Yesterday, the SEC announced that, after just seven months on the job, Director of Enforcement Judge Margaret Ryan has resigned from her position. Here’s an excerpt from the SEC’s press release:
“Our goal has been to the lead the Division of Enforcement back to Congress’ original intent: enforcing the federal securities laws, particularly as they relate to fraud and manipulation,” said SEC Chairman Paul S. Atkins. “I am pleased to report significant progress toward this objective.”
Chairman Atkins continued, “Judge Ryan has served with honor and distinction since joining the Commission last year, hallmarks that have served her incredibly well throughout her distinguished career and will continue to do so. Under her leadership, the division reprioritized enforcing the nation’s securities laws, with a focus on pursuing fraud. I thank Meg for her many contributions and wish her very well.”
“I extend my thanks to Chairman Atkins, the Commission, and the staff of the Enforcement Division for the opportunity to continue my public service in a different role,” said Judge Ryan. “As I recently said, I did not seek the role of Director of the SEC’s Division of Enforcement. Rather, this role found me. And for that, I am grateful. I am confident that the foundation I helped to shape – working together with Chairman Atkins – will continue to serve investors and the markets well.”
The press release says that Principal Deputy Director Sam Waldon will serve as Acting Director of the Division of Enforcement.
The SEC didn’t announce a reason for Judge Ryan’s departure, but the whole situation is very odd. Given her background as a military appellate judge and academic, Judge Ryan seemed an unlikely choice for the position in the first place, and she kept a very low public profile throughout her tenure. In fact, she made her first public remarks as Enforcement Director only last month. Now, she’s gone. Your guess is as good as mine as to why.
Rule 15c2‑11 generally prohibits brokers from publishing quotations for OTC securities unless specified, current information about the issuer is publicly available. Yesterday, the SEC announced proposed amendments that would limit the Rule’s application to equity securities only. Here’s the 76-page Proposing Release and here’s the one-page Fact Sheet. This excerpt from the Fact Sheet explains what this proposal is about:
In 2020, Rule 15c2-11 was amended to require that specified information be current and publicly available for brokers and dealers to publish a quotation for, or maintain a continuous quoted market in, a security in a quotation medium. Following the adoption of the 2020 amendments to Rule 15c2-11, numerous industry participants stated that they never understood Rule 15c2-11 to apply to non-equity securities and expressed concerns with the potential burdens of applying the amended rule to fixed-income securities.
After industry participants shared their concerns regarding Rule 15c2-11’s application, the Commission provided exemptive relief and the staff issued a no-action letter addressing the vast majority of fixed-income securities. Accordingly, the Commission is proposing amendments to Rule 15c2-11 to replace the term “security” with “equity security,” as defined in Exchange Act Rule 3a11-1.
Comments on the proposal are due 60 days after publication in the federal register.
In other rulemaking news (and at the risk of “burying the lede”), the WSJ is reporting that the SEC may issue its long-anticipated proposal to eliminate mandatory quarterly reporting as soon as next month. Stay tuned.
Be sure to tune in at 2 pm Eastern tomorrow for the CompensationStandards.com webcast – “Pre-IPO Through IPO: Compensation Strategies for a Smooth Transition” – to hear Morgan Lewis’s Timothy Durbin, Alpine Rewards’ Lauren Mullen, Cooley’s Ali Murata, Pearl Meyer’s Aalap Shah, and Latham’s Maj Vaseghi share practical guidance on key compensation considerations from the pre-IPO phase through the offering and into the first chapter of public company life. Our panelists will also address questions submitted by members in advance (the deadline was March 13th).
Topics include:
– Assessing Existing Arrangements and IPO Impact
– Designing and Adopting New Equity Plans and ESPPs; Share Pool Strategy
– Managing “Cheap Stock” Issues; 409A Valuations
– Designing and Communicating Special IPO Awards
– Negotiating New Employment Agreements; Change-in-Control and Severance Terms
– Navigating Lockups, Blackout Periods and Post-IPO Selling Mechanics
– Establishing the Post-IPO Executive Compensation Program
– Building Compensation-Related Policies, Governance and Controls
– Communicating with Executives and Employees Through the Transition
– Transitioning Director Compensation (time permitting)
– Q&A: Answering Questions Submitted in Advance (15 minutes)
Members of CompensationStandards.com can attend this critical webcast (and access the replay and transcript) at no charge. Non-members can separately purchase webcast access. If you’re not yet a member, you can sign up for the webcast or a CompensationStandards.com membership by contacting our team at info@ccrcorp.com or at 800-737-1271. Our “100-Day Promise” guarantees that during the first 100 days as an activated member, you may cancel for any reason and receive a full refund.
