Yesterday, the SEC’s Office of Mergers and Acquisitions issued an exemptive order providing issuers and, in some cases, third party bidders with the flexibility to shorten the time period during which tender offers for equity securities must be open from 20 to 10 business days. In order to take advantage of the shorter tender offer period, the tender offer must satisfy several conditions, which vary depending on whether the target is a reporting or a non-reporting company.
Some of the more prominent conditions applicable to a tender offer for equity securities of an Exchange Act reporting company include, among others:
– The tender offer must be subject to Regulation 14D or Rule 13e-4 under the Exchange Act;
– If the tender offer is subject to Regulation 14D, (i) the offer is made pursuant to the terms of a negotiated merger agreement or similar business combination agreement between the subject company and the offeror, (ii) the offer is made for all outstanding securities of the subject class, and (iii) a Schedule 14D-9 is filed and disseminated by the subject company no later than 5:30 p.m., Eastern time, on the first business day following the date of commencement of the tender offer:
– If the tender offer is subject to Rule 13e-4, the offer is made for less than all outstanding securities of the subject class; and
– The consideration offered in the tender offer consists only of cash at a fixed price.
Certain conditions relating to the contents and dissemination of communications announcing the tender offer and any changes in its key terms must also be satisfied.
Cross-border tender offers, tender offers in connection with Rule 13e-3 transactions, and tender offers for which a competing tender offer has already been announced are ineligible to take advantage of the shortened tender period. In addition, if a competing tender offer is publicly announced, then the tender offer made in reliance on the exemptive order must be extended such that it is open for at least 20 business days from the date the initial offer commenced.
In the case of tender offers for securities of non-reporting companies, only all cash, fixed price issuer tender offers (or tender offers by wholly owned subsidiaries for the issuer’s securities) are eligible for the shortened tender offer period. Certain conditions relating to the contents and dissemination of communications announcing the tender offer and any changes in its key terms must also be satisfied.
Yesterday, the SEC announced that its Small Business Capital Formation Advisory Committee will meet on Tuesday, April 28th at 10:00 am Eastern. Here’s the agenda for the meeting, which, as this overview from the SEC’s press release indicates, is all about figuring out how to encourage more IPOs:
The committee will start the morning session by hearing from its members about their perspectives on the state of the IPO market while considering the existing regulatory framework and how decreased IPO activity and market shifts are impacting companies’ (including small caps’) desires to go public. Edwin O’Connor, Partner, Co-Chair of Capital Markets, Goodwin Procter LLP will share his views on the IPO market, trends, and factors that may be at play.
This conversation will continue into the afternoon session where the committee will hear from Beau Bohm, Managing Director, Global Co-Head of Equity Capital Markets, Cantor Fitzgerald, who will share views on the IPO market from the underwriter’s perspective.
The meeting will be open to the public and will be live streamed on SEC.gov.
Ideagen Audit Analytics recently released its annual market share analysis of public company auditors as of early 2026. Here are some takeaways from the summary:
– The Big Four tighten their grip on the largest companies. The Big Four audit approximately 90% of large accelerated filers but their dominance drops sharply further down the market, where mid-tier and other firms hold the majority.
– Market share is moving and not always where you’d expect. Deloitte grew to 926 registrant clients and Baker Tilly broke into the top 10 for the first time off the back of recent merger activity.
– SPACs are back on the radar. SPACs now represent 4% of total registrants, up from 2.4% in the prior report, and the Big Four are entirely absent from the segment, leaving mid-tier and smaller firms to compete for a growing pool of engagements.
– Industry concentration reveals where auditor competition is fiercest. The Big Four audit 59% of energy and transportation companies but just 43% in trade and services.
As noted above, Deloitte continues to lead the Big 4 with a client count of 926 registrants (15% of the non-SPAC market), up from 901 in the prior year’s report. EY dropped from 869 to 799 registrants (13%), a decline of 8%. PwC was flat with 744 clients (12%), and KPMG has 639 clients (11%), up from 616 last year.
The Big 4 don’t play in the SPAC sandbox, so the lineup there looks very different, although it’s still concentrated in a handful of firms. For SPAC auditors, WithumSmith+ Brown leads the pack with 120 clients (51% market share), followed by MaloneBailey and CBIZ, each with 23 clients (10%). No other firm holds more than a 5% share of the SPAC market.
