Speaking of impact and examples, I think we all have a general sense of just how impactful both proposals will be if adopted. But when you start thinking about the ‘Specifics, Bob,’ I think the benefits to public companies are even more evident. For example, this Davis Polk alert identifies these examples:
IPO companies. Say you are a biotech that is an EGC and an SRC, and you just went public. Under the proposal you are already eligible to use Form S-3 to raise additional capital. And a year out, you have the ability to file a Form S-3 that is automatically effective. If there is an open market window at the beginning of March and you don’t have audited financials yet for the prior fiscal year – you can still go out and do an offering, subject to banks being comfortable with the comfort package, since those would no longer be required that early for a NAF.
Non-WKSIs. An existing public company that’s been reporting for 12 months but currently does not qualify as a WKSI because it does not meet the required thresholds under the current definition would be able to file an automatically effective shelf, immediately raise capital and pay the SEC registration fees at the time of a takedown as opposed to when it files the registration statement. If that same company also shifts from accelerated filer to NAF status under the filer status proposal, it would combine expanded capital-raising flexibility with scaled disclosure obligations, including executive compensation-related disclosures.
ICFR auditor attestation cost savings. For current accelerated filers that would transition to NAF status under the proposed filer status reform, the elimination of the ICFR auditor attestation requirement alone could yield meaningful compliance cost savings. A newly public company would not become subject to the section 404(b) ICFR auditor attestation requirement until at least 5 years after its IPO, regardless of the size of its public float.
deSPACed companies. A company that goes public through a deSPAC transaction would no longer be considered an “ineligible issuer” under Securities Act Rule 405, which means it would be eligible to use Form S-3 like a traditional IPO company provided it meets the other eligibility criteria under the form. It would also benefit from other flexibility, including the ability to use free writing prospectuses like traditional IPO companies and be eligible for SELI and ELI status just like traditional IPO companies, unlike the current framework where WKSI status is not available until at least three years after closing of the deSPAC transaction. Notably, the proposals do not seek to amend either Rule 144(i) or Rule 145. Rule 144(i) currently imposes a rolling 12-month current public information requirement for persons seeking to rely on Rule 144’s safe harbor in reselling securities issued by a deSPACed company, and that requirement never falls away no matter how long the company has been an SEC registrant. Rule 145 currently deems statutory underwriter status on certain parties involved in a deSPAC transaction. So, deSPACed companies would continue to be treated differently in these two respects.
Filer status determination. While companies would continue to assess their filer status annually, they would not be at risk of falling in or out of a particular category based on where their public float was on June 30 of a given year, given the requirement that the relevant threshold be met for two consecutive years. This would give a company visibility into any changed reporting obligations in advance and more time to prepare for any internal controls or other changes it would need to put in place. And it would effectively just need to determine whether it is a LAF or not, a binary choice which in itself brings welcome simplification.
That last one is huge! And on Form S-3 eligibility, no baby shelf! That alone is a game-changer for a lot of companies and their bankers and advisors.
The SEC has announced the agenda for its next Investor Advisory Committee (IAC) meeting, to be held on June 4 at 10 a.m. ET at the SEC’s headquarters and via webcast. The meeting will consist of two panels:
Speaking of quarterly v. semiannual reporting, we will be hosting a webcast later that day at 2 pm ET: “The SEC’s Semiannual Reporting Proposal: Considering the Alternatives.” Our panel of SEC experts – Skadden’s Brian Breheny, WilmerHale’s Meredith Cross, Gibson Dunn’s Tom Kim and Goodwin’s (and our own) Dave Lynn – will discuss the SEC’s semiannual reporting proposal and explore the practical implications of a shift to semiannual reporting for issuers, auditors, underwriters and the markets.
