No one likes waiting in line, especially (I assume) the world’s richest people. So I guess it shouldn’t come as a surprise that part of the planning for the SpaceX (plus xAI) IPO is figuring out how to accelerate entry into major stock indexes that otherwise have lengthy (sometimes longer than the lockup) waiting periods. Think amusement park fast passes, but this one is about avoiding rollercoaster-like post-IPO period stock price volatility by balancing supply and demand. The WSJ reports:

Advisers for the company . . . have reached out to major index providers . . . to discuss how SpaceX and this year’s other hot startups might join key indexes sooner than normal, according to people familiar with the matter.

Companies typically must wait several months or a year after their public debut before gaining inclusion in a major index such as the S&P 500 or the Nasdaq-100. Inclusion unlocks access to retail and institutional capital from funds, particularly those mimicking the performance of indexes that have to hold the companies in the index.

The traditional waiting period is intended to give the companies time to demonstrate that they are stable and liquid enough to handle extensive buying from index funds.

SpaceX hopes to skirt traditional rules in an effort to bring liquidity to its shareholders sooner as part of its planned IPO. SpaceX advisers have sought index policy changes that would fast-track its entry into major indexes for the company and benefit other highly-valued private companies, the people said.

Just earlier this week, Nasdaq posted a Nasdaq-100 Index Consultation seeking feedback from market participants on potential methodology changes, including a 15-trading-day “fast entry” for newly Nasdaq-listed large (top 40) companies.

The D.C. federal district court recently addressed Elon Musk’s motion to dismiss the highly anticipated SEC lawsuit regarding Musk’s publicly scrutinized Twitter stock beneficial ownership reporting back in 2022. Musk had disclosed his ownership stake in Twitter on a Schedule 13G, more than 20 days after crossing the 5% threshold, and one day before filing a 13D reporting that he’d accepted a seat on Twitter’s Board.

In the motion to dismiss, Musk argued:

– Section 13(d) unconstitutionally forces speech
– Rule 13d-1 is unconstitutionally vague
– The SEC is selectively enforcing Section 13(d)
– SEC Commissioners are unconstitutionally protected from removal

The court found that “the balance Congress struck in Section 13(d) does not violate the First Amendment” and Rule 13d-1 is not unconstitutionally vague. It also found that Musk hadn’t presented enough evidence (for now) for a “selective enforcement” defense. (As John has shared, Section 13(d) enforcement is not unusual.) On the last point, the court said briefing was “woefully inadequate” for the court to address the issue, but also that:

Ultimately, the Supreme Court has cautioned that “the unlawfulness of [a] removal provision does not strip [an agency head] of the power to undertake the other responsibilities of his office” [. . . and] Mr. Musk has not shown that dismissal of the SEC’s Complaint is an appropriate response to the SEC Commissioners’ purported unconstitutional protections from removal.

If you read the related documents in full, remember that the activities that are the subject of this complaint preceded the amendments to Regulation 13D-G that were adopted a little over two years ago that tightened the filing deadlines.

For busy audit committee members, there are almost too many great annual publications with suggestions for your annual audit committee agenda. Luckily, Dan Goelzer’s latest Audit Committee and Auditor Oversight Update shares summaries and key takeaways, along with this 2026 audit committee action plan from the Center for Audit Quality (CAQ) that distills them into 10 succinct points.

This article from Nasdaq’s Chief Economist & Director of Economic Research attempted to answer how much mandatory quarterly reporting costs public companies. They looked at the total cost of SEC reporting, including audit & consulting fees plus systems and technology expenses:

Experts estimate that total annual SEC compliance costs, including audit costs, range from below $0.5 million for small companies to $5+ million for large companies – averaging roughly $2.3 million per company. For all U.S. companies, that adds to roughly $9 billion a year.

Then, by comparing disclosure requirements and page lengths of various forms (10-Ks are only twice as long as 10-Qs!) and considering FPI disclosures and 8-K requirements, they estimated that moving to semi-annual reporting would reduce SEC reporting costs by half and “add roughly $45 billion to U.S. market valuations.”

Corp Fin Director Jim Moloney also addressed the possible shift away from mandatory quarterly reporting at SRI, noting that it may be voluntary, with companies being able to choose between one or three 10-Qs. He said life sciences companies with one product candidate, for example, may not feel the need to put so much information into the market since investors are focused on limited data points — like remaining cash, trial data and regulatory approvals. And for companies that file one 10-Q, Form 8-K might be used for flash numbers to allow stock buybacks, etc.