Last year, we blogged about the DOJ’s announcement of a “Civil Rights Fraud Initiative” targeting DEI programs. Last week, the DOJ announced that the initiative claimed its first scalp – and a high-profile one to boot:
Today, Acting Attorney General Todd Blanche announced the first False Claims Act resolution secured under the Civil Rights Fraud Initiative, which he launched in May 2025. International Business Machines Corporation (IBM) has agreed to pay the United States $17,077,043, inclusive of civil penalties, to resolve allegations that it violated the False Claims Act by failing to comply with anti-discrimination requirements in its federal contracts due to practices the United States contends discriminated against employees and applicants for employment because of race, color, national origin, or sex.
According to the DOJ’s statement, the government alleged that the company took race, color, national origin, or sex into account when making employment decisions, altered interview criteria based on race or sex through the use of “diverse interview slates” in order to identify diverse candidates for hiring, transfer, or promotion. The company also allegedly considered race and sex when making employment decisions to achieve progress towards demographic goals, and offered certain career development programs participation in which was limited on the basis of race or sex.
Latham & Watkins’ memo on the settlement offers these recommendations for federal contractors to mitigate the risk of their own liability:
– Conduct a Privileged Compliance Review: Contractors should conduct a privileged review of any DEI-related policies and programs, including vendor agreements and internal programs, to ensure compliance with current interpretations of civil rights and anti-discrimination laws. Programs and practices that run afoul of anti-discrimination laws should be promptly terminated or modified for compliance. Practices that link compensation to diversity-related goals or metrics or that involve workforce representation goals or race- or sex-based eligibility criteria may present particular risk.
– Monitor Regulatory and Contract Changes: Contractors should closely monitor guidance and memoranda from their contracting agencies regarding how new executive orders surrounding discrimination or DEI will be implemented and enforced. Agencies are likely to begin including new anti-DEI clauses in solicitations and contract modifications.
– Ensure Proper Compliance Controls: Contractors should have policies and processes in place to monitor and promptly address compliance concerns, including subcontractor compliance given the new reporting obligations set forth in the March 26, 2026 executive order.
The DOJ’s announcement noted that IBM received credit for its significant cooperation in the investigation, and Latham’s memo recommends that if potential compliance issues are identified, contractors should carefully evaluate the benefits of early cooperation with the government.
This Nutter memo provides additional information about the kind of DEI program practices that are likely to attract the DOJ’s attention. This excerpt cites remarks made by Brenna Jenny, Deputy Assistant Attorney General for DOJ Civil Division’s Commercial Litigation Branch, at the Federal Bar Association’s February 2026 Qui Tam Conference:
Jenny described three practices that DOJ views as encouraging decisions based on race or sex instead of merit and are thus likely to draw interest from DOJ. First, where companies deploy tracking systems to meet demographic metrics in hiring and staffing. DOJ does not view such tracking as remedying any identified discrimination, but instead shifts decisions away from merit in favor of numerical outcomes based on protected characteristics.
Second, where companies’ compensation decisions are influenced by race or DEI-related metrics. An example of this is where race is considered for the purpose of bonuses or salary increases.
Third, where company policies and procedures require employees to support DEI initiatives in connection with performance reviews, as such practices may pressure employees to support DEI policies and demographic objectives to avoid adverse employment outcomes.
Jenny also singled out employee training and mentoring programs with restrictions based on race or sex, saying that when access to such opportunities is restricted to certain groups, it effectively denies the benefits of membership in such groups to other employees. In DOJ’s view, this can lead to career advancement decisions being made on the basis of race or sex, and not on merit.
Additionally, Jenny raised concerns about “diverse-slate” requirements and preferential hiring practices, stating that DOJ is concerned with situations where employers relax experience or qualification standards only for certain candidates on the basis of race or sex.
The memo points out that federal agencies are now requiring contractors to provide updated certifications regarding anti-discrimination practices consistent with Executive Order 14173, which requires agencies to include in every contract or grant award “[a] term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of [the FCA]” and “[a] term requiring such counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.”
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:
– Prediction Market Considerations for Public Companies
– Cybersecurity in the Age of Cyber Warfare: Governance Reminders for Public Company Boards
– 2026 CISO AI Risk Report
– SEC Enforcement Under the Atkins Administration: What Public Company Boards Should Know
– SEC Sued re: Revised Rule 14a-8 No-Action Letter Process (update up from February topic)
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.
The Corp Fin staff has been working to dig itself out of the backlog created by last year’s extended government shutdown, and according to Olga Usvyatsky’s “Deep Quarry” Substack newsletter, that’s contributed to a growing delay in releasing staff comment letters. Olga worries that the lag in releasing comment letters may result in them becoming “historical artifacts rather than a timely alert about issues identified by the SEC during the review process.”