A bipartisan coalition of lawmakers is looking to crack down on Chinese forced labor by exposing Uyghur forced labor in public company supply chains. A new bill proposed in the House of Representatives will require public companies to provide new SEC disclosures listing the following documentation:
“With respect to an issuer, the documentation described under this paragraph is documentation showing whether the issuer or any affiliate of the issuer, directly or indirectly, contains within its supply or production chain—
(A) goods, wares, articles, or merchandise sourced from or through the XUAR, or mined, produced, or manufactured wholly or in part by forced labor identified by mandate of section 2(d)(2)(B)(iv) of Public Law 117–78, including:
(i) the industries contained on the ‘Illustrative List of Industries in Xinjiang in which Public Reporting has indicated Labor Abuses may be Taking Place’ in Annex 2 of the ‘Xinjiang Supply Chain Business Advisory’ (published July 13, 2021) and any successor list; and
(ii) all products listed within ‘high-priority sectors for enforcement’ by the Forced Labor Enforcement Task Force pursuant to Public Law 117–78; or
(B) goods, wares, articles, or merchandise that are mined, produced, or manufactured by an entity engaged in labor transfers from the XUAR or forced labor.”
The Uyghur Forced Labor Prevention Act (UFLPA) was a major piece of human rights legislation in the U.S. It imposed a rebuttable presumption that certain categories of goods produced in China’s Xinjiang region were produced using forced labor. This presumption made these materials very difficult to import into the U.S.
The new disclosure regime pulls the same categories identified in the UFLPA and extends disclosure obligations to companies with such goods in their supply chains. Notably, this law does not limit disclosures to the supply chains of goods imported into and sold in the U.S. This means that multinationals will be obligated to disclose their forced labor exposure globally, even if those supply chains don’t touch U.S. markets. Additionally, the law will require companies sourcing high-risk products to obtain third-party verification of their disclosures.
Who knows where this will go, but if passed, the SEC would have 180 days from the law’s effective date to implement new rules for Uyghur forced labor disclosures.
Last Friday, the SEC announced settled charges against Foot Locker (which has since been acquired) for allegedly violating Rule 21F-17 – the whistleblower protection rule – by including problematic language in separation agreements. Without admitting the findings in the order, Foot Locker consented to the entry of a cease-and-desist order and to pay a $148,000 civil penalty.
According to the SEC’s order, from at least July 2020 through June 2024, approximately 148 departing Foot Locker employees, who were senior executives, directors, and employees in finance, legal, supply chain, and operations, signed separation agreements in order to receive severance payments. The order finds that the agreements contained a provision that purported to waive employees’ rights to receive whistleblower awards from the Commission.
The order includes the offending language:
This Agreement and General Release does not prevent you from filing a charge or participating in an investigation or proceeding conducted by a government agency, including the Securities & Exchange Commission, the Equal Employment Opportunity Commission, the Department of Justice, or comparable state or local agency. However, by signing this Agreement and General Release, you understand and agree that you are waiving the right to receive any award of monetary or other benefits or any other legal or equitable relief whatsoever resulting from any such charge or proceeding by you, anyone else on your behalf, or otherwise, unless this Agreement and General Release is invalidated. You agree to waive such personal relief even if it is sought on your behalf by an agency, governmental authority or a person claiming to represent you and/or member of a class.
Like in prior enforcement actions, the action was brought despite no indications that Foot Locker ever sought to enforce the provision or that it actually did impede reporting, and Foot Locker phased out the award waiver provision in its separation agreements in 2024.
This Debevoise alert says this enforcement action “continues a line of enforcement actions against public and private companies for including language in employment agreements, company policies, and other materials that the Commission has interpreted as having a chilling effect on potential whistleblowers in violation of Section 21F of the Dodd-Frank Act and Exchange Act Rule 21F-17(a) thereunder.” We’ve seen a lot of those actions during other administrations, but the alert continues:
The action serves as a reminder that while the current Commission may be less active in bringing cases involving violations of Rule 21F-17(a), the enforcement staff will continue to pursue instances in which companies include language in their agreements that the staff views as clearly violative.