One big, open question seems to be how much information and engagement the street expects for non-10-Q quarters. If companies also forego earnings calls for those quarters, that would significantly reduce the burden on financial reporting teams and on public company CEOs & CFOs.

– Meredith Ervine 

Actually, not just “IPO time.” FPIs were likely figuring this out recently. And this is a perennial question. Public companies usually confirm executive officer designations annually, which often means continuing last year’s list, but this discussion arises when there are officer hires, departures, and promotions.

And anyone who’s dealt with this knows it’s not always cut-and-dry. Corp Fin Staff will not provide advice or concurrence regarding a determination, and companies must apply the facts and rely on the rule itself, judicial decisions and various statements by the Staff for insight when making the determination. To that end, as Alan recently shared and discussed during his recent annual webcast “Alan Dye on the Latest Section 16 Developments” on Section16.net (replay available), the SEC listed several factors it believed established that a company employee was an executive officer and should have been treated as such in a cease-and-desist order against Ammo, Inc. in December 2025. If you’re on the fence about whether anyone should be so designated, these factors may be helpful.

– The individual shared an office suite with the CEO and the two were in almost daily contact
– The individual received more compensation than any named executive officer besides the CEO in several fiscal years
– The individual’s job responsibilities included:

• Providing input on key corporate decisions
• Soliciting individuals to join Ammo’s board of directors
• Serving on Ammo’s advisory board
• Identifying and participating in the hiring of other officers
• Developing the strategy for and executing corporate finance and fundraising activities
• Identifying and leading negotiations for corporate acquisitions
• Participating in hiring and terminating senior employees
• Preparing materials for and attending meetings of the board of directors
• Reviewing corporate financial projections
• Playing a strategic role in procuring manufacturing equipment and raw materials
• Identifying vendors and negotiating and signing contracts with vendors
• Approving payments to vendors
• Identifying and recommending a contractor (his brother’s company) to build a new manufacturing facility
• Directing the content of and review of financial statements and filings
• Drafting, reviewing, and editing press releases, earnings releases, and earnings call scripts
• Leading Ammo’s investor relations activities, including by meeting with investors and responding to analysts

For more, see our “Checklist: ‘Executive Officer’ Determinations” on TheCorporateCounsel.net and the great discussion in Romeo & Dye’s Section 16 Treatise.

– Meredith Ervine 

Late last month, the FTC held a workshop called “Moving Forward: Protecting Workers from Anticompetitive Noncompete Agreements.” The panel included statements by FTC Commissioners that gave some insight into how the current commission might approach noncompetes (full transcript here). As this HR Dive article reports:

Federal Trade Commission officials and witnesses offered many critiques of noncompete agreements during a public hearing Tuesday, but little in the way of proposals that would match the scope of the agency’s short-lived nationwide ban on the agreements.

Noncompetes can have anticompetitive effects on workers, employers and consumers, said FTC Chairman Andrew Ferguson, adding that the commission would pursue enforcement against agreements that lack a sufficient justification and that have adverse effects. However, he decried the Biden-era FTC’s effort to issue a blanket prohibition as an overreach [. . .]

In lieu of a similar effort, Ferguson said FTC would take an approach of “education through enforcement,” recognizing that noncompetes may advance some pro-competitive employer interests but that they also must be narrowly tailored to achieve an employer’s goals.

The workshop followed a recent FTC enforcement action, several letters sent to healthcare companies warning of the use of noncompetes and a broad request for information seeking tips for further enforcement actions.

– Meredith Ervine 

The SEC’s Office of the Advocate for Small Business Capital Formation will host the 45th Annual Small Business Forum from 1:00 to 5:00 pm ET on March 9 at the SEC’s Headquarters (plus a live webcast). Registration information and the full agenda will be available soon. As the announcement notes, “What makes the Forum unique is the opportunity for the public to suggest and prioritize capital-raising policy recommendations that will be delivered to Congress.” The Q&A about the event explains:

What is the Forum?  The Forum is an annual event that brings together members of the public and private sectors—including entrepreneurs, small business leaders, investors, and those that support them across the small business ecosystem—to discuss and provide suggestions to improve securities policy affecting how companies raise capital from investors.

