In remarks last week at the MFA Legal & Compliance Conference, the SEC’s newly minted Enforcement Director, David Woodcock, outlined how he intends to lead the Division and what that means for current enforcement priorities. Here’s an excerpt:
As a matter of first principles, my goals are aligned to those of Chairman Atkins: to return the enforcement program back to basics. That means vigorously protecting investors and safeguarding markets, while also providing transparency and certainty to those we regulate.
A quick aside, there has been considerable attention paid to the decline in the number of cases brought over the last several years. Let me be clear: this Commission has deliberately shifted toward an emphasis on quality over quantity, and I fully support that direction.
Our focus is, and will remain, on protecting investors and safeguarding markets from real harm. That means identifying and stopping fraud and manipulation in all its forms—for instance, offering frauds, accounting and disclosure fraud, insider trading, market manipulation, fraud by foreign actors targeting U.S. markets and investors, and breaches of fiduciary duties by advisers misusing client assets.
To emphasize the Division’s focus on rooting out fraud, David has reinstituted the “Retail Fraud Working Group” – which focuses on protecting retail investors and strengthening coordination with state and federal partners. The speech says we’ll hear more on this in the coming weeks.
Another key takeaway from the speech is that the Commission is committed to distinguishing fraud from errors – and calibrating remedies accordingly. But investigative targets who want to try to show that their missteps were unintentional will have to be able to make a case with evidence and facts. According to these remarks, the Division will also look favorably on self-reporting and cooperation. Here’s more detail on that point:
A company that self-reports, cooperates fully, and remediates will not be treated the same as one that conceals or obstructs.
The takeaway is simple: engage early, engage seriously, and engage candidly. If your client operates in a gray area, take advantage of the Commission’s stated commitment to pre-enforcement dialogue. If we misunderstand your business model, use that opportunity to clarify. The days when a subpoena was our primary tool of communication are behind us.
That being said, I want to emphasize that the Division’s staff are some of the finest securities lawyers anywhere. Zealous client advocacy by defense counsel is wanted and expected, but I ask that you respect the Division chain of command, and not assume that you as counsel have a perfect understanding of the Commission’s priorities and what cases will or will not ultimately be brought. Similarly, respect and dialogue go both ways. You should treat our staff with the utmost respect, because that is how we aim to treat you.
Check out this Cleary memo for more color on David Woodcock’s impact on the Division and its priorities.
We don’t blog much about Delaware Superior Court decisions, but in this D&O Diary blog, Kevin LaCroix highlights a recent case that’s worth a read. Here’s Kevin’s intro:
One of the perennial D&O insurance issues involves the question whether “disgorgement” amounts awarded in SEC proceedings represent “penalties” for which insurance coverage is precluded. In the latest example of a case involving these issues, the Delaware Superior Court recently held, in reliance on the statutory provisions defining the SEC’s authority to seek monetary remedies, that the disgorgement amounts and prejudgment interest awarded against a large media company are not “penalties” for which coverage is precluded. As discussed below, the court’s analysis of the issues, and its reference to the relevant statutory provisions, is both detailed and instructive.
In explaining the decision and its implications, Kevin says:
Although I continue to view the Delaware Superior Court as generally favorable to policyholders, I don’t think this generalization explains the court’s decision here. I don’t think the court’s decision here can be understood as yet another example of this court’s policyholder proclivity.
The court’s reasoning here about whether or not “disgorgement” is a “penalty,” and therefore precluded from coverage, is based on the language of the statutory provisions authorizing the monetary remedies the SEC may seek. The court found a distinction in the statutory language between “penalties” on the one hand and “disgorgement” on the other, and, more importantly for purposes of the issues in dispute here, the court found further that the words used in the relevant policy provision “mirror” those securities law statutes. Both the statute and the policy provision, the court said, “delineate” between penalties on the one hand and disgorgement on the other.
In other words, the court’s decision is grounded in the relevant statutory provisions and corresponding policy language. Moreover, this connection to the relevant statutory provisions was sufficient for the court to reject the insurer’s attempt to rely on seemingly contradictory dictionary definitions of the term “penalties.”
As Kevin notes, the insurer is likely to appeal – and disputes on this issue are likely to continue. Here are his parting thoughts:
I suspect that in the future policyholders seeking coverage for disgorgement amounts will try to marshal the arguments that were successful here – that is, that the relevant statutory authority allowing the SEC to seek monetary remedies draws a distinction between “penalties” on the one hand, and disgorgement on the other hand, and that the relevant policy language “mirrors” this distinction.
