Membership on the board of the PCAOB has long been one of D.C.’s most lucrative gigs, and in his statement on the appointment process for new board members last summer, SEC Chairman Paul Atkins made it clear that he intended to take a hard look at board compensation in the SEC’s evaluation of the PCAOB’s 2026 budget request. The PCAOB tried to read the room and proposed a 20% cut in board compensation when it submitted its budget request for the upcoming year.
Yeah, nice try guys. Yesterday, the SEC approved a PCAOB budget for 2026 that slashes the compensation of the PCAOB’s chair and its other board members by 52% and 42%, respectively. Like they say, “that’ll leave a mark.” Anyway, here’s what Chairman Atkins had to say about the reductions in his statement on the budget:
In 2007, during my final vote on a PCAOB budget before leaving the Commission, I highlighted two main concerns, which I will briefly revisit now.
The first concern was the high salaries of the PCAOB Board members, prompting me to reject the budget that year. I highlighted then that “[t]he SEC can and must provide objective oversight with respect to the Board’s salaries. If we do not oversee those, nobody else can.”This budget, I believe, addresses this first concern, reducing the chairman’s and other Board members’ compensation by 52 percent and 42 percent, respectively. This action demonstrates a clear commitment to aligning PCAOB Board pay more closely with the ethos of public service that reinforces trust, demonstrates fiscal responsibility, and affirms the honor of stewardship over the capital markets.
Chairman Atkins said his second main concern in 2007 was the PCAOB’s lack of a strategic plan, which the SEC subsequently required the PCAOB to implement. Development of an updated strategic plan is one of the Chairman’s top priorities for 2026.
Allianz’s 2026 Risk Barometer identifies the following as the top five risks facing global business in 2025: cyber incidents, artificial intelligence, business interruption and supply chain disruptions, changes in legislation and regulation, and natural catastrophes. Climate change dropped out of the top 5, while AI made its first appearance at #2. Here’s what Allianz has to say about the risks associated with AI:
AI climbs to its highest-ever position of #2, up from #10. Both cyber and AI now rank as top five concerns for companies in almost every industry sector. As AI adoption accelerates and becomes more deeply embedded in core business operations, respondents expect related risks to intensify.
Close to half of respondents believe AI is bringing more benefits to their industry than risks. However, a fifth say the opposite, while the remainder believe the jury is still out. Education, retraining, and upskilling initiatives are the main actions being taken by companies in response to increasing AI adoption in the workforce. Organizations also need to implement the right risk management and governance frameworks to successfully capture AI opportunities.
The report explains what accounts for AI’s rapid rise on the list of global risks facing business:
AI is the big mover in the Allianz Risk Barometer 2026,” explains Michael Bruch, Global Head of Risk Consulting Advisory Services, Allianz Commercial. “Its rapid evolution and adoption are reshaping the risk landscape, making it a standout risk for businesses worldwide. Yet in many ways, it could be seen as just another risk to add to the growing list of challenges for businesses. However, AI’s transformative potential means it cannot be underestimated. As the results show, many of the top perils are interconnected and highly complex risks that will impact every organization in 2026.
If you’re looking to stay on top of the evolving risk environment for AI and other emerging technologies, be sure to subscribe to our free “AI Counsel” Blog.
It’s been kind of a slow news week, and that’s always a signal for me to search the Internet to see if there’s anything new going on with America’s most entrepreneurial hip-hop artists, The Wu-Tang Clan. They almost never let me down, and they came through again this week.
In my most recent Wu-Tang Clan update, I mentioned the ongoing litigation between PleasrDAO, which acquired the only copy of The Wu-Tang Clan’s “Once Upon a Time in Shaolin” from the DOJ a few years ago, and the album’s original owner, convicted fraudster Martin Shkreli. The gist of the lawsuit is that although Shkreli was prohibited from copying the one of a kind LP, he allegedly did, and PleasrDAO sued him.
