaq Rule IM-5101-4 specifies that because trading activity that is indicative of potential manipulation may occur when a security lacks sufficient public float, investor base, or trading interest to support the depth and liquidity necessary to maintain a fair and orderly market, the Exchange may use this authority even where the potential manipulation appears to be driven by third parties with no known connection to the company, and even where Nasdaq cannot determine whether the company or any associated individual was involved. Further, the Exchange will consider evidence provided by the company that there is sufficient public float, investor base, or trading interest.
Under the proposal, Exchange Staff will issue a Staff Delisting Determination under Nasdaq Rule 5810(c)(1) if the Exchange determines to delist a security pursuant to this authority. A company can seek review of such a Staff Delisting Determination pursuant to Nasdaq Rule 5815.
One of the areas of comment on the original Nasdaq proposal focused on the discretion that Nasdaq may exercise in determining whether to delist a security in this situation, and the Commission notes that the factors are based, in part, on factors used in Nasdaq Rule IM-5101-3, which provides that the exchange may use its discretionary authority under Nasdaq Rule 5101 to deny initial listing to a company based on factors that make the company’s security susceptible to manipulation, and also include additional considerations “specific to continued listing and Section 12(k) suspensions, including, but not limited to, trading patterns, evidence of third-party social media activity, disclosure of material news, and recent securities issuances.” The notice also indicates that proposed Nasdaq Rule IM-5101-4 provides that the exchange will consider “any other material information, whether mitigating or concerning, provided by the company or otherwise available in the record of the matter; and will consider evidence provided by the company that there is sufficient public float, investor base, or trading interest to support a fair and orderly market.”
As acknowledged in the notice, Section 12(k) suspension proceedings remain very rare, but this rule change will provide Nasdaq with an ability to react to those unusual circumstances when warranted.
Yesterday, the PCAOB announced that it will convene an open meeting on June 9 to consider proposed amendments to QC 1000, A Firm’s System of Quality Control, the PCAOB’s audit firm quality control standard, which is set to go effective on December 15, 2026.
QC 1000 was approved by the SEC back in September 2024, and the effective date of the new standard was postponed last August. At the time, Reuters had reported that SEC Chairman Paul Atkins had pushed for a delay, due to feedback from audit firms. Earlier this year, the Financial Times reported that new PCAOB Chairman Jim Logothetis had indicated that he planned to seek narrow changes to the new standard.
May was indeed a very busy month on the SEC rulemaking front, and all indications are that we have more rulemaking action to come from the agency on a variety of fronts. While sometimes there is not as much interest in potential rule changes at the proposing phase, I would say that many people are very interested in the SEC’s latest round of proposed amendments, given the potential impact of these proposed changes on public companies, their advisors and the markets. With all of this potential change going on, you will not want to miss our 2026 Proxy Disclosure and Executive Compensation Conferences on October 12th & 13th in Orlando, Florida. We have put together an outstanding agenda and a great group of speakers who will address all of the latest developments.
If you register now, you can take advantage of our substantially discounted “early bird” rate! You can register online at our conference page or contact us at info@CCRcorp.com or 1-800-737-1271.
Yesterday, the SEC announced that it had published its draft strategic plan for fiscal years 2026 through 2030. The SEC is soliciting public comment on this strategic plan. The announcement highlights the following three goals:
1. Renew our regulatory policy focus to support innovation, capital formation, market efficiency, and investor protection — This goal promotes clear, fit-for-purpose rules that foster responsible innovation and deter misconduct. Modernizing and simplifying disclosure practices, expanding access to private markets, and enabling new capital-raising pathways are essential to ensuring that entrepreneurs and small businesses can thrive. One objective is to provide a firm regulatory foundation for digital assets and distributed ledger technologies through a rational, coherent, and principled approach.
2. Shift our regulatory practices to increase stakeholder engagement, facilitate compliance efforts of market participants, and effectively return our enforcement approach to Congress’ original intent — This goal seeks to increase staff engagement with business and industry groups while restoring an enforcement approach that polices violations of established law such as fraud and manipulation rather than expanding regulatory reach through ad hoc enforcement actions. Other objectives include periodic, retrospective reviews of existing rules as well as an assessment of the agency’s administrative law framework.
3. Optimize our operational efficiency by enhancing our organizational structure, modernizing our technology, reforming employee performance management, and implementing robust internal performance reporting that incorporates accountability for resources and program success — This goal prioritizes technology modernization as a critical enabler of regulatory effectiveness. A comprehensive review of legacy systems – such as EDGAR – and the adoption of secure, scalable infrastructure will enhance data integrity, reduce operational risk, and support advanced analytics. The responsible use of artificial intelligence and blockchain technologies can further improve oversight, reduce costs, and unlock new efficiencies.
