I blogged a few months ago that the SEC and Ripple Labs settled the civil enforcement action that the Commission launched back in December 2020. The settlement of the SEC v Ripple Labs case was conditioned on the judge in the case agreeing to dissolve the permanent injunction and lower the penalty that had been aspects of the court’s July 2023 ruling against the company.

Late last week, the judge denied the parties’ request – saying that the SEC’s decision to reverse course on crypto enforcement isn’t grounds for changing a final judgment outside of the appeals process. From Reuters:

“The parties do not have the authority to agree not to be bound by a court’s final judgment that a party violated an Act of Congress in such a manner that a permanent injunction and a civil penalty were necessary to prevent that party from violating the law again,” she wrote.

“Accordingly, if jurisdiction were restored to this court, the court would deny the parties’ request to vacate the injunction and reduce the civil penalty,” she added.

Torres said the SEC and Ripple remain free to withdraw their appeals, or appeal her injunction.

The next day, Ripple’s CEO announced on X that the company plans to drop its cross-appeal in the case. This crypto saga always feels like a “never say never” situation to me, but the industry folks at Coindesk say that this means Ripple will pay the existing $125 million penalty and abide by the injunction to follow the law. I’ll look forward to final confirmation on this one.

– Liz Dunshee

The Senate passed the “Genius Act” last week in a 68-30 vote, to the delight of the crypto industry. It still has to clear the House – where it’s known as the “Stable Act” – before becoming law, but lawmakers in the House say they want to act quickly.

The Senate’s approval is viewed as a win for U.S. based stablecoin issuers – for at least a few reasons:

– It provides clarity on which entities are permitted to issue payment stablecoins and how they’ll be regulated.

– It amends the definition of “security” in the Securities Act, the Exchange Act, and certain other statutes to exclude a payment stablecoin issued by a permitted payment stablecoin issuer as defined in the statute.

– It prohibits federal banking agencies, the NCUA, and the SEC from requiring financial entities to report custodial digital assets as liabilities.

– It establishes guardrails that stablecoin companies outside of the U.S. aren’t prepared to comply with.

This Troutman Pepper memo summarizes how the regulation would work – and this WSJ article explains some of the industry dynamics. This Arnold & Porter memo explains how the reconciliation process could play out:

Differences remain, however, including regarding the breadth of federal preemption, transaction monitoring processes and know-your-customer requirements, and the need for consumer protections. The political will to make law governing stablecoins suggests that the differences between the two bills are surmountable.

No word yet on whether this legislation will ultimately be named the “Stable Genius Act.” The Senate’s version says that existing ethics rules prohibit any member of Congress or senior executive branch official from issuing a payment stablecoin during their time in public service.

– Liz Dunshee

Reporting on greenhouse gas emissions and climate-related risks will be required in California beginning in January 2026. Unfortunately, there’s still a lot of uncertainty about what that will involve. Over on PracticalESG.com, we just posted a helpful 17-minute podcast with Kristina Wyatt of Persefoni that gives the latest update on what companies need to be doing to comply with these laws. Kristina shares key topics from a workshop that the California Air Resources Board (CARB) recently hosted.

This new guide from ISS-Corporate also gives a quick refresher on getting started with SB 253 and SB 261 reporting. Key takeaways include:

– Emissions Disclosure: SB 253 requires companies in scope to annually disclose scope 1 and 2 GHG Emissions (Scope 3 starting 2027).

– Financial Risks: SB 261 requires companies to report biannually on climate-related financial risks.

– Future Guidance: CARB will develop guidance around the climate acts, but these will likely not be finalized until late 2025.

– Getting Ready for Emissions Reporting: Companies can begin developing disclosures aligned with SB 253 requirements using available guidance and standards.

– Framework Clarity: SB 261 is informed by the TCFD and IFRS S2 frameworks. Companies can proactively address the regulation by aligning their reporting with these standards, as CARB continues to finalize specific requirements.