Public and private companies should review their current employment contracts, separation agreements, and other documents across their businesses to ensure they do not contain language that could be read as prohibiting, discouraging or otherwise interfering with any protected SEC whistleblowing activities. Companies should also ensure that any prior versions of documents with such language are no longer in use.
John and I both delight in unicorn IPO filings. Normally, I have the S-1 up almost immediately. Not so with the SpaceX S-1. There was just so much reporting leading up to it, I was feeling a bit overwhelmed. But then I read an article suggesting it was a good beach read, saying “this thing slaps,” and I finally got up the courage to take a look and wade through the second wave of articles about it. For those feeling similarly fascinated but overwhelmed, here are some highlights in no particular order:
– Layout: The number of color photos throughout is impressive (including an “artist visualization of life on Mars”). There’s also a 7-page glossary of terms (this is rocket science, after all).
– Market & Mission: SpaceX quantifies its addressable market at $28.5 trillion. That sounds less ‘out of this world’ when you read its mission.
Our mission is to build the systems and technologies necessary to make life multiplanetary, to understand the true nature of the universe, and to extend the light of consciousness to the stars. [. . .] For the entirety of its existence, human civilization has lived on a single celestial body: Earth. The current paradigm, in which human civilization is confined to one planet, exposes humanity to existential threats that are unpredictable and uncontrollable on a planetary scale. By moving beyond the only home we have ever known, we ensure species- level redundancy and that the light of consciousness will not be tied to a single planet subject to the inevitable hazards of a harsh and vast universe. We do not want humans to have the same fate as dinosaurs. We want to give them a reason to look ahead with excitement, with the prospect that we are entering an age of abundance with an endlessly prosperous and exciting future.
– Risk Factors: This will not be easy, as detailed in almost 40 pages of risk factors. “We face a number of challenges relating to our business and growth strategy and, ultimately, the achievement of our mission to make life multiplanetary, understand the true nature of the universe, and extend the light of consciousness to the stars.” And there are very ‘down to earth’ disclosures here, since a lot of those challenges are everyday things like FAA licenses.
– CEO Pay: Musk was awarded 1 billion performance-based restricted shares in January 2026. You’ve probably already read that they are contingent upon the company establishing a permanent colony of 1 million inhabitants on Mars. I thought, ok, sure, some part is based on that, then I read: “For any tranche of the award to vest, both the applicable market capitalization milestone for such tranche and the human colony milestone must be met” subject to his continued employment through the date achievement is certified by the board (no time limit). The market cap milestones are staggering, but still . . . (Will this create a new term? ‘Marsshot’ award? In defense of this blog title, the moon also features prominently in the S-1.)
Also, Musk’s xAI award assumed in the merger was canceled and replaced with an award of 300 million performance-based restricted shares based on market cap milestones and 100 terawatt data centers in space.
– Capitalization & Control: SpaceX will have three authorized classes of common stock upon completion of the IPO: Class A (1 vote per share), Class B (10 votes per share) and Class C, which will be authorized but unissued (no voting rights). Musk’s combined voting power disclosed in the Beneficial Ownership Table is 85% (this is pre-offering, but won’t change much). A WSJ article has a nice interactive graphic on SpaceX’s capitalization. Plus, those 1.3 billion restricted shares I mentioned above come with voting rights, and Musk can only be removed as CEO/Chair by a vote of Class B holders, which he controls.
– Protections Against Shareholder Lawsuits: As highlighted by law prof Ann Lipton, Texas law immunizes officers and directors from liability absent a showing of “fraud, intentional misconduct, an ultra vires act, or a knowing violation of law,” and allows companies – as SpaceX has done – to bar derivative claims unless the plaintiff holds 3%. Also, SpaceX has an expansive forum-selection bylaw that names the Texas Business Court, otherwise requires mandatory arbitration and bars class actions, which should either prevent or discourage most state and federal suits. Separately, SpaceX has opted into Texas’s shareholder proposal limitations.