We covered the SEC’s last strategic planning process back in 2022, when the strategic goals were: (1) protecting the investing public against fraud, manipulation, and misconduct; (2) developing and implementing a robust regulatory framework that keeps pace with evolving markets, business models, and technologies; and (3) supporting a skilled workforce that is diverse, equitable, and inclusive and is fully equipped to advance agency objectives.
Ahead of tomorrow’s meeting of the SEC’s Investor Advisory Committee, the SEC has announced four new members of the Investor Advisory Committee. The announcement notes that three of the four new members will serve four-year terms, while the fourth new member will serve as the designated representative of the interests of senior citizens.
The four new members of the Investor Advisory Committee are:
– Patrick Daugherty, a Partner at the law firm of Foley & Lardner
– John Liu, a senior citizen investor and former Managing Director at Accenture and co-founder of Agile Partners, who will serve as the representative of the interests of senior citizens
– Sheldon L. Ray Jr., former Senior Vice President, Investments, Portfolio Manager, at Raymond James & Associates
– Adriana Z. Robertson, Professor of Business Law at the University of Chicago Law School
The SEC notes that it will be seeking additional members of the Investor Advisory Committee in late 2026 or early 2027.
Be sure to tune in at 2:00 pm Eastern tomorrow for our webcast – “The SEC’s Semiannual Reporting Proposal: Considering the Alternatives,” – to hear from me and the all-star line-up of Brian Breheny of Skadden, Meredith Cross of WilmerHale and Tom Kim of Gibson Dunn on the topic of the SEC’s proposed amendments that would allow public companies to elect to file semiannual reports on new Form 10-S, rather than filing quarterly reports on Form 10-Q. We will discuss the SEC’s proposed rule changes and explore the practical implications of a shift to semiannual reporting for issuers, auditors, underwriters and the markets. Topics include:
– The SEC’s proposed rule changes to the periodic reporting system
– The SEC’s proposed changes to financial statement requirements
– Potential areas for changes to the proposed rules
– The experience of public companies in other jurisdictions with optional semiannual reporting
– Considerations for companies when deciding to elect semiannual reporting
– Potential challenges of semiannual reporting for areas such as insider trading compliance, share repurchase activity, capital-raising and investor communications
– The ways in which earnings releases and earnings calls may change for companies opting into semiannual reporting
– The relationship of the semiannual reporting proposal to other SEC initiatives
As usual, we will apply for CLE credit in all applicable states (with the exception of SC and NE, which require advance notice) for this 60-minute webcast. You must submit your state and license number prior to or during the live program. Attendees must participate in the live webcast and fully complete all the CLE credit survey links during the program. You will receive a CLE certificate from our CLE provider when your state issues approval, typically within 30 days of the webcast. All credits are pending state approval.
This program will also be eligible for on-demand CLE credit when the archive is posted, typically within 48 hours of the original air date. Instructions on how to qualify for on-demand CLE credit will be posted on the archive page.
One of the topics that we have not yet seen the Commission address through the rulemaking process is Rule 14a-8, the shareholder proposal rule. We have repeatedly heard from the Chairman and other SEC Commissioners that changes to Rule 14a-8 will be forthcoming, as the SEC seeks to address what it considers to be politicization of the annual meeting process. The first shot across the bow of Rule 14a-8 was the shift in the SEC Staff’s approach to exclusion requests this past proxy season, while Chairman Atkins laid out a path to considering whether precatory proposals could be excluded under Rule 14a-8(i)(1), which no companies followed during the course of the 2026 proxy season.
Liz recently noted on the Proxy Season Blog that a group of investors consisting of he US Sustainable Investment Forum (US/SIF), Interfaith Center on Corporate Responsibility, Freedom to Invest, the Shareholder Rights Group, and For the Long Term launched the website “Protect Shareholder Voice,” which hosts a petition urging the SEC to preserve the shareholder proposal rule. The petition states:
We write as retirees, pension beneficiaries, and individual and institutional investors whose savings depend on the integrity of America’s capital markets. We urge you to preserve the shareholder proposal rule as a cornerstone of property rights and free-market accountability.
Shareholder proposals are an expression of ownership. For eighty years, the ability of shareholders to raise questions before the companies they own has been one of the most effective free market-based checks on corporate mismanagement. The need for regulators to intervene is reduced when owners can speak directly. That is the genius of the system — and precisely what is at risk.
Shareholders have advanced sound governance of their companies through decades of governance reforms, adopted first through the shareholder proposal process and then as general market practice.