The guide recommends that companies start to prepare for disclosure based on current information, which will give more breathing room and time for strategic decisions when the deadline nears.

– Liz Dunshee

Here are takeaways from the SEC’s Executive Compensation Disclosure Roundtable that Meredith shared yesterday on CompensationStandards.com:

Last Thursday, the SEC held its roundtable on executive compensation disclosure requirements. Our own Dave Lynn (who spoke on a panel) noted on TheCorporateCounsel.net blog on Friday that the event was well-attended. If you missed it — either in person or virtually — the SEC posted a replay of each panel on the SEC’s YouTube channel. And if listening to 4+ hours of discussion about the SEC’s executive compensation disclosure requirements is just not in the cards for you right now (or ever), we’ve got you covered!

In blogs on TheCorporateCounsel.net on Friday, Dave shared his thoughts and excerpts from the remarks by Chairman Atkins and Commissioners Crenshaw, Peirce and Uyeda. On the Proxy Disclosure Blog, Mark Borges (who also spoke on a panel) shared a few thoughts about revisiting the current disclosure requirements that occurred to him as he listened to the various panelists.

Today, I thought I’d share high-level topics, ideas and themes that I heard throughout the three panels, many of which were teed up in advance by Chairman Atkins, and whether there was consensus or some disagreement among the panelists. Here are a few:

– How or whether executive compensation disclosure requirements drive or distort compensation decision making

• Panelists cited the requirement to hold a say-on-pay vote and compensation committees taking into account investor and proxy advisor policies
• Panelists also noted that including executive security spend in the Summary Compensation Table’s calculation of “Total Compensation” can distort investor and proxy advisor perception and analysis of pay (although corporate representatives stressed that the board will make decisions in the best interest of the company regardless)

 

– Whether the executive compensation disclosure requirements effectively convey how the board and compensation committee consider compensation

• A number of panelists supported the suggestion that the disclosure requirements more closely reflect the presentation of pay in board materials — including the “target” and “outcome” tables that compensation committees use

 

– Whether “more is better”

• Investor representatives generally made suggestions for additional disclosures, and issuer or advisor representatives generally suggested that the rules could be shortened and streamlined
• Repeated “asks” by investor representatives included that quantitative disclosures be machine-readable and that the disclosures more clearly present the life-cycle of an equity award

 

– Whether the executive compensation disclosure rules are too granular and attempt to elicit disclosure of ALL the information ANY investor might want to know, instead of focusing on materiality and the reasonable investor standard

• If you’re wondering about the title of this blog, CII’s Bob McCormick shared a story about his high school job making ice cream. He once asked the owner why they make some unusual flavors that weren’t very popular. The owner explained that one customer — who drove 30 minutes each way — really liked them. From there on out, “rum raisin ice cream” was a favorite call back, but panelists disagreed whether the rules should require companies to keep making rum raisin ice cream — i.e., keep disclosing information that is very valuable only to a small subset of investors. Now you know!

 

– Whether simplifying the Item 402 disclosure requirements would actually result in shorter disclosures

• As Dave noted, while say-on-pay required very little disclosure, companies significantly expanded their voluntary disclosures after these votes were legislatively mandated

 

– The complexity and homogenization of pay and the factors driving these developments

• There was generally consensus that companies feeling like they have to follow a “one-size-fits-all” approach to pay programs — with most pay in the form of PSUs — is a bad thing for both companies and shareholders, and that flexibility — including to simplify equity programs to largely time-vested with a long holding period — would be beneficial

 

– Consensus that the prescriptive, tabular requirements generally provide overly complicated and difficult to use disclosures, while some voluntary disclosures are particularly useful (including presentations of realized and realizable pay)

• A few investor representatives described the complicated process they follow to understand executive equity awards, which involves flipping between numerous tables and referencing Form 4s

 

– Consensus among the issuer and advisor representatives that compensation disclosures are too costly to prepare

• Corporate representatives stressed that “every dollar matters” for companies both large and small, while also noting the outsized burden on less-resourced small- and mid-cap companies

We’ll be posting memos — like this Weil resource identifying four themes — in our “SEC Rules” Practice Area on CompensationStandards.com and sharing more content & takeaways from the roundtable and submitted comment letters over the next weeks and months. We’ll also be covering this and any updates at our “Proxy Disclosure and 22nd Annual Executive Compensation Conferences.”