In an apparent effort to throw sand in the gears of that lawsuit, Shkreli filed a motion to add RZA and Cilvaringz to the case. As this excerpt from Billboard’s article on the case notes, the judge wasn’t impressed with Shkreli’s effort:
Last fall, Shkreli made a surprise move: he said the case could not be resolved unless RZA and Cilvaringz were forced to participate in the case. He claimed they had “conflicting interests in the same property,” and that the case would need to wade into the original purchase agreement for Once Upon that he had inked with the musicians back in 2015.
But on Monday, Judge Chen said that claim was clearly “unpersuasive.” She said that nobody was seeking to deprive RZA and Cilvaringz of any rights, and that Shkreli’s attorneys were trying to “manufacture” such a situation with an argument that “cherry-picks” details: “Thus, the court finds that Shkreli has not met his burden of proving that Diggs and Azzougarh are necessary parties.”
You’d think that by now Martin Shkreli would have learned not to disrespect The Wu-Tang Clan (see 2nd blog). After all, they don’t say “Earth spins, Wu wins” for nothing.
Over on RealTransparentDisclosure.com, Broc Romanek blogged about a recent Labrador Transparency Report reviewing 2025 proxy statement risk oversight disclosures and recommending potential enhancements for companies to consider as they prepare their 2026 proxies.
The report says that risk oversight disclosures have fallen into a bit of a rut, with companies generally following the same standardized format. These disclosures typically start with a matrix showing board and committee oversight of key risks and management’s role. That’s followed by description of the company’s ERM program and more detailed discussion on the board’s oversight of more significant risks.
Does that sound familiar? Yeah, I thought so. Anyway, Broc excerpts some suggestions from the report on how companies might do a better job on these disclosures:
1. Rethink the Traditional Committee Oversight Matrix: Many companies cite the desire to streamline text and remove duplication in their proxy statements. We recommend taking a look at your Committee descriptions and Risk Oversight disclosures to see how they overlap. Similarly, think about whether key risks are overseen by the Board or a singular committee, or whether there is a more cross-functional approach.
2. Show an Integrated Approach to Risk Throughout the Company: The traditional Board/Committee/management oversight graphic often includes only a high-level overview of the role of management in managing risks, with a separate discussion on the ERM process. Two Dow 30 companies take a different approach, incorporating a crisp, easy-to-digest graphic that shows their top-down/bottom-up risk management governance structure.
3. Reflect Better Alignment Between Risk, Strategy and Sustainability: Growing anti-ESG backlash and the current political and legal environment have caused companies to rethink whether and how they report on sustainability-related topics in their proxy statements and annual reports on Form 10-K. We recommend, however, taking a step back from the rhetoric and examining the interrelated nature of sustainability, risk management, strategy and competition, and long-term value creation.
With respect to this final point, the report cites a 2024 Harvard Business Review article arguing that corporate leaders should address sustainability issues that “have the most impact on the bottom line” and identify the most material negative impact their company is having on society, and then make significant investments to develop practical solutions. It also notes a PwC report recommending that companies integrate sustainability into their ERM process.
A few years ago, we blogged about a federal jury verdict against Chiquita Brands holding the company liable for financing a Colombian paramilitary group. That blog noted that there are three specific statutes that can provide a basis for imposing liability for companies doing business in troubled parts of the world. The statutes are the Anti-Terrorism Act (ATA), the Alien Tort Statute (ATS) and the Torture Victim Protection Act (TVPA).
This Freshfields blog notes that the SCOTUS recently granted cert in the case of Cisco Systems, Inc. v. Doe I, in order to determine whether two of these statutes, the ATS and the TVPA, allow suits against individuals and entities for aiding and abetting violations of international law. The lawsuit is premised on allegations that Cisco built a nationwide surveillance system that allowed the Chinese government to identify and arrest members of the Falun Gong religious group, and that in doing so, the company aided & abetted violations of these statutes. This excerpt discusses the two statutes and provides an overview of how courts have approached them in recent years:
The lawsuit is based on two separate but related federal statutes. The ATS, enacted in 1789, allows federal courts to hear lawsuits brought by non-US citizens for actions that violate the “law of nations” (customary international law). The TVPA, passed in 1992, creates liability for torture and extrajudicial killings committed by a foreign nation. Unlike the ATS, the TVPA applies only to conduct committed by individual defendants, not corporations.