In this 27-minute episode of the Women Governance Trailblazers podcast, Courtney Kamlet and I spoke with Suzanne Miglucci, who is a board-readiness coach, Chair of the NACD’s Research Triangle Chapter, and has held CEO, CMO and independent director roles at various companies. We discussed:
1. Suzanne’s career highlights from her various roles, including her time as CEO of Charles & Colvard and her time as CMO at ChannelAdvisor.
2. Leveraging technology and trusted resources to stay informed on current governance issues.
3. Tips for expanding and maintaining a professional network.
4. Top three pieces of advice for C-suite leaders who are seeking executive coaching or board readiness training.
5. Suzanne’s advice for the next generation of women governance trailblazers.
To listen to any of our prior episodes of Women Governance Trailblazers, visit the podcast page on TheCorporateCounsel.net or use your favorite podcast app. If there are governance trailblazers whose career paths and perspectives you’d like to hear more about, Courtney and I always appreciate recommendations! Drop me an email at liz@thecorporatecounsel.net.
The last time we blogged about the folks from the r/wallstreetbets subreddit was during the height of the pandemic’s meme stock craze. I was pretty dismissive of them back then, but I’ve gotta tip my hat to them for the comments they recently submitted on the SEC’s semiannual reporting proposal. Not only do they raise some pretty good points, but they do so through an endearing and amusing mix of self-deprecation and sarcasm. For example, there’s this:
We understand the Commission is more accustomed to receiving comment letters from people who use words like “stakeholder ecosystem,” and we will try to keep up. A word on who we are, we are self-directed retail investors. Some of us are very good at this and some of us are, in the technical securities law sense, terrible at it. Many of us learned what a 10-Q was the hard way, which is to say we bought a stock, watched it fall 40% on an earnings release, and then read the filing to find out why. That is a stupid order of operations and we acknowledge it. But it is also the entire mechanism by which a generation of retail investors taught itself to read financial statements, and the Commission is now proposing to cut that mechanism in half.
And then there’s this:
We also want to register, respectfully, our objection to the suggestion that quarterly reporting is a burden the Commission can lift to help companies focus on the long term. The companies we trade are not being held back from greatness by the obligation to file four reports a year. Apple files a 10-Q every quarter and has nine hundred billion dollars in cash equivalents. Nvidia files a 10-Q every quarter and is worth more than the GDP of most G20 countries. The entire S&P 500 files a 10-Q every quarter, and the S&P 500 is at an all-time high. If quarterly reporting is crushing American capitalism, American capitalism is hiding it well. We have looked.
To paraphrase Jerry Maguire, you had me at “that is a stupid order of operations. . .” The only negative is one that undoubtedly would have been pointed out to the authors by their fellow Redditors if this was posted on that website – it’s a 750 word wall of text without any paragraph breaks. The folks at Securities Docket flagged this problem as well, and commented “C’mon man! Just hit “Return” on the keyboard a couple times!”
Still, I wonder if Securities Docket may be pointing the finger at the wrong culprit. This seems to be a problem with a lot of comments on the SEC’s website that don’t attach a .pdf, so maybe the problem is with the SEC’s interface? In any event, whoever is to blame obviously hasn’t gotten the message that every Reddit user has heard repeatedly – “paragraphs are your friend.”
UCLA Law Professor Stephen Bainbridge recently submitted a comment letter supporting the SEC’s proposal to permit semiannual reporting. Among other things, the letter acknowledges that a “status quo bias” will deter many companies from initially making the switch, and then goes on to speculate about what types of companies are likely to eventually opt-in. These excerpts provide some details:
Smaller Companies with Higher Reporting Costs. The most natural candidates for electing semi-annual reporting are smaller reporting companies for whom the compliance burden of quarterly reporting is highest relative to the informational benefit investors derive from it. As noted above, the quarterly preparation of Form 10-Q—including financial statement preparation, auditor review, MD&A drafting, and officer certification—imposes fixed costs that fall disproportionately on companies with smaller finance and legal functions.
Companies with Longer-Horizon Investor Bases. Companies whose investor bases have longer investment horizons are also more likely to elect semi-annual reporting successfully. Companies with significant founder or family ownership, companies backed by patient institutional capital, and companies in industries where current-period earnings are poor proxies for long-run value are natural candidates.
Industry Considerations. Certain industries present a natural fit for semi-annual reporting. Companies engaged in long gestation projects—biotech and pharmaceutical firms awaiting regulatory approvals, capital-intensive infrastructure and energy companies, and early-stage technology firms where current losses are priced against multi-year growth expectations—may find that quarterly disclosures add little decision-relevant information for investors already pricing future cash flows over extended horizons. The IPO evidence discussed above supports this intuition: investors in such companies are demonstrably capable of thinking far beyond the current quarter.
Prof. Bainbridge suggests that the companies least likely to depart from quarterly reporting are those with large & active institutional ownership and those in industries, like financial services, retailers with seasonal patterns, and cyclical business, where quarterly results are highly material to market valuations.