Our 2025 Conferences will be taking place Tuesday & Wednesday, October 21 & 22, at the Virgin Hotels in Las Vegas, with a virtual option for those who can’t attend in person. The early bird rate expires July 25th! You can sign up by emailing info@ccrcorp.com or calling 800-737-1271.

– Liz Dunshee

Often, when I whine about the shrinking number of public companies and the absence of a robust pipeline for initial public offerings, I am very focused on the plights of securities lawyers and the companies they represent. But that is pretty self-centered, because the stock exchanges are also sad. There’ve been fewer bell-ringing parties, probably, among other reasons for wanting more listings.

So, it’s not too surprising that the major exchange operators are responding to the SEC’s call for deregulatory feedback. Reuters reported last week that Nasdaq and NYSE reps are among the groups that are sharing ideas with the SEC that could ease the burden of becoming – and remaining – a public company. Reuters describes some of the topics that may be on the table:

One area in focus is an overhaul of current proxy processes, which involves information that companies have to provide shareholders to allow them to vote on various matters.

The reform would make it harder for activist shareholders with small stakes to launch proxy contests and curb repetitive proxy proposals from minority investors, the sources said. It would also lead to less onerous disclosure requirements in preliminary proxy filings, according to the sources.

Another effort involves making it less expensive for companies to list on exchanges and remain public by reducing fees associated with listing, the sources said.

The conversations also include making it easier for companies that went public through deals with special purpose acquisition companies (SPACs) to raise capital, the sources said. In recent years, the SEC had cracked down on SPACs, in which a firm goes public by selling itself to a listed shell company, as a work around listing regulations.

The rollbacks would also make it easier for public companies to raise capital by selling additional shares through follow-on offerings, they said.

Meanwhile, as Dave shared last week, “capital formation” legislation has also advanced in the House. If you have ideas for improving the regulatory framework, don’t forget to add your two cents to the suggestion box!

– Liz Dunshee

It’s important to remember that regulations can only bear so much blame for the lack of initial public offerings. A bigger part of it is the market – where banks steer deal flow, availability of capital and high valuations in private fundraising rounds, and overall public market performance and perceptions. This Bloomberg article says there are reasons for optimism for those of us on Team IPO – with a few caveats:

At nearly the half-way mark of the year, IPOs on US exchanges have raised $29.1 billion, surging 45% versus the same period last year, according to data compiled by Bloomberg.

That’s not nearly as good as it sounds.

Proceeds from IPOs are actually down from last year, when you excise the $12.1 billion of blank-check vehicle listings — an increase of more than 400% from last year. While special purpose acquisition companies have raised a lot of money in listings, some of the underwriters’ fees are deferred until the blank-check merges with a private firm and takes it public. That activity remains depressed compared to the heady levels of 2021.

Excluding SPACs and tiny listings by companies raising less than $50 million, only 33 IPOs have priced this year, down from 41 in the first half of 2024.

I’m going to take a “glass half-full” view of these stats and our current environment. For one thing, the article shares predictions that the second half of 2025 and into 2026 will be a busy time for public offerings.

Second, even though the article disregards “tiny listings,” those deals help disprove the stereotype that today’s public markets are only for later-stage companies with huge valuations. The smaller companies are also an important part of the market – and they’re often pretty fun to work with, too.

– Liz Dunshee

Last week, the SEC’s Office of the Investor Advocate – which is also known as the “OIAD” – announced that it had delivered this 24-page report to Congress on its objectives for the fiscal year ending September 30, 2026. Priorities include:

1. Investor research and testing on existing and proposed disclosures to retail investors.

2. Informing SEC activities and policy priorities through data collected from nationally representative surveys.

3. Addressing and advocating for the priorities and concerns of retail investors affected by financial fraud, including through the Interagency Securities Council.