When investors ask a clothing retailer to account for supply chain vulnerabilities, they are protecting brand equity and long-term profitability. When they ask a pharmaceutical company to address legislative risk embedded in its earnings guidance, they are doing the analytical work that sound investing requires. When they flag water scarcity exposure for agricultural, beverage, semiconductor, or mining companies, they are surfacing risks that conventional financial filings routinely omit — risks that eventually become losses borne by ordinary shareholders.
Other investors have a right to inquire whether environmental or social commitments of a company are undercutting shorter term profitability. Regardless of the time horizons of investing, this is a critical right of investors to engage a fundamental American value — the marketplace of ideas.
If the shareholder proposal process is curtailed, the practical result is not quieter markets. It is a transfer of power: away from diverse owners, and toward a narrow class of the largest institutional players. Smaller investors — retirees, pension funds, individual savers — will lose one of the only shareholder protection tools scaled to their resources. Blind spots will accumulate. Risks that could have been surfaced early will compound, spreading across companies and sectors until they become systemic.
The boards and executives of public companies should answer to their owners. That principle is not progressive or conservative — it is foundational to capitalism.
We urge the Commission to honor its mandate to protect investors and maintain fair, efficient markets by keeping this rule intact.
Let America’s public companies be guided by their shareholders — not shielded from them.
Liz observes in her blog:
For companies, this is another reminder that any rollback of Rule 14a-8 is going to draw criticism and challenges. The petition floats talking points that – while somewhat ironically sounding like they were AI-generated – may resonate with some institutions and retail holders. Companies that believe the costs of putting shareholder proposals in the company’s proxy statement outweigh the benefits may want to gather data and anecdotes to help support that message and to help folks understand the nuances of Rule 14a-8 that may be problematic. Although the stated goal of SEC Chair Paul Atkins is to depoliticize annual shareholder meetings, it’s possible that things could get worse in that regard before they get better. . .
Back in April, I blogged about the PCAOB’s request for public comment seeking input regarding the PCAOB’s strategic priorities. The Council of Institutional Investors (CII) recently submitted a comment letter in response to this request, expressing varying levels of support for the strategic priorities outlined in the PCAOB’s request. For example, on the topic of how the PCAOB should consider deploying technology, including AI, to help further its investor-protection mission, CII notes:
CII continues to strongly support as a strategic objective of the Board the ongoing evaluation of developments in technology, including AI, and the consideration of the need for guidance, changes to PCAOB standards, or other action in light of the increased use of technology by registered audit firms and financial statement preparers and in furtherance of the Board’s investor protection mission.
We generally share the following view expressed by IAG Member Jen Sisson, CEO of the International Corporate Governance Network, in connection with the April 2026 IAG meeting discussion of the agenda item on “Artificial Intelligence”:
“AI means ‘the mechanics of how audits get done are going to change,’ . . . and the PCAOB needs to think about what it needs to do differently to respond.”
In addition, CII generally believes, consistent with our policy on Audit Committee Responsibilities Regarding Independent Auditors, that the PCAOB could also help further its investor protection mission by deploying technology, including AI, to make more accessible the public information they currently maintain about registered auditing firms. In that regard, we generally support the views of the Members of the IAG in their comment letter in response to this question:
“[W]e propose that the Board consider using AI to create an “answer-bot” or an AI search function so that investors and members of the public might be able to query the public database of inspection reports and other valuable information the PCAOB already possesses. AI has reached the point now where it can access and analyze structured and unstructured data. It also can embed necessary confidentiality restrictions. This use of AI could free up PCAOB staff time in responding to requests and trying to figure out what investors and the public want. In addition, it could unleash the power of crowds to identify interesting and impactful questions.”
It is with great sadness that I mark the passing of David Becker, who died on May 29, 2026 at the age of 78. David was truly a titan of the securities bar, and someone that I have admired throughout my career. The Commission issued a statement yesterday that noted:
The Securities and Exchange Commission notes with sadness the death of our former colleague David Becker on Friday, May 29. David faithfully dedicated a significant portion of his career to public service. With a deep knowledge of our securities laws, the Commission and the American people benefited from David’s leadership and expertise during his years as General Counsel under Chairmen Schapiro, Pitt, and Levitt. Beyond his command of complex legal and policy issues, David’s kindness, humor, and collegiality earned him the respect of his colleagues across the SEC and in the private sector. He received the William O. Douglas Award from the Association of SEC Alumni in 2019. On behalf of the entire agency, we extend our condolences to his family during this difficult time.