The Forum culminates in policy recomendations. How do audience members participate? We invite all participants to provide policy recommendations in advance of the live event. The event culminates with an opportunity for all participants – whether attending in person or virtually – to vote to prioritize the submitted recommendations. The top recommendations are published in a report that the SEC delivers to Congress.

If ever there was a year to submit your thoughts, this is it! Filer status and capital formation are on the Commission’s rulemaking agenda, and SEC Staff members have reiterated the current “open door policy” at every speaking event. It seems pretty clear that public input is welcome, even outside these more formal opportunities. So, here’s how to do that:

Please submit your policy recommendations in advance by emailing them to smallbusiness@sec.gov by 12:00 p.m. ET March 5. Voting will open at the end of the event and remain open until 9:00 p.m. ET on March 9.

– Meredith Ervine 

Maybe I’m dating myself with this reference. There’s certainly no dearth of movies about AI turning against humans. (I’m not talking about yesterday’s SaaS-stock-pocalypse). If you’re looking to do a thematic movie marathon, here’s a list from IMDB. Some are even kid-friendly, like Mitchells vs. the Machines (a household favorite). But also at this point, why bother? You could just read the news! I’m talking about Moltbook, of course. ICYMI (do you live under a rock?), it’s a new social network where chatbots, and solely chatbots, are having free-form conversations. (Reddit for AI?) The NYT reports:

The chatty bots became the talk of Silicon Valley and an elaborate Rorschach test for belief in the current state of A.I. According to countless posts on the internet and myriad interviews with The New York Times, many saw a technology that could make their lives easier. Others saw more of the A.I. slop that has been filling the internet in recent months. And some saw the early signs of bots conspiring against their creators.

On that last note, we’ve seen that before. Over the summer, Anthropic issued a report on “Agentic misalignment.” It detailed a simulation that resulted in an AI system blackmailing a company manager, which John has coined the “Hal 9000 problem” on the AI Counsel blog.

This risk is not lost on AI company CEOs. Anthropic CEO Dario Amodei just published an essay about the “risks of powerful AI.” He also opens with one of my favorite movies, Contact.

[T]he main character, an astronomer who has detected the first radio signal from an alien civilization, is being considered for the role of humanity’s representative to meet the aliens. The international panel interviewing her asks, “If you could ask [the aliens] just one question, what would it be?” Her reply is: “I’d ask them, ‘How did you do it? How did you evolve, how did you survive this technological adolescence without destroying yourself?” When I think about where humanity is now with AI—about what we’re on the cusp of—my mind keeps going back to that scene [. . .] I believe we are entering a rite of passage, both turbulent and inevitable, which will test who we are as a species. Humanity is about to be handed almost unimaginable power, and it is deeply unclear whether our social, political, and technological systems possess the maturity to wield it.

Yikes! (This is the point where you say, aren’t I reading a securities law blog?) Well, as this is happening, the business news is abuzz about not just two but three AI unicorns racing to IPOs, and I can’t wait to see the disclosures. Specifically, I’ve been wondering (probably because of Matt Levine writing about AI catastrophe bonds) whether the “our AI might destroy humanity” risk might appear in the IPO prospectuses.

Like Matt Levine, I’m being a little tongue-in-cheek here. I mean, the point of risk factors is to describe what makes an investment speculative or risky and to protect the company against lawsuits. “Investment” risk assumes investment is still a thing we can all do, plus who could sue in an AI extinction scenario? How our brokerage accounts or 401ks are performing will be the least of our worries. On the other hand, this is the worst risk, and also something that the CEOs of all of these companies have publicly speculated about, so it would also seem strange if “AI could transform the world for better” isn’t balanced with “AI could also end the world.”

I did spend 5 minutes running a few pretty ridiculous keyword searches on EDGAR, and found some disclosures that “some AI scenarios present ethical issues or may have broad impacts on society,” which is then connected to reputational harm. I guess the idea is “If customers or investors perceive that our AI might destroy humanity, you might lose some or all of your investment.” And I guess that’s the right answer. Of course, it’s written like this:

If we enable or offer AI solutions that are controversial because of their purported or actual impact on human rights, privacy, employment or other social issues, we may experience reputational harm.