4. Private market investments in retirement accounts.

5. China-based variable interest entities listed on U.S. exchanges.

The report describes the Investor Advocate’s disclosure-related objectives as:

Among other things, the Investor Advocate will explore different approaches to making required disclosures more user-friendly and comprehensible to investors, particularly retail investors, while also considering the extent to which this may add to the costs and burdens on issuers and other providers of disclosure. For example, investors may benefit from highlighting or simplifying certain information, streamlining disclosure requirements, and/or reducing or eliminating repetitive disclosures.

A central aspect of this effort will be ongoing engagements by the Investor Advocate with retail investors and other relevant parties to develop a more thorough understanding of how investors use this information and to solicit a range of views on how to improve the effectiveness of the current disclosure system.

I heard a lot of complaints last week at the SEC’s Executive Compensation Roundtable – from both companies and investors – that executive compensation disclosure in particular has become very unwieldly. Hopefully, that means that when the OIAD solicits a range of views, it can find a few folks who can see the benefits of streamlined – and less burdensome – disclosures.

If you’re curious about why this report was delivered, it’s one of two that Exchange Act Section 4(g)(6) requires the Investor Advocate to deliver each year. This one is “forward-looking” for the forthcoming fiscal year. The other – due December 31st – reports on activities for the preceding fiscal year.

The Investor Advocate delivers the Report directly to Congress without any prior review or comment from the Commission, any Commissioner, any other officer or employee of the Commission outside of the OIAD or the Office of Management and Budget. So it doesn’t necessarily reflect the priorities of the Commission.

– Liz Dunshee

In addition to considering the impact of streamlined disclosures on investors and companies, the report that the SEC’s Office of the Investor Advocate delivered to Congress says that public-private markets are also a 2026 priority for the OIAD. Specifically:

The Investor Advocate will explore some of the issues surrounding the inclusion of alternative investments – such as private equity and private credit – in retirement savings plans and their implications for retail investors.

That’s a timely endeavor since – as Bloomberg’s Matt Levine has explained, “the new market is public-private.” Here are just a few of the recent developments in this quick-moving space:

– The WSJ reported last week that BlackRock will begin including private investments in its 401(k) target date funds.

– State Street announced back in March that it’s exploring a similar move.

– Vanguard has teamed up with Blackstone.

If anyone had unresolved questions on whether the asset managers are prioritizing financial returns over long-term “sustainability” or “ESG” considerations, the fact that they’re hopping on the private equity train should put those doubts to rest.

– Liz Dunshee

SquareWell Partners – a Europe-based shareholder advisory boutique for high profile “special situations” – recently published the latest edition of its survey on institutional investors’ views on shareholder activism (available for download).

This year’s survey includes responses from 30+ global investors – representing $35 trillion in assets under management. SquareWell asked how these institutions view activism, what drives their support for activist campaigns, and how boards can engage more effectively to avoid escalation.

Some highlights:

– Most investors (77%) view activism as a useful force for catalyzing change and accountability.

– A key concern (65%) is that activists may oversimplify complex businesses or adopt overly short-term views and cause disruption.

– Board-related activism tied to governance and management change is most supported (71%), while M&A and balance sheet activism receive minimal backing (3%).

– Nearly half of investors are open to engaging before a campaign is public; many also consult peers to gauge broader sentiment.

If you want to stay in the know about shareholder activism – and what your company or clients can do to stay out of the crosshairs – make sure to also check out the “Understanding Activism with John and J.T.” podcast. John and J.T. Ho have been covering all sorts of interesting topics with engaging guests. The episodes are all posted on TheCorporateCounsel.net and DealLawyers.com!