– Conflicts: Through the charter, as permitted by Texas (and Delaware) corporate law, SpaceX renounces certain corporate opportunities that may be presented to Musk and certain directors, and they have no duty to present such opportunities to the company. (On the other hand, the related person transaction disclosure is mostly just what was previously reported and may even be underwhelming compared to some other unicorns.)
– IPO Process: SpaceX is making a sizable allocation of shares available to retail investors. In addition to the underwriters’ retail investor allocations, SpaceX plans to offer shares to retail investors through brokerage platforms, including Charles Schwab, Fidelity, Robinhood, SoFi Securities and E*TRADE.
The IPO also uses a staggered approach to lockup releases and expiration.
Activist investor and advisor Mike Levin and Colorado Law professor Ann Lipton had a detailed conversation about some of these points in the latest episode of the Shareholder Primacy podcast.
– The Office of Data Science has been renamed the Office of Advanced Analytics and Artificial Intelligence to more accurately represent its dedication to enhancing analytical and artificial intelligence capabilities across the Commission. Its initiatives augment Commission staff’s ability to extract insights from data and incorporate evidence-based decisions into mission-critical work.
– The Office of Structured Disclosure has been renamed the Office of Data Standards and Innovation to underscore its work on innovative initiatives and its engagement with data across multiple formats. The name change also highlights a strategic commitment to applying data standards to the information collected by the Commission, making the data more accessible and easier to use.
– The Office of Data Science and Innovation has been renamed the Office of Innovative Data Engineering Analytics and Standards to reflect its subsidiary offices’ name changes and represent the Division’s focus on innovation around data analytics and standards to advance mission capabilities and provide data to the public for easier use.
While we’re on the subject, John and I were recently discussing how the ‘Economic Analysis’ sections of the three recent rule proposals have taken on heightened importance since the rules are focused on supporting capital formation and encouraging more companies to go public. We lawyers can easily find our eyes glossing over as we read those sections (this includes yours truly, which I’m a bit ashamed to say because I majored in Econ and seriously considered continuing in Econ instead of getting a J.D.), but they probably deserve more time and attention right now, especially if you’re submitting a comment letter and can can provide information on compliance costs and other barriers to going public.
Yesterday, during remarks at the Stanford Rock Center for Corporate Governance, SEC Chairman Atkins kicked off the Commission’s request for comments on modernizing the IPO process. Noting that the Staff is “well underway” in its efforts to rationalize public company disclosure requirements (including with respect to executive compensation!), the Chairman noted, “Of course, the incentives for going public are only as effective as the process that companies must navigate to capitalize on them. With that in mind, I have asked the Commission staff to prepare recommendations to modernize the IPO process itself.” That includes the gun-jumping rules:
I routinely hear from companies and their advisors that one of the challenges of the IPO process is navigating the communication—or gun-jumping—rules under the Securities Act of 1933. In light of this, I would like to see any rulemaking in this area include considerable reforms to these rules. When Congress originally enacted the Securities Act, a company could not make any written or oral “offers” to sell securities before a registration statement became effective. But as Linda Quinn—a former director of the SEC’s Division of Corporation Finance—once questioned, “[d]o we need to continue to register offers?”
Over time, both Congress and the Commission eased the prohibition on offers. However, the Commission’s spider web of gun-jumping prohibitions and exceptions remains difficult to maneuver. Moreover, the last time that the Commission implemented significant reform in this area was more than 20 years ago. The ways in which businesses communicated with employees, customers, and potential investors at that time bears little resemblance to how they do so now. As the Commission staff prepares its recommendations, I look forward to constructing a more harmonized set of rules that offer clarity, simplicity, and congruity with today’s technology.
It also includes reassessing the method by which companies go public – including de-SPACs and (perhaps especially) direct listings.