OR

Some uses of AI will present ethical issues and may have broad effects on society. In order to implement AI responsibly and minimize unintended harmful effects, we have already devoted and will continue to invest significant resources to develop, test, and maintain our products and services, but we may not be able to identify or resolve all AI-related issues, deficiencies, and/or failures before they arise. Unintended consequences, uses, or customization of our AI tools and systems may negatively affect human rights, privacy, employment, or other social concerns, which may result in claims, lawsuits, brand or reputational harm, and increased regulatory scrutiny, any of which could harm our business, financial condition, and operating results.

Will the pure-play AI unicorns come up with a new way to say this? I hope so.

– Meredith Ervine

Officers and directors of foreign private issuers will become subject to Section 16(a)’s reporting requirements on March 18. Ten percent owners were notably not covered by the SEC’s announcement, and not everyone is happy about this. As noted last week on Alan Dye’s Section16.net blog, the three scholars whose 2022 research paper led to the enactment of the Holding Foreign Insiders Accountable Act have filed a rulemaking petition asking the SEC to adopt rules implementing the Act before the mandatory compliance deadline. Here’s more from the blog:

While the Act’s rescission of the Section 16(a) exemption for (certain) insiders of foreign private issuers becomes effective on March 18 regardless of whether the SEC adopts implementing rules, the petition states that the SEC should clarify the scope of the Act by extending 16(a) to ten percent owners as well as directors and officers (which the petition says is at least implicitly mandated by the Act).

The petition also asks the SEC to (1) make clear that Section 16(a) applies to an FPI’s directors by deputization and (2) focus FPIs on the definition of “officer” so they don’t develop underinclusive lists based on the law or customs of the FPI’s home jurisdiction.

The petition also recommends that, when considering whether to exempt insiders from Section 16(a) because their home jurisdiction imposes substantially similar reporting requirements, the SEC take into account (1) whether the foreign jurisdiction imposes a filing deadline comparable to the two-business-day deadline for Form 4, (2) whether filings are made in English, and (3) whether filings are made electronically, allowing easy access by other investors.

For more information on what’s coming for FPIs, see this detailed Mayer Brown blog and our resources on Section16.net.

And don’t forget to join today’s webcast “Alan Dye on the Latest Section 16 Developments” at 1:30 pm ET. Section16.net members are able to attend this critical webcast at no charge. The webcast cost for non-members is $975. If you’re not yet a member, sign up now by sending us an email at info@ccrcorp.com — or calling us at 800.737.1271.

– Meredith Ervine 

Fiscal 2025 was an outlier year for SEC enforcement. Activity dropped, according to White & Case, to its lowest levels in a decade, owing to several trends (e.g., staffing, the fall 2025 shutdown, and expanded requirements for Commission approval), some of which are continuing into fiscal 2026. It’s probably also due in part to the SEC’s “back to basics” enforcement approach to pursue “those who lie, cheat, and steal.” While that probably means we won’t see the “gotcha” type enforcement actions that really scare financial reporting professionals (like ones premised on allegedly deficient disclosure controls with no related disclosure violation), that doesn’t mean we won’t see disclosure cases continue to be brought by the current Enforcement Staff or that every accounting case will be based on claims as clear cut as fabricating revenue.

Just last week, the SEC announced settled charges against Archer-Daniels-Midland Company (ADM) and certain former executives for materially inflating the performance of a key business segment. This seems like a classic earnings management case (albeit one involving intersegment adjustments), so no surprise that this would still be in the crosshairs. But there’s more to take away from the settlement. Since it was announced during Northwestern Pritzker School of Law’s Securities Regulation Institute, the enforcement panels had a recent case to discuss, and I benefited from their wisdom.

During the “SEC Enforcement and Investigations” panel, Davis Polk’s Fuad Rana described the charges as involving real accounting issues that require judgment, noting that this was the first time this administration has pursued an accounting theory that wasn’t fabricating revenue or hiding expenses, and it still brought a scienter-based fraud charge. (ADM had restated its financials, and a criminal investigation had been opened, but closed with no charges.) He also said it was unclear what benefits the company derived from cooperation and remediation. It still received the highest charge and a penalty, although its penalty might have been lower than it would have been in the absence of the cooperation and remediation. He acknowledged there was a focus on individual accountability, but said this settlement looked similar to past accounting cases.

As John shared a few years ago, discussions about “meeting analysts’ expectations” and “making our numbers” should raise a big red flag for anyone who hears them. In the moment, they may be mis- (or accurately) interpreted as encouragement to improperly get creative with numbers, and even if they don’t, might at least give that impression if later viewed by a regulator or private litigant.

– Meredith Ervine