She also identifies another issue that may be of more concern to lawyers and compliance officers – the possibility that a growing delay in releasing comment letters may enhance opportunities for insider trading:
A long dissemination lag may also create an opportunity for insiders to trade on information that is not yet publicly available, according to academic research. For instance, research by Dechow, Lawrence, and Ryans (2016, TAR) finds that insider selling increases prior to the public release of SEC comment letters — especially for firms with high short positions, and that stock prices exhibit a delayed negative reaction once the letters are disclosed. The results are especially salient for SEC reviews raising revenue recognition concerns.
Would longer dissemination lag and delays in SEC scrutiny exacerbate insider trading? Ultimately, this is an empirical question.
My guess is that’s an empirical question that the SEC might be interested in as well, particularly if resource constraints at the agency make it more difficult to return to a timelier dissemination of completed comment letter exchanges. In this environment, companies may want to police more closely transactions by insiders who are aware of the contents of unreleased staff comment letter exchanges in order to avoid potential insider trading issues.
Here’s something that Liz posted yesterday on The Advisors Blog on CompensationStandards.com:
As we note in our checklist on share counting (and in our Form S-8 handbook on TheCorporateCounsel.net), the methodology for counting share usage against a plan’s share pool may not necessarily be the same as counting shares for Form S-8 purposes – and this is something that can cause confusion from time to time.
One wrinkle where I have experienced some clients wanting to “shoot the messenger” is in counting restricted stock units against the registered share pool at the time of grant. A lot of folks have interpreted the rules to say that all RSU grants count against S-8 capacity – even if the award is later forfeited and the underlying shares again become available for grant under the plan’s recycling provisions. But there has been room for ambiguity and therefore some variances in practice. Ali Nardali of K&L Gates informed us of a recent conversation with the SEC’s Office of Chief Counsel, where OCC informally shared this view:
An RSU must be counted against the Form S-8 registered share capacity at the time of grant. If the RSU is later forfeited and the underlying share becomes available for reissuance under the plan, any subsequent RSU granted over that share must again be counted against S-8 capacity. In effect, each grant event – not each underlying share – triggers a deduction from the S-8 share registration.
Some companies don’t worry too much about this because their plans have evergreen features that result in regularly registering new shares for issuance and having plenty of headroom. For others who need to track usage more carefully, this is why some companies register “extra” shares on the Form S-8 – i.e., a number that is greater than what the plan document indicates. The OCC clarification also serves as a reminder that the S-8 should be on file before RSUs are granted.
At least one comment letter that was submitted in connection with the Commission’s “executive compensation” review called for the Commission to align the treatment of RSUs under Rule 701 and Form S-8 with the treatment of options under those rules – so the “date of sale” would be the vesting date (or later settlement), similar to the “exercise date” for options. If the Commission did that, it would correct difficulties that this issue causes for newly public companies and would resolve this share-counting issue for Form S-8. Fingers crossed!
Over on Radical Compliance, Matt Kelly flagged recent OFAC guidance on sham transactions and sanctions evasion. Sham transactions occur when the bad guys “effectuate transfers or establish arrangements that conceal—rather than genuinely extinguish—a continuing interest in property.” Among other things, OFAC’s guidance document identifies the following non-exclusive list of red flags for potential sham transactions:
– Commercially unreasonable transactions. Transfers of property in which a blocked person once held an interest on terms that are not commercially reasonable, lacking adequate consideration, or otherwise not suggestive of an arm’s length transaction may indicate that the blocked person still retains an interest in the property. Conversely, evidence that a transaction was between unrelated parties, at fair market value, in a competitive market, would tend to demonstrate that a bona fide transfer occurred.
– Transfer to family members or close associates. Transfers by a blocked person to a family member or close associate can be evidence of a sham transaction. Such family members or close associates may be acting as a proxy, facilitator, money manager, or agent for the blocked person. Similarly, the nature and scope of the relationship between the blocked person and a nominal owner of the transferred property may also be relevant. Formal or informal agreements, agent-principal or other close relationships, and other similar factors may indicate that the nominal owner is not independent from the blocked person and is instead holding property for, or acting on behalf of, the blocked person.
– Unclear purpose of transfer. Transfers lacking apparent business purpose may indicate an attempt to obfuscate a blocked person’s continued interest in property. Likewise, transfers to an individual with little or no relevant experience or expertise with respect to the transferred property may be evidence of a sham transaction.
– Unduly complex corporate structures involving higher-risk jurisdictions. The presence of unnecessarily complex legal structures without a discernible legitimate purpose—such as certain multi-layered limited liability companies, partnerships, or trusts—may indicate an effort to conceal an ownership interest. This risk is heightened when holding entities are domiciled in jurisdictions that have little connection to the property they hold, lack robust regulatory and supervisory controls, or offer laws and structures that enable obfuscation in property ownership.