The consulting firm Alix Partners recently issued its 2026 U.S. Risk Survey, which analyzes the top risks facing U.S. corporations based on responses from 500 senior executives in legal, compliance, and regulatory roles. The survey found that cybersecurity incidents are of greatest concern to respondents (65%), but that only 48% say that their organizations are “very prepared” to address cyber threats. Here are some other highlights from the survey:
– Financial crime. Fewer than half (48%) of respondents feel “very prepared” to address financial crime and fraud in 2026. Technology investment remains the top resource to combat it—yet confidence in risk-detection technologies dropped 20% year-over-year.
– AI-related risk. Accelerating AI adoption poses internal and external risks, with about half of organizations still lacking key elements of AI governance, such as an AI governing body/committee. The share who see AI-powered attacks as a top cybersecurity concern doubled from 2025—to 34% from 17% last year—but nearly three quarters (74%) have not completed system upgrades to address such threats.
– Data privacy. Nearly six in 10 (58%) cite data privacy as among the most concerning risk events their organizations face, but action lags awareness. Only 50% say their organizations are enhancing or plan to enhance data encryption, for instance, even though 73% say that measure is among the most important to address data privacy challenges for companies in their industry.
– Cryptocurrency. A majority (59%) is either already using crypto for payments and transactions or testing use cases. Yet the lack of more involved safeguards heightens risk: fewer than half (45%) have escalation and off-ramp procedures in place, while just 44% conduct third-party risk assessments for BaaS/fintech partners.
– Sanctions. Amid mounting geopolitical tensions, only about a third (35%) of organizations are “very prepared” for potential changes in sanctions, compared to 44% who said the same in 2025.
The survey also found that 63% of respondents expect corporate disputes to rise due to increased litigation exposure associated with economic uncertainty and AI-driven upheaval, while 80% said that developing federal AI policy poses strategic risk to compliance efforts in an increasingly fragmented regulatory landscape.
The latest issue of Deloitte’s Board Practices Quarterly reports the results of a recent Society for Corporate Governance survey of corporate secretaries, in-house counsel, and other governance professionals from 76 public companies and 17 private companies of varying sizes and industries.
The survey was conducted during Q4 of 2025 and looked into organizational crisis preparedness and governance. Covered topics included crisis plan formalization, types of crises addressed in the plan, management functions that participate in crisis teams, and the role of the board of directors. This excerpt addresses some of the highlights:
– Cybersecurity incidents/data breaches are commonly reported crises: Public companies most often report facing reputational, cybersecurity incident/data breach, and supply chain/geopolitical crises, while private companies most often report facing regulatory investigations, cybersecurity incident/data breach, and major litigation.
– Many have plans, but associated practices vary: Most respondents report having a formal, documented crisis management plan, but whether and how often the plan is reviewed or tested varies across organizations.
– Coverage gaps exist between “experienced” and “planned for” crises: Survey results indicate gaps between crises organizations have experienced and those anticipated and included in crisis plans. Some crises (like major litigation and regulatory investigations) are experienced more often than they are included in plans.
– Readiness practices differ: Most companies define when their board should be involved in a crisis, but whether companies delineate board vs. management responsibilities in a crisis yielded disparate results (25%–73%).
I found a few of the survey’s results a little surprising. For example, nearly one-third (31%) of public companies surveyed did not have a specifically and/or formally defined role for the board in crisis management preparation, and only 15% of public company boards participated in scenario planning or tabletop exercises.
Unlike the past couple of years, nobody’s been running around with their hair on fire about proposed changes to the DGCL, so you may have missed the news that the Delaware General Assembly passed this year’s amendments. Here’s the official synopsis:
Section 1. Section 1 of this Act confirms that if a certificate of incorporation includes a provision that “opts out” of the class vote specified in § 242(b)(2) of Title 8 to increase or decrease the number of shares of a class of stock authorized for issuance, including a provision that requires the affirmative vote of the holders of a majority of the stock (or a majority of the votes of such stock) entitled to vote, that “opt out” will not be deemed an express provision that has the effect of “opting out” of the default provisions of § 242(d). Instead, § 242(d) will apply unless the § 242(b)(2) “opt out” expressly states that the corporation is not governed by § 242(d)(1) or (2), or the § 242(b)(2) “opt out” provision specifies a greater or additional vote to increase or decrease the authorized number of shares of 1 or more classes of stock.