We will apply for CLE credit in all applicable states (with the exception of SC and NE which require advance notice) for this one-hour 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.
Whenever I watch international sporting events, I’m always struck by just how many of the world’s countries have national anthems that you don’t have to be Whitney Houston to sing properly. Ireland is one of those countries – and I’d place its unofficial anthem, “Ireland’s Call,” among the very best. So, in honor of St. Patrick’s Day, here’s the Irish rugby team and thousands of proud Irish men & women belting it out:
I have several professional Irishmen in my family (my last name’s Jenkins, but my other 3 grandparents last names are Kennedy, Keefe and Gallagher), and I know I’d hear from them if I didn’t point out that Ireland’s Call isn’t the Republic of Ireland’s official anthem, and that it’s used at rugby matches for reasons that reflect the Emerald Isle’s sad & divided history.
Still, it’s a terrific song and one that both North & South are increasingly proud to sing together. I think that’s something we can all lift a glass to on this St. Patrick’s Day.
Happy St. Patrick’s Day to all of you actual or honorary sons & daughters of Erin!
The SEC’s decision to withdraw from its role as Rule 14a-8 referee has generated bipartisan howls from leading participants in the shareholder proposal industry about “silencing shareholder voices.” However, early returns suggest that companies are taking a cautious approach about telling their shareholders to “shut up.” Check out this excerpt from a recent Bryan Cave blog discussing ISS’s Proxy Season Preview (which Liz recently blogged about over on our “Proxy Season Blog”):
As discussed in our November 19, 2025 post, in most cases, companies can now decide themselves whether to exclude shareholder proposals – subject only to documenting a reasonable basis for exclusion.
However, according to ISS, a smaller percentage of companies (22%) are omitting proposals so far this year compared to 2025 (28%). This suggests that companies “may be reassessing the strategic value of omissions and the risks associated with it.”
For example, as noted in our post, companies may face litigation risks from proponents. Last month, three lawsuits were filed, with two of the companies quickly settling and agreeing to include the proposals. In one case, the complaint alleged inadequate disclosure in the company’s notice filing with the SEC.
Glass Lewis noticed the same thing in its review of how companies are handling shareholder proposals so far:
While the SEC’s change can be interpreted as giving boards free rein to set their meeting agendas, some companies appear to be taking a more cautious approach. A number of companies that filed exclusion notices prior to the November 17 announcement (Analog Devices, Apple, Costco, Starbucks and Tyson Foods) did not receive any response from the SEC, did not withdraw or refile their notices, and ultimately allowed these shareholder proposals go to a vote.
Like ISS, Glass Lewis also highlights the changing risk environment that companies face in the absence of the no-action process as likely contributing to this cautious approach. Participants in the shareholder proposal industry have proven willing to litigate, and institutional investors and proxy advisors have indicated that there will be consequences to boards that exclude proposals without solid justification.
Disclosure of executive security arrangements is a topic that’s received a lot of attention over the past year, including from SEC Chairman Paul Atkins, who suggested that the SEC’s continued treatment of executive security arrangements as a perk doesn’t reflect modern business realities. While Chairman Atkins’ comments may give companies reason to hope that perk disclosure of these arrangements may soon end, for this year at least, the old rules continue to apply.
So, with all the attention being paid to executive security, what should companies disclose about these arrangements in their proxy statements? Over on Real Transparent Disclosure, Broc recently provided some answers to that question. Here’s an excerpt:
– Rapid Growth in Executive Security Spending: Personal security services (home security, cybersecurity, security personnel, travel security) are increasing in prevalence and cost. Disclosure rates show 64% of the S&P 100, 35% of the S&P 500 – and 10% of the Russell 3000 provide executive security services, with expectations of continued growth.