David served as General Counsel of the SEC from 2000 to 2002 and from 2009 to 2011, having first served joined the SEC as Deputy General Counsel in 1998. I most recently spoke with David at the SEC Historical Society’s program focusing on the SEC’s Office of General Counsel last Fall, and it was always great to hear his perspective on our practice and the regulatory environment. It is difficult to imagine a world without his thoughtful insights and calming presence.
David was a loving husband, father, and grandfather. As his obituary notes, he is survived by his beloved wife, five children and ten grandchildren. I offer my deepest condolences to David’s family and all of his friends and former colleagues.
What a long, strange trip it has been with the SEC’s climate-related disclosure rules!
On Friday, the SEC announced that it is proposing to rescind its own climate related disclosure rules, just a little over two years after those rules were adopted by the Commission. The SEC’s adoption of those rules back in March 2024 marked the culmination of well over a decade of active debate as to what role the SEC’s public company disclosure requirements could play in requiring companies to describe their climate-related risks and opportunities, but the contemplated disclosures never actually materialized as the disclosure rules were bogged down in litigation.
Over the course of the past two years, the fate of the SEC’s climate disclosure rules was far from certain. The litigation challenging the rules was consolidated in the U.S. Court of Appeals for the Eighth Circuit, and in March 2025, the SEC announced that it had voted to discontinue its defense of the climate-related disclosure rules. But the litigation did not go away, and the SEC subsequently provided a status update to the Eighth Circuit indicating that the Commission did not intend to review or reconsider the climate-related disclosure rules, and instead the Commission wanted the Court to continue the proceedings so that it could address the SEC’s authority to adopt the climate-related disclosure requirements. In September 2025, the Eighth Circuit ruled that the litigation should continue to be held in abeyance, noting that it was the SEC’s responsibility to determine whether the climate-related disclosure requirements should be rescinded, repealed, modified, or defended in litigation. Now the SEC has determined to go down the route of rescinding the rules, which requires the full notice and comment rulemaking process to strike the requirements from the SEC’s rulebook.
It is very clear from the proposing release and the statements of the Chairman and Commissioners that the current Commission is very much opposed to the climate-related disclosure requirements. The proposing release notes:
The Final Rules were a dramatic overreach of the Commission’s statutory authority and, independently, unsound as a matter of policy. Based on an incorrect view of the scope of its authority, the Commission determined that it was appropriate to prescribe dozens of pages of highly specific disclosure rules solely about climate-related matters and apply the bulk of those rules to virtually all public companies, regardless of size, industry, or specific circumstances.
The Commission’s Fact Sheet describing the proposed amendments summarizes the key policy reasons that the Commission is relying on to propose rescission of the rules now, including:
– They are unnecessary and inconsistent with a registrant-specific, materiality-based approach to disclosure.
– They stray well beyond the policy concerns of the federal securities laws.
– They impose substantial costs that are not justified by the informational benefits they may provide to some investors.
– They are at odds with the Commission’s policy objectives of facilitating capital formation and promoting public company status.
Chairman Atkins described his concerns with the climate-related disclosure requirements in his statement in support of the rulemaking:
I have been concerned about the 2024 Climate Rules for some time because of questions raised about the Commission’s authority to adopt them and the soundness of the policy basis to support them. Careful compliance with the statutes governing the exercise of the Commission’s authority and a comprehensive effort to review and reshape the current SEC public company disclosure requirements are key components of my agenda, and I believe serious consideration must be given to rescission of the 2024 Climate Rules to help accomplish both of those goals.
We must re-examine the costs, burdens, and benefits of disclosure mandates to make becoming and remaining a public company more attractive again. SEC disclosure obligations should comply with the Commission’s statutory authority, be guided by materiality as the North Star, avoid the practical effect of dictating corporate behavior, and be imposed only when the expected benefits justify the likely costs and burdens.
In his statement supporting the action, Commissioner Mark Uyeda noted:
The Climate Rule should serve as a cautionary tale to financial regulators that their expertise is narrow and their authority is not without limit. We should focus our regulations on matters within our areas of core competency and not attempt to interject our subjective judgment on topics minimally related to that which the legislature has tasked us to oversee. If Congress had wanted the Commission to regulate environmental emissions and other non-financial issues, then Congress knows how to direct the Commission to do so.
In her statement in support of the proposal, Commissioner Hester Peirce notes that “[a]dhering to a merit-neutral, materiality-centric disclosure framework is not only consistent with the SEC’s statutory authority, but also good for the health of our capital markets.”
The comment period on the proposal will remain open until 60 days after publication of the proposing release in the Federal Register. The rules themselves continue to be stayed and presumably the litigation challenging the rules will be held in abeyance while the rulemaking process plays out.
