Because tokens are often thinly traded during off-hours, they are susceptible to sharp price moves when users buy or sell more than the markets can handle.
Regulators have also warned that such tokenized assets create opportunities for bad actors to engage in insider trading and market manipulation while circumventing oversight. In the U.S. stock market, exchanges use surveillance to identify suspicious activity and the people behind it, while brokerages must know the identity of their customers. But such controls don’t currently exist with tokenized stocks
.As we see the proliferation of various tokenized versions of public company stocks, whether issuer sponsored or not — companies should be considering whether their existing insider trading policy language adequately covers the potential risk of employees trading tokenized versions of company stock.
Said differently, you shouldn’t be able to circumvent insider trading rules by trading in a tokenized version of your company’s stock when you’re prohibited from trading the company stock. This might seem obvious, but as third party tokenized stocks come online this strikes me as a new potential risk that may not be explicitly covered by an existing policy because the token wouldn’t be “company stock.”
On Wednesday, the SEC announced that its Small Business Capital Formation Advisory Committee will meet on Tuesday, October 27th at 10:00 am Eastern. Here’s the agenda for the meeting, which, as this overview from the SEC’s press release indicates, will continue the Committee’s discussions on how to encourage more IPOs as well as potential tweaks to Regulation Crowdfunding:
Building upon ideas generated during prior committee meetings, the morning session will focus on ways to encourage more companies to go public. The committee will consider ways to modernize the IPO process and potential regulatory reforms to improve the offering process, IPO communication rules, and analyst coverage and support.
During the afternoon session, the committee will consider Regulation Crowdfunding (Reg CF), including the current regulatory framework, successes to-date, challenges, and whether there are potential policy changes to Reg CF that could improve the exemption in order to further expand access to early-stage capital raising. To facilitate the discussion and deepen the committee’s understanding of the Reg CF landscape, members will hear from several experienced professionals in the crowdfunding space.
The meeting will be open to the public and livestreamed on SEC.gov.
A new study says that how companies talk about CEO departures can have a tangible impact on the success of their succession efforts & their former CEO’s success in obtaining new employment. Here’s the abstract:
This study examines whether the frequently used, seemingly platitudinous, euphemistic language common in CEO departure announcements has real economic consequences. We analyze 1,330 forced exits at U.S. publicly listed firms between 2016 and 2025, where incentives to soften negative information are strongest and euphemistic framing appears in 27% of cases.
Our Employment Outcomes Hypothesis predicts that such framing benefits departing CEOs by muting adverse reputational signals. Accordingly, euphemistically described forced departures are associated with an increase in the odds of reemployment within a year and a reduction in job search duration.
Our Succession Outcomes Hypothesis predicts that euphemistic framing dampens negative inferences about the firm, facilitating faster and stronger successor matches. When no immediate successor is appointed, euphemistic narratives are associated with a shorter succession search, lower odds of early successor turnover, and the appointment of high-quality successors. These findings are robust to alternative specifications, endogeneity corrections, and additional tests.
Overall, our results suggest that the language firms use to explain forced CEO departures is not merely boilerplate but a consequential disclosure choice that shapes labor-market outcomes for departing CEOs and succession outcomes for firms.
I guess the bottom line is that taking the high road pays dividends for everyone involved in the CEO’s departure. Of course, there’s sometimes a fine line between positive spin and pure fiction – and it’s one that companies cross at their peril.
In order to obtain the protections of the PSLRA’s safe harbor, a forward-looking statement must be “accompanied by” meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the forward-looking statements. Over on The Business Law Prof Blog, Prof. Ann Lipton recently flagged the SDNY’s decision in Construction Industry Laborers Pension Fund v. Fortrea Holdings Inc., (S.D.N.Y.; 9/26), in which the Court concluded that certain statements made by management at an industry conference weren’t protected by the safe harbor because they weren’t “accompanied by” meaningful cautionary statements.
This excerpt from the Court’s decision addresses the issue:
At that conference, Mr. Pike prefaced his remarks with the following fifteen-word warning, and nothing else: “Forward looking statements. We may make some forward-looking statements, you have all the usual stuff here.” Mr. Pike made the third statement at the Barclays Global Healthcare Conference on March 12, 2024: “Now turning to Fortrea, of course, there [ ] may be forward looking statements here.”
Mr. Pike’s cursory warnings were insufficiently “meaningful” to qualify the statements for the safe harbor….
To be sure, executives of publicly traded companies are not required to incant a precise prophylactic warning to warrant protection under the safe harbor. But all that was required was for Mr. Pike or one of his employees to orally identify the “document, or portion thereof, that contains the additional [cautionary] information” — in other words, to direct his audience to the cautionary statements made in some prior disclosure.
Ann noted that, in the end, things worked out for the company because the case was dismissed on other grounds. However, she says the Court’s approach to the “accompanied by” requirement came as a bit of a surprise, because for as long as she can remember, courts have been “handwaving the PSLRA’s formal requirement of accompaniment.”