– ISS’s Evolving Position on Security Perks: While ISS historically cited security expenses critically in negative Say-on-Pay recommendations, it recently relaxed its stance. ISS now indicates it is unlikely to raise significant concerns if companies provide robust proxy disclosure explaining the rationale and assessment process behind security programs.
– Disclosure Expectations from Proxy Advisors: Adequate disclosure should describe:
-The nature of the security program
– The benefit to stockholders
– The internal or third-party security assessment
– The arm’s-length decision-making process
Broc also says that companies expecting a significant increase in executive security expenditures need to involve the compensation committee and the relevant executives early on in order to ensure a robust assessment and approval process. These companies should also provide clear disclosure of that process in the CD&A in order to mitigate any criticism they might receive from proxy advisors.
Check out our latest “Timely Takes” Podcast featuring Cleary’s J.T. Ho & his monthly update on securities & governance developments. In this installment, J.T. reviews:
– New CDIs – Notices of Exempt Solicitations
– New CDIs – Broker Search Timing
– New CDIs – Spinoff Exec Comp Disclosure
– Rule 14a-8 Litigation
– Updates on Fallout from DEI Executive Order
As always, if you have insights on a securities law, capital markets or corporate governance issue, trend or development that you’d like to share in a podcast, we’d love to hear from you. You can email me and/or Meredith at john@thecorporatecounsel.net or mervine@ccrcorp.com.
In the latest issue of The Corporate Executive, I published a piece titled “An Ode to Shareholder Engagement: Turning the Page in 2026.” In the article, I posit the potentially controversial thesis that the “modern” era of shareholder engagement – which was ushered in by the advent of the Say-on-Pay requirement in 2011 – has ended, and in 2026 we enter a new era for engagement that is marked by significant technological, business and regulatory changes that could have an enduring impact on the shareholder engagement landscape for public companies.
Looking back 15 years to the dawn of Say-on-Pay, we can observe that the seemingly innocuous advisory, non-binding vote on executive compensation certainly changed the game when it comes to shareholder engagement. In the article, I recount the practices that developed to facilitate robust engagement with shareholders on executive compensation, corporate governance matters and any number of ESG issues. The article notes:
A positive outcome of these “modern” engagement efforts is that companies and institutional investors were generally able to have an active dialogue about the issues that were important to both the companies and the institutional investors. While criticism has inevitably focused on the extent to which asset managers and proxy advisory firms articulated a specific agenda through their proxy voting guidelines and company engagements (particularly on topics such as climate, ESG and DEI), companies were at least able to benefit from the opportunity to present their perspectives for consideration by significant shareholders, and in many cases both sides benefited from the exchange of viewpoints.
The article notes that the curtain began to fall on the modern era of engagement last year, with the Corp Fin guidance indicating that the ability to file on Schedule 13G could be jeopardized when an investor explicitly or implicitly conditions its support of one or more of the company’s director nominees at the next director election on the company’s adoption of its recommendation with respect to certain governance and ESG matters, or when the investor states or implies that it will not support one or more of the company’s director nominees at the next annual meeting unless management makes changes to align with the shareholder’s expectations as articulated in its voting policies. Beyond the immediate impact of shutting down engagement meetings for a brief period at some asset managers, the long-term impact has been to make shareholder engagement activities more one-sided and potentially less effective. The trend calls into question the utility of engagement with certain asset managers, and while companies continue to seek out engagement opportunities, the incidences of productive engagement meetings seem to be on the decline, at least anecdotally.
The article also addresses significant changes on the investor side of the equation, with the Big Three announcing the establishment of separate stewardship teams focused on differing investment strategies during 2025 and the rise of “voting choice” or “pass-through” voting programs, which permit institutional and some retail investors to direct how their shares held by the fund are voted on proposals considered at company annual meetings. As these voting choice programs are adopted more widely, companies will have a more difficult time trying to understand how shares directed by the fund holder will be voted on proposals, altering the efficacy of engagement with a particular asset manager. Companies ultimately may need to pivot to much more “public” solicitation efforts that seek to reach the unknown investors participating in these voting choice programs.