In recent years, the Supreme Court has significantly narrowed the scope of the ATS. In Sosa v. Alvarez-Machain (2004), the Court concluded that only certain conduct could give rise to liability under the ATS. In addition, the Court held in Kiobel v. Royal Dutch Petroleum (2013) that a plaintiff cannot sue under the ATS when the alleged conduct occurs entirely outside the United States. Relatedly, in Nestlé USA, Inc. v. Doe (2021), the Court determined that corporate decisionmaking is not enough to hold a company liable.
In July 2023, the Ninth Circuit allowed the claims against Cisco to continue. It held that aiding and abetting is actionable under the ATS, and that Cisco’s development of the surveillance system went beyond mere decisionmaking. The Ninth Circuit also held that the TVPA’s text and history permit aiding and abetting claims against Cisco’s executives.
The blog says that the stakes in the case are high – a favorable ruling for the plaintiffs would “create a pathway for holding US corporations and individuals responsible for facilitating human rights abuses,” while a decision in favor of Cisco could effectively shield corporations from liability absent federal legislation.
Deloitte’s Center for Board Effectiveness recently issued its report on board governance in 2026. The report addresses the topics that are likely to be on the agenda for boards during the upcoming year and suggests strategies that help position boards to better address the challenges they face. Board topics identified by Deloitte include economic and geopolitical volatility, AI and emerging tech governance, cybersecurity, and human capital management – particularly CEO succession. Here’s an excerpt from the report’s discussion of that topic:
According to the 2025 Spencer Stuart Board Index, CEO turnover at S&P 500 companies rose nearly 30% from 2024, to 61 new appointments in 2025 from 47 the year before.2 The report indicates many of these appointments involved internal promotions and first-time leaders. It also indicates a slight decrease in average tenure for departing leaders, with approximately one-third serving in their roles for less than five years.
A Russell Reynolds report indicates a trend toward elevated levels of CEO turnover and shortening tenures globally as well. Taken together, these data points indicate an increase in CEO turnover that should prompt boards to evaluate their approach to succession planning and consider whether the board is adequately prepared to deftly manage these changes in leadership at the top of the organization.
If CEO and other management succession topics are on your plate this year, be sure to check out our recent webcast, “The Secret of My Success: Best Practices for Management Succession Planning,” which is available for free on demand to members of TheCorporateCounsel.net. Not a member? We can fix that. Contact us today at info@ccrcorp.com or call 800.737.1271 to sign up for a no-risk trial.
The DOJ hasn’t made any secret of its plans to swing the False Claims Act club at companies that it believes engage in DEI programs that run afoul of federal civil rights laws. In a recent “D&D Diary” blog, Kevin LaCroix says that the Trump Administration’s use of the FCA in this manner creates all sorts of issues under D&O policies:
From a D&O insurance perspective, there are many concerns here. The first is, as I have noted previously on this site (most recently here), FCA claims are an awkward fit with the typical D&O insurance policy. There is in fact a long history of D&O insurance coverage disputes arising in connection with underlying FCA claims. (Refer, for example, here.) Notice timing issues are common.
Coverage for FCA claims under public company D&O insurance may be limited because the FCA claims are typically entity only claims, but the public company D&O insurance policy provides coverage only for securities claims (which the FCA action is not). The D&O insurers often contend that FCA claims are essentially non-covered contract disputes, or stem from excluded professional services liability issues.
Kevin says that the good news is that the authority increasingly appears to support of the conclusion that D&O insurers must cover FCA claims. However, he points out that the government’s use of the FCA in this area may also increase companies’ vulnerability to follow-on securities class action claims.
In another step toward the mainstreaming of all things crypto, the NYSE announced that it plans to launch a 24/7 trading platform for tokenized securities. Here’s an excerpt from the NYSE’s parent company’s press release with some details about the platform:
NYSE’s new digital platform will enable tokenized trading experiences, including 24/7 operations, instant settlement, orders sized in dollar amounts, and stablecoin-based funding. Its design combines the NYSE’s cutting-edge Pillar matching engine with blockchain-based post-trade systems, including the capability to support multiple chains for settlement and custody.