– Liz Dunshee

Yesterday, the SEC held its roundtable on executive compensation disclosure requirements. The event was well-attended and featured wide-ranging discussions on the state of executive compensation disclosure today and potential changes that could be made to the SEC’s requirements. Chairman Atkins, Commissioner Peirce and Commissioner Uyeda each delivered opening remarks and Commissioner Crenshaw posted a statement because she was unable to attend in person. These statements touch on many of the issues that were discussed at the roundtable. The statement of Chairman Atkins notes:

The Commission amended Item 402 of Regulation S-K in 1992 to state specifically that “This Item [402] requires clear, concise and understandable disclosure of…compensation…” However, one could say that this well-intentioned, three-decade-old statement has become facetious with the passage of time in light of the lengthy narrative disclosure and numerous tables and charts that appear in today’s proxy statements.

Our rules must be grounded in achieving the Commission’s three-part mission: investor protection, fair, orderly and efficient markets, and capital formation. These rules should be cost-effective for companies to comply with and provide material information to investors in plain English. Most importantly, the information required to be disclosed should be material to the company and understandable to the Supreme Court’s objective reasonable investor. The outcome of our rules is not effective when companies require highly specialized lawyers and compensation consultants to prepare disclosure that the reasonable investor struggles to understand.

Today’s roundtable is one of the first steps in considering whether the current executive compensation disclosure requirements achieve these objectives, and if not, how the rules should be amended. In connection with this process, I previously asked the Commission staff to consider several questions in this area and for the public to provide their views on those questions. Thank you to those who have already submitted comment letters. For others who intend to submit a letter, please do so as soon as possible over the next several weeks, to provide the staff time to consider and incorporate your views into any potential rulemaking proposal.

Commissioner Peirce focused her remarks around the theme of missing the forest for the trees, noting:

Some executive compensation rules seem more responsive to the general public’s curiosity than a genuine investor need for material information. Painstakingly calculated tallies of perks, like rides on the corporate jet, housing allowances for overseas assignments, or car services give us a tiny window into executives’ lives, but do little to fill out an investor’s picture of the company. Lately, our rulemakings have taken a “more is better” approach to executive compensation disclosure. These tack-on rules to the growing alphabet of Item 402 of Reg S-K—we are almost all the way through the alphabet—do not provide new information. Instead, these rules re-package and re-present data that investors mostly already have. Or they add details that are immaterial. Do investors even look at this “new” information? And if they do, are we confident it gives them a rational basis to evaluate a security’s price?

Consider, for example, pay ratio disclosure and pay-versus-performance disclosure. In his statement of dissent on the pay ratio rule, then Commissioner Dan Gallagher noted that it could have been “marginally less useless” if it were limited to U.S. full-time employees. While not a ringing endorsement of the rule or any of its possible permutations, his comment highlights that even with respect to a rule mandated by Congress as this rule was, the Commission retains some latitude to implement it in the best way possible. More recently, pursuant to another Dodd-Frank mandate, the Commission adopted the pay-versus-performance rule. The overarching feedback I hear on the rule is that it is a regulatory “tax” on public companies without a corresponding benefit for investors. Management, and the high-priced consultants and lawyers they hire, spend hours preparing the various narratives, tables, and graphs that produce nothing but yawns of disinterest from investors.

More concerning than the direct costs of producing executive compensation disclosures are the costs that arise from the distortion of corporate behavior in response to executive compensation disclosure mandates. Perhaps a company opts for a compensation scheme that is less effective at aligning incentives because of the way such a scheme will be reflected under SEC disclosure rules that do not necessarily represent economic reality. Or perhaps a company opts not to provide security for its executives because it appears in a laundry list of examples of perks in a 2006 Commission release that incidentally declines to define what a perk is. Now may be time for the Commission to return to a more nuanced approach to personal security disclosure that considers the context in which those measures are provided. Some companies have even gone so far as to eliminate perks altogether while offsetting such “cost-saving” measures with increases to base salaries. Executive compensation disclosure, along with other disclosures, should reflect rather than direct corporate actions.