Section 2. Section 2 of this Act amends § 275 of Title 8, which addresses the dissolution of a corporation. New § 275(h) provides that the authority and responsibilities of the registered agent of the corporation terminate at the time the dissolution of the corporation becomes effective, except with respect to service of process that the registered agent has received before that time. New § 275(i) establishes procedures for the Secretary of State to accept service of process for a dissolved corporation after the dissolution has become effective. The amendments to § 275(d) and (f) require a corporation to include in its certificate of dissolution an agreement that the dissolved corporation may be served with process in the State by service to the Secretary of State in accordance with the Secretary of State’s rules and regulations.
Section 3. Section 3 of this Act amends § 312(j) of Title 8, which addresses the revival of the certificate of incorporation of a nonstock corporation if the certificate has become forfeited or void. The amendments delete reference to actions taken by members of a nonstock corporation who are entitled to vote on a dissolution of the corporation. The provisions of § 312(j), when read together with § 312(h), contemplates member action only to elect persons to the governing body of the corporation if there are no such persons then in office to revive the corporation. Because no action by members entitled to vote on a dissolution is required for revival, the reference to these members is being deleted. In addition, because no member action is required to revive a corporation if there are persons then serving on the governing body of the corporation, amended § 312(h) also clarifies that member action will be taken for a revival only “if any” member action is necessary.
Section 4. Section 4 of this Act provides that this Act takes effect on August 1, 2026. This Act requires a greater than majority vote for passage because § 1 of Article IX of the Delaware Constitution requires the affirmative vote of two-thirds of the members elected to each house of the General Assembly to amend the general corporation law.
The legislation will now be sent to Governor Matt Meyer for signature, and as noted above, the amendments will go into effect on August 1st.
I’ve got a feeling that we’ll all be drinking water through a firehose over the next several months when it comes to new SEC guidance and rulemaking – and that means our 2026 Proxy Disclosure and Executive Compensation Conferences on October 12th & 13th in Orlando, Florida are going to be more essential than ever! With an agenda featuring two days of fast-paced, topical panels, an all-star speaker lineup, and Dave Lynn’s interview with Corp Fin’s Deputy Director Christina Thomas, attendees will receive critical insights into the latest SEC rulemaking initiatives and developments in governance, disclosure practices, activism & shareholder engagement, and executive compensation.
By the way, keep an eye on our agenda – if the next few months are as action-packed as we expect them to be, we’ll tweak it as necessary to ensure that we’re bringing you the most up-to-date information on the SEC initiatives that mean the most to you and your clients.
Register online at our conference page or contact us at info@CCRcorp.com or 1-800-737-1271. If you register now, you can take advantage of our discounted “early bird” rate!
Ideagen/Audit Analytics recently issued its 2026 report on comment letter trends. The report looks at comment letters issued during the period from 2016-2025. Here are some of the highlights:
– The total number of comment letter conversations referencing periodic filings declined overall in the past 10 years. However, prior to 2025, there had been a slight rebound in the trend. Total conversations were at their highest in 2016, with 1,485 conversations started, and dipped to a low of 545 in 2021. In 2022, there was a nearly 76% increase in comment letter conversations from 2021, the highest amount seen since 2017. Conversations remained elevated in 2023 at 1,074 before declining to 975 in 2024. The 2025 figure of 423 conversations reflects data disseminated through March 6, 2026; conversations initiated in the later part of 2025 may not yet be publicly available, which may account for the lower volume relative to prior years.
– For 2025, results of operations was the leading issue, referenced in 140 conversations and comprising 33% of all conversations started during the year. This figure combines references to both the results of operations disclosure topic and SEC Release No. 33-8350, which addresses the same MD&A guidance. Financial statement segment reporting was the second most common issue in 2025, appearing in 117 conversations and 28% of all conversations — nearly double its 14% share over the full ten-year period — likely driven by the implementation of ASU 2023-07. Non-GAAP measures, which has led this list for the majority of the period, ranked third in 2025 at 26% of conversations.
– For 2025, segment reporting emerged as the leading accounting issue, cited in 117 conversations and 38% of all conversations that included an accounting issue — a significant shift from its third-place position over the full period. Revenue recognition ranked second at 23% of accounting conversations. Research and development issues ranked third in 2025 at 12% of accounting conversations, reflecting increased SEC scrutiny of R&D capitalization and clinical-stage company disclosures, particularly in the Life Sciences sector. Fair value measurement, which ranked first over the ten-year period, did not appear in the 2025 top 10, indicating a notable shift in SEC staff focus.
The report goes into detail about the Staff’s comments on segment reporting and revenue recognition, and notes that the sharp increase in segment reporting comments in 2025 continues a trend that began following implementation of ASU 2023-07 in 2024, and reflects the fact that companies are still adapting their disclosures to the new standard, and the Staff is actively reviewing their efforts. When it comes to revenue recognition, many Staff comments focus on how companies recognize revenue, but many also address disclosure issues relating to disaggregation of revenue information required under ASC 606-10-55-89 through 91.