Finally, I address the “elephant in the room” for engagement, and that is the role of the proxy advisory firms. Earlier this year, we have seen artificial intelligence enter the field, with JPMorgan Chase and Wells Fargo announcing plans to replace proxy advisory firms with internal proxy voting analysis powered by AI. At the same time, the proxy advisory firms are in the crosshairs of Texas, Florida and the federal government, with the outcome of legislation, rulemaking and investigations yet to be seen. Amidst the turmoil, Glass Lewis announced last Fall a pivot toward helping clients with more bespoke voting advice rather than maintaining a house policy, with these efforts facilitated by AI-powered technology.
If we have indeed entered the “post-modern” era of engagement, what will that mean for companies? Companies should continue to seek to engage with investors on executive compensation, governance, ESG and other matters (even if the investors are not necessarily engaging with them), and we should all be cognizant of the increasing role that technology plays in the voting recommendation and decision-making process when preparing proxy statements and other investor communications.
If you do not have access to all of the practical insights that we provide in The Corporate Executive, I encourage you to email info@ccrcorp.com or call 1.800.737.1271 to subscribe to this essential resource!
Yesterday, the SEC’s Investor Advisory Committee met to discuss public company disclosure reform and proxy voting by funds, and to consider a recommendation regarding the tokenization of equity securities.
On the topic of disclosure reform, the remarks of Chairman Paul Atkins noted a goal of moving to “a minimum effective dose of regulation” by using materiality as the north star, scaling disclosure requirements with a company size and maturity and moving away from “regulation by shaming” in the SEC’s disclosure requirements. In her remarks, Commissioner Peirce emphasized that disclosure reform should address companies spending a lot of time and attention preparing disclosures that may obfuscate, rather than add to the mix of information on which investors rely, citing certain mandatory executive compensation tables. The remarks of Commissioner Uyeda noted that effective disclosure requires significant effort, and that the SEC should consider reforms to reduce unnecessary burdens on public companies without compromising investor protection and capital raising.
In the panel discussions on disclosure reform that followed, panelists discussed the importance of financial statements and MD&A to investors. A panelist noted that the Commission could provide more guidance as to the standard of materiality, recognizing that materiality determinations with respect to any given topic can vary from company to company based on their circumstances. The panel explored the pros and cons of moving away from quarterly reporting, as well as the concept of more scaled disclosure based on company size. The length and complexity of risk factor disclosure was discussed, and the panelists identified several areas of Regulation S-K that could be significantly revised or eliminated.
Before I relinquish control of the blog this week, I want to take a moment to congratulate Meredith Cross, who will be receiving the William O. Douglas Award at next week’s dinner held by the Association of Securities and Exchange Commission Alumni (ASECA). Since 1992, ASECA has awarded the William O. Douglas Award annually to an SEC alumnus who has contributed to the development of the federal securities laws or served the financial and SEC community with distinction. For those who may not know, William O. Douglas served as Chairman of the SEC from 1937 to 1939 before being appointed to the Supreme Court by President Franklin D. Roosevelt in 1939. Suffice it to say, if there was a Mount Rushmore of federal securities law legends, William O. Douglas would most certainly be memorialized there.
I cannot think of anyone more deserving of the esteemed William O. Douglas Award than Meredith Cross. For the entirety of my career, Meredith has exemplified for me what it means to be the best of the best in our profession. She served at the SEC in two different tours, holding numerous senior positions in the Division of Corporation Finance, including as Director of the Division of Corporation Finance from 2009 – 2013. In private practice, I learned everything I needed to know about being an effective public company counselor from Meredith, as she is the go-to person for so many public companies, particularly when they find themselves in a crisis. Through her work at the SEC and in private practice, Meredith has truly been one of the most influential people in the federal securities laws, and she has always been so generous with her time in sharing her knowledge at our conferences and on our webcasts.
For me personally, I am incredibly fortunate to count Meredith as a friend and mentor. Liz and I recently spoke with Meredith about mentorship on the “Mentorship Matters with Dave & Liz” podcast, and I encourage you to listen to our wide-ranging discussion of the importance of mentorship. I can attest to the fact that mentorship truly does matter, because without Meredith’s inspiration and mentorship, I would not find myself where I am in my career today.
So, with all that said, congratulations to Meredith Cross on receiving the William O. Douglas award!