This Ashurst Perkins Coie memo reviews commentary on SEC enforcement initiatives at two recent conferences held in Chicago. This excerpt discusses some of the insights gleaned from commentary at those events on the SEC’s recently announced Financial Reporting and Accounting Unit and what that unit expected to focus on:
The establishment of the Division’s Financial Reporting and Accounting Unit, announced by the SEC in an August 5, 2026, press release and discussed by [SEC Enforcement Director David] Woodcock in a September 18, 2026, speech persisted as a recurring theme across conferences, panels, and panelists. The unit is the successor to the Financial Reporting and Audit Task Force that Woodcock led in 2013, but panelists drew a critical distinction: Unlike a task force, a dedicated unit has its own staff, management structure, and resources—more akin to the SEC’s Cyber and Emerging Technologies Unit in terms of institutional permanence.
Panelists expect the unit to pursue public company accounting fraud, non-GAAP disclosure cases, and auditor/gatekeeper matters. Life sciences, healthcare, pharmaceutical, and medical device companies were flagged as sectors of particular interest to the current administration. Speakers cautioned, however, that financial reporting cases are inherently complex and typically take approximately two years to develop; the first year will likely involve matters already in flight. Defense counsel reported that staff in at least some accounting-related investigations are pushing for testimony earlier in the process—sometimes before document productions are complete—signaling a shift in investigative tempo.
I hope you were able to join us on Tuesday for our “2026 Proxy Disclosure Conference” and yesterday for our “23rd Annual Executive Compensation Conference.” Thanks again to all of valued sponsors, terrific speakers, and everyone at CCRcorp who made these events possible!
As always, our 13 panels covered a lot of ground on a wide range of topics over the past two days, and if you found that your notetaking was sometimes unable to keep pace or if you had to miss parts of the conferences, don’t fret – archives of the sessions will be available to attendees in the near future.
Attendees should receive an email next week with a link to our 2026 Conference Archives page. Members of TheCorporateCounsel.net, CompensationStandards.com, Section16.com and DealLawyers.com who registered for the conferences can use their existing logins to access the Proxy Disclosure Archives and the Executive Compensation Archives. In order to earn CLE credit for the archived sessions of the 2026 Proxy Disclosure & 23rd Annual Executive Compensation Conferences, you’ll need to follow the instructions outlined in our CLE FAQ page.
The unedited transcripts for the conferences will be added to the archive pages in the near future – and we’ll let you know when they’re up.
One final quote as we leave Orlando – and I’ll take it from Walt Disney, both because it wouldn’t be right to leave Orlando without hearing from him, and because I think it sums up the big picture lessons from this year’s conferences:
“In this volatile business of ours, we can ill afford to rest on our laurels, even to pause in retrospect. Times and conditions change so rapidly that we must keep our aim constantly focused on the future.”
The primary justification put forth by the SEC for repealing Rule 14a-8 is that the agency lacked the authority to promulgate the rule in the first place. The SEC argues that because Section 14(a) of the Exchange Act authorizes it to regulate the proxy solicitation process but does not authorize it to decide what matters must be submitted to shareholders, Rule 14a-8 exceeds the SEC’s statutory authority. The group of academics who call themselves the “Shadow SEC” argue that the SEC is simply wrong on this point. Here’s an excerpt from their recent CLS Blue Sky Blog post on the SEC’s proposal:
Rule 14a-8 does not create any substantive right enforceable under state corporate law, and it displaces nothing that state law otherwise governs. Proposals included under the rule are precatory; they bind no one, alter no charter, and effect no corporate action that state law does not already fully control. What the rule actually regulates is the content of a federal disclosure document—the company’s own proxy statement—a subject squarely within the Commission’s Section 14(a) authority since 1934.
A shareholder has always been free to raise the identical resolution from the floor of a meeting; Rule 14a-8 only concerns whether that proposal may also appear in the company’s proxy materials. That is a question about the scope of a federal communications channel, not an intrusion into state corporate governance. The fact that in-person attendance at meetings had ceased to be a meaningful way for shareholders to exercise voting rights was evident in 1934 and is not a change that can justify a rescission of a long-standing rule on any ground, much less legal authority.
I’m uncomfortable with the SEC’s assertion that it never had the authority to promulgate Rule 14a-8 in the first place, but I find this argument unpersuasive. At its heart is the contention that “what the rule actually regulates is the content of a federal disclosure document,” and that this fits squarely within the SEC’s authority under Section 14(a). That argument begs the question by essentially asserting that because the rule requires a company to include something in the proxy statement it’s consistent with the SEC’s authority to require a company to include something in the proxy statement.
This approach has the advantage of avoiding engagement with the substance of the SEC’s argument, but if you accept it, it’s difficult to discern any limiting principle for when permissible federal regulation of proxy solicitations crosses the line and becomes impermissible regulation of matters governed by state law.
Earlier this month, I blogged about the SEC’s decision to amend its Rules of Practice to reduce its quorum requirement to a single commissioner in some circumstances. FT Alphaville published an opinion piece trashing the decision, and Commissioner Uyeda wrote his own piece responding to that one, which The Financial Times recently published.