As we look for ways to improve the process and method of becoming a public company, regulators and market participants might consider revisiting how direct listings are conducted and the associated legal requirements. As part of this consideration, it behooves us to ask questions such as: following the 2023 Supreme Court decision, does the market really believe that a Securities Act registration statement continues to offer meaningful investor protections in the direct listing context? Is the requirement to prepare a Securities Act registration statement—as opposed to an Exchange Act one—a hindrance for companies contemplating a direct listing? And beyond the form of the registration statement, are there other regulatory frictions in the direct listing process that the Commission or its staff can reduce through rulemaking or guidance, respectively, while preserving investor protections?
If you have thoughts on IPO modernization, Chairman Atkins stressed, “All ideas are most welcome. I have just one request—that you be bold and creative. And as you share your ideas, you have my word that we are listening.”
After the remarks, there’s information on how to submit comments:
Members of the public who wish to provide their views on ways to improve the SEC’s communication or other rules related to IPOs, or how the agency can remove roadblocks to methods of going public unrelated to a “traditional” IPO, may submit comments electronically or on paper . . . All submissions should refer to File Number CLL-16, and the file number should be included on the subject line if email is used. Please submit your comments as soon as possible and by no later than July 27, 2026.
Yes, July 27 is the same day comments on the Registered Offering Reform proposal are due, and you may have a number of comment letters in the works already. Thankfully, Chairman Atkins noted they will still consider comments received after that date.
Speaking of submitting comments, it feels like the three major rulemaking proposals released in the last few weeks were published in the Federal Register very quickly! That starts the clock for the comment period, so we now know when comments are due for all these proposals. For those interested in submitting comments (or just curious about timing for next steps), here are the due dates (all 60 days after publication):
In our latest “Timely Takes” podcast, I’m joined by IR professional and CEO of DeCue Technologies, James Palczynski. James shares that new AI systems can use paralinguistic data below the level of human perception to extrapolate information — like the emotional state and stress levels (and even some mental and physical health conditions) of the speaker — from audio files, and it has already been applied to earnings calls. (James was introduced to this technology through the paper, Silent Suffering, in the Journal of Accounting Research.)
– What Advanced Voice Analysis is and What it Detects
– How AI has Changed Voice Analysis
– How Advanced Voice Analysis Technology is Being Used Today
– Information Investors Can Extrapolate from Voice Analysis
– Challenges this Technology Presents for Public Company Earnings & Investor Calls
– How to Monitor the Risks and Understand Defensive Capabilities
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 John at mervine@ccrcorp.com or john@thecorporatecounsel.net.
Last week, Regent University School of Law announced that Commissioner Peirce will be joining the law school faculty as an Associate Professor in November. As Dave has explained, the Chair and SEC Commissioners may continue to serve up to approximately 18 months after their terms expire if they are not replaced before then. Commissioner Peirce joined the SEC in 2018, but, as various news outlets have noted, her most recent term began in 2020 and expired in June 2025. So she’s been serving under an extension since then, and I guess this news shouldn’t really come as a surprise (though it did to me, initially) since the timing seems to align pretty closely with the end of that 18-month extension.
Regent University’s announcement describes her deep and varied career in financial regulation — both in academia and public service.
She began serving as a commissioner on the U.S. Securities and Exchange Commission in 2018. Before that, she conducted research on financial markets at the Mercatus Center at George Mason University and served in several roles connected to federal securities law, including as Senior Counsel on the U.S. Senate Committee on Banking, Housing, and Urban Affairs; Counsel to SEC Commissioner Paul S. Atkins; and Staff Attorney in the SEC’s Division of Investment Management. Her scholarship and public commentary have emphasized the need for regulatory humility, the importance of capital markets in the economy and society, the appropriate regulation of crypto assets, and the interaction between innovation and regulation. Peirce earned her J.D. from Yale Law School and her bachelor’s degree in economics from Case Western Reserve University. She clerked for Judge Roger B. Andewelt of the U.S. Court of Federal Claims.
Commissioner Peirce’s exact departure date has not been set yet, as Bloomberg reports, and she stressed: “Until I leave the Commission, my focus is on the work of the SEC.”