Subject to regulatory approvals, the platform will power a new NYSE venue that supports trading of tokenized shares fungible with traditionally issued securities as well as tokens natively issued as digital securities. Tokenized shareholders will participate in traditional shareholder dividends and governance rights. The venue is designed to align with established principles for market structure, with distribution via non-discriminatory access to all qualified broker-dealers.
A WSJ article about the initiative notes that some crypto firms have launched tokens that track popular stocks and trade 24/7 on exchanges outside the US. However, those platforms have been plagued by price deviations between the tokens and the underlying stocks. The WSJ says that if the platform receives regulatory approval, it could be used by blue-chip companies to issue tokenized versions of their stock that would be accessible to U.S. investors.
Yesterday, the SEC announced that Christina Thomas will rejoin the agency to as Deputy Director of the Division of Corporation Finance and chief advisor on disclosure, policy, and rulemaking. Christina is currently a partner at Kirkland & Ellis and previously served as a senior advisor at the SEC, most recently as Counsel to SEC Commissioner Elad L. Roisman. Here’s an excerpt from the SEC’s press release announcing her appointment:
“Christina brings her deep technical experience in disclosure, compliance, and international securities law back to the Commission at a critical time,” said SEC Chairman Paul S. Atkins. “Her expertise will contribute meaningfully to the Division’s goals of facilitating capital formation and protecting investors in the modern operating environment.”
“Christina is a talented attorney with a deep understanding of corporate disclosure matters,” said James Moloney, Director of the Division of Corporation Finance. “Her experience, intellect, and practical ideas will be wonderful assets to our work in the Division and will support the Commission’s mission.”
With the SEC contemplating an overhaul of both the executive compensation disclosure rules and Regulation S-K, Christina is certain to have a lot on her plate. Fortunately, she’ll have some help, because the SEC separately announced the members of the team of senior Corp Fin staff who will be responsible for advising Director Jim Moloney on all matters the Division has before the Commission, “including rulemaking efforts, corporate disclosure matters, and all day-to-day operations needed to fulfill the SEC’s mission.”
Over on Cooley’s CapitalXchange Blog, Liz recently posted about a Nasdaq proposal to amend Rules 5450 and 5550 to impose a $5 million minimum market cap requirement on companies listed on Nasdaq’s Global and Capital Markets. Here’s an excerpt from her blog with some details about the proposal:
Nasdaq has proposed a new continued listing standard for companies listed on its Global and Capital Markets tiers. The proposed rule, which would amend existing Rules 5450 and 5550, would require these companies to maintain a minimum Market Value of Listed Securities of at least $5 million.
Nasdaq believes that once the market identifies significant problems in a company by assigning a very low market value, that company is no longer appropriate for continued listing and trading on Nasdaq because challenges facing such companies, generally, are not temporary and may be so severe that the company is not likely to regain compliance within a compliance period and sustain compliance thereafter. In Nasdaq’s view, it is also more difficult for market makers to make markets in the securities of these nano-caps, and for there to be a fair and orderly market.
Nasdaq is also proposing an amendment to Rule 5810 that would suspend trading and immediately delist from Nasdaq the securities of companies that do not satisfy the proposed new market cap requirement for 30 consecutive business days. The staff’s delisting notice would inform the company that its securities are immediately suspended from trading and subject to delisting.
Companies would not have a cure period to regain compliance with the market cap standard or be entitled to any stay in effectiveness. A company would be permitted to appeal the delisting decision to the Hearings Panel, but its securities would generally trade on the over-the-counter market while the review is pending, rather than on the exchange, and the Hearings Panel would not be able to grant an exception to the continued listing standard.
The rule proposal would also tie the Hearings Panel’s hands pretty tightly – it could overturn a delisting decision only if it finds that Nasdaq got the math wrong and the company never actually failed to satisfy the minimum market cap requirement. Other matters, such as the company’s subsequently regaining compliance with the requirement, could not be considered by the Panel.
This hasn’t hit the SEC’s website yet, but keep an eye out for it. Also, Liz’s blog covers a bunch of other recent Nasdaq rulemaking, so be sure to check out the whole thing.