FT doesn’t permit publication of excerpts from its articles, so you’ll need to click on the link to read Commissioner Uyeda’s response to its criticism – in which he points out, among other things, that this isn’t the first time that the SEC has had only two commissioners from the same political party.
Your mileage on the original article and the response to it may vary. Personally, I think the quorum amendment is a largely irrelevant sideshow. As I said in my prior blog, having only two SEC commissioners for an extended period is no way to run a railroad.
You can still register to attend today’s conference and receive access to the archive of yesterday’s program as well as live and archived access for today! You can do that online or by calling us at 800-737-1271. Our conferences are bundled together into a single two-day event for registration and pricing, so your purchase will cover both events.
– How to Attend Online: Our conferences are hosted online through the RingCentral Events platform. When you register for the conferences, you’ll receive a registration confirmation email that will contain your personalized “Magic Link.” Just click on that link to be instantly directed to the event. The Magic Link acts as an “access pass” into the event. It is unique to you and cannot be shared with others. It bypasses the need for registered users to sign into RingCentral Events and brings you directly into your RingCentral Events account and into the event.
Once in the event, click the “Stage” button from the menu on the left of the webpage. In order to view the session currently playing on stage, you will need to press the play button on the video. If you’re having issues accessing the RingCentral Events platform, review this guide and contact your IT department. For audio/video issues, there are separate guides for Windows and for Mac. If you still need help, email info@ccrcorp.com.
– Access to Archives & On-Demand CLE: Your registration includes access to the conference archives, which will be available until October 12, 2027 – but you’ll need your confirmation email to access them so be sure to retain it! One big reason to make sure you do that is that if you can’t attend the conferences live, you may earn on-demand CLE credit by viewing the archives. See these “CLE FAQs for Archived Conference Sessions (ON DEMAND)” for more information.
– Thanks to Our Sponsors! A huge “thank you” to our sponsors who have helped make these events possible. Our founding sponsor for this year’s conferences is Goodwin, our PDEC lounge sponsor is Greenshoe.ai, our managing partner sponsor is Cooley, our associate sponsors are Ashurst Perkins Coie, Ballard Spahr, King & Spalding, Latham & Watkins, Morrison Foerster, Sidley, Troutman Pepper Locke, and Wilson Sonsini – and a special shoutout to our rise and shine breakfast sponsors Cleary and Dragon GC.
We are extremely grateful for the support of these fine law firms and businesses and invite you to consider joining them as a sponsor of next year’s conferences.”
I’ve got to admit that finding pithy little quotes to close out each day of our conferences was easier last year when we were in Vegas and I could just rely on Hunter S. Thompson, but Orlando is not without its quotable residents. For example, consider Orlando’s own David Bromstad, the host of HGTV’s “My Lottery Dream Home.” My wife and I are addicted to this show mostly because of this guy, who is, to put it mildly, completely over-the-top. Turns out he’s pretty quotable too. Here’s one for today:
Don’t call me normal. . . Call me strange, please!
A guest post over on The D&O Diary by two Nelson Mullins lawyers provides a checklist of 10 key policy terms that boards should assess when reviewing D&O coverage. Here’s an excerpt addressing three of those policy terms:
Policy Limits and Order of Payments. In addition to selecting the right overall policy limit, it’s also important to understand how that limit works. A $15 million policy does not necessarily provide $15 million of protection to directors personally. Multiple claims or claims against the company itself may erode the available limit.
Directors should understand how the Side A, B, and C coverages interact and whether the limits available under one coverage section can be eroded by claims under another. Strong Side A protection can also be particularly important when indemnification is unavailable because of insolvency, legal restrictions, or other circumstances. For example, policies can prioritize individual Side A protection first if policy limits begin to erode rapidly due to heavy defense costs or corporate entity-level (Side C) claims.
Prompt Advancement of Defense Costs. Defense costs can become substantial long before a case reaches settlement or judgment, and directors should avoid having to fund years of defense expenses personally while waiting for the ultimate resolution of a suit or coverage dispute. Some policies may not provide for prompt advancement or include terms that may hold up the process, such as requiring allocation disputes to be resolved or other conditions. Boards should therefore review for advancement terms that provide prompt, mandatory advancement of legal fees and defense expenses before the final disposition of a claim or suit.
Severability. A strong severability provision generally prevents one insured person’s knowledge, conduct, or misrepresentation from automatically being attributed to another insured. Boards should assess the policy for severability terms, including related application representations, knowledge of circumstances, and policy exclusions. Directors should not necessarily lose coverage because another insured director or officer allegedly made a misrepresentation or engaged in misconduct. Boards can avoid issue that by ensuring one insured’s misconduct cannot be imputed to or used to deny coverage to any other “innocent” director or officer.
Other policy terms covered by the checklist include Side A “difference in conditions” coverage, favorable exceptions to the “insured v. insured” exclusion, regulatory investigations coverage, prior acts, continuity and retroactive dates, related claims and interrelated wrongful acts, non-rescission clauses, and jurisdiction and choice of law.