– Continued involvement of a blocked person. Facts or circumstances suggesting a blocked person remains involved in the use, management, or disposition of property—including through proxies or intermediaries—may indicate that the blocked person continues to retain an interest in property. In these situations, where a blocked person previously held an ownership interest in the property, the blocked person may still be behind legal structures designed to conceal their interest.
– Transfer near the time of designation. Transfers completed close in time to a person’s designation may trigger suspicion warranting further analysis, such as when a purported transfer occurs immediately before or after a designation. For example, shortly before or after being designated by OFAC, blocked drug kingpins have transferred shares in non-U.S. companies to offshore shell companies; such transfers should raise U.S. sanctions compliance concerns.
– Evasive responses regarding a blocked person’s involvement. Evasive or vague responses, or failures to respond to questions from counterparties, key intermediaries, or gatekeepers regarding a blocked person’s involvement in property may be evidence of intent to conceal a continuing interest.
Keep in mind this isn’t just about Iran, North Korea and Cuba. The US currently imposes sanctions touching more than 30 countries, although only the three that I mentioned are subject to near-total trade and financial embargoes. Check out Matt Kelly’s blog for insights into some practical considerations to help your compliance program find and avoid potential sham transactions.
Whatever you may think of the Trump Administration’s policies, you have to admit that these folks are positivelyelite when it comes to generating new risk factor disclosure topics. Anyway, as you sit down to draft or review upcoming Form 10-Q filings, here are some resources that you may find helpful in addressing the disclosure implications of the Iran conflict:
PwC Report on Financial Reporting Implications of Geopolitical Conflict. Among other things, PwC addresses the conflict’s implications on fair value determinations, including the possibility of impairment charges and inventory write-downs, whether expected insurance recoveries can be booked as a receivable, how payments to displaced employees should be accounted for, and the implications of exposure to affected customers and volatility in foreign currency and capital markets.
The memo also highlights various S-K line-item disclosures that may be implicated by the conflict, including Item 303 (MD&A) and Item 105 (Risk Factors). Here are some of the specific risks that the memo suggests companies consider:
– The direct or indirect impact on liquidity, including the inability to transfer funds into affected regions for various purposes (e.g., paying employees, suppliers) or repatriate assets due to banking or exchange restrictions; this includes payments from third parties, subsidiaries, and affiliates
– The direct or indirect impact on operations for companies selling into or obtaining products or commodities from affected regions and other impacted territories
– Supply chain disruptions or increased commodity prices
– The loss of key customers or suppliers
– The impact of inflation, considering operations in affected regions as well as the global implications
– The risk of cyberattacks
– Impairments of operations impacted by the conflict (e.g., potential expropriation of operations)
– Impacts on stock price (e.g., due to investor sentiment related to a company maintaining operations in affected regions or economic and market implications resulting from the conflict)
Sidley Restructuring Update: Iran, the Strait of Hormuz, and the Distress Risks Ahead. Sidley addresses the direct and indirect disruptions that may result from the war, including energy price spikes, shipping disruptions, supply chain issues affecting various chemicals, the risks of potential Iranian retaliation, and the risks of redirected government funding in the event of a long-term conflict. The memo also identifies the specific industry sectors likely to be most affected by the hostilities. Here are some of the key takeaways:
– Public companies should reassess their risk disclosures, including whether acute developments warrant updated risk factors, management discussion and analysis reporting, or a Form 8-K. Management teams should also consider whether board-level decision making is calibrated for a fast-moving geopolitical event.
– Public and private companies should assess near- and medium-term liquidity against assumptions of higher energy and input costs, shipping delays, weaker demand, and no near-term rate relief. That review should examine maturities, covenants, revolver availability, and triggers for engaging creditors or sponsors before markets deteriorate.
– Companies should anticipate that financial stress from a prolonged Iran conflict may catalyze creditor groups and other stakeholders to organize, with lenders, bondholders, trade creditors, and sponsors seeking to protect their positions amid deteriorating financial conditions.
Finally, there’s one more resource I recommend to help you keep your perspective in these challenging and uncertain times. It comes from Abraham Lincoln, who knew a thing or two about challenging and uncertain times. In 1859, Lincoln gave a speech at the Wisconsin Agricultural Society. Here’s an excerpt from the speech’s final paragraph:
It is said an Eastern monarch once charged his wise men to invent him a sentence, to be ever in view, and which should be true and appropriate in all times and situations. They presented him the words: “And this, too, shall pass away.”
Hang in there, everyone. This too shall pass away.