Commissioner Uyeda focused on a number of SEC rules that have been identified as problematic, as well as concerns with the process in adopting those rules, noting:

Other executive compensation disclosures appear to have dubious purposes. The CEO pay ratio disclosure is one such example. There appears to be little nexus to investor protection concerns. Instead, aspects of the CEO pay ratio rule, and the underlying Dodd-Frank statutory provision, seem to have a “name and shame” motivation. The Commission’s rulebook should not serve to further political agendas. In addition to distracting from the Commission’s primary mission of providing material information with respect to executive compensation, this rule also increases regulatory compliance costs without providing any corresponding investor benefits.

We have received many recent comment letters on executive compensation that are critical of the CEO pay ratio disclosure. One letter noted that the “CEO Pay Ratio does not provide an accurate comparison of pay equity within organizations” as “various industries have different workforce and compensation structures, which prohibit meaningful evaluation.” Another comment letter stated that the CEO pay ratio “does not appear to have played a material role in compensation committee discussions, investor decision-making, or the rapid rate of increase in executive pay relative to that of the wider workforce.” Disclosures that are both costly and complex to produce, while not material to investment or voting decisions, are at odds with good disclosure regulations.

Regarding the adoption of clawback rules, the scope and impacts of the rule may have increased uncertainty. Specifically, market participants indicated that there is a lack of clarity as to what type of accounting errors “need to be analyzed and when boxes need to be checked …” Further, third-party analysis indicated that few companies have analyzed the underlying accounting errors potentially requiring a clawback. As such, the benefit of this framework appears minimal. Perhaps these issues could have been avoided if the Commission, in its haste, had not rushed in 2022 to adopt an unadopted 2015 proposal from the Obama Administration without first updating the economic analysis and engaging with the stakeholders as how to best implement this rule.

Commissioner Crenshaw offered a different perspective, raising some questions for discussion:

Compensation Trends. The Chairman has posed a number of questions in advance of these roundtables. Many focus on how compensation is set today. I’m also interested in hearing about compensation trends. Long-term data on executive compensation can be both decision-useful for shareholders writ large and can help us evaluate potential weaknesses in the market. For example, we’re just starting to realize the data from our pay versus performance rulemaking in 2022. And, the figures on “compensation actually paid” metrics are potentially revealing. The data show that the highest paid CEO in 2024, using compensation actually paid metrics, made over $6.9 billion. The ratio of CEO to median employee pay at S&P 500 companies rose to approximately 192:1, and at the companies of the 100 highest paid CEOs, that ratio is 348:1. Do larger data sets reveal compensation trends or practices that may foretell problems down the road?

Material Information. Looking further into the roundtables, the Chair has posed a number of questions on what information is material to shareholders. Feedback from investors on the materiality of executive compensation disclosures has been consistently strong, from comment files in our rulemakings, to everyday conversations, to testimony in the leadup to the seminal Dodd-Frank legislation.

I nonetheless encourage all shareholders to continue to comment on what is the most decision-useful information in response to the questions posed in connection with this forum. In addition, I hope commenters will discuss how data quality can be improved and made more comparable, for example, potentially by reconciliation of non-GAAP financial measures to comparable GAAP measures. I hope we see shareholder and issuer input alike, which goes not only for the preeminent panelists on the dais today, but also market participants of all stripes. Please use the opportunity to make your voices heard in the comment file.

Additionally, staff (at the behest the Commission) has recently taken steps to limit shareholder engagement with management, in the executive compensation and other contexts, by amending staff guidance on 13D and 13G filings. This may put more pressure on the proxy process. How can we strengthen transparency and the quality of disclosures, both in general and specifically in light of these regulatory changes that tend to discourage shareholder communications?

Cost. The Chairman has also posed questions relating to cost. I would encourage panelists to consider all costs in their comments, and not just those incurred by issuers (which, of course, are ultimately borne by the shareholders). Oftentimes, shareholders expend substantial sums analyzing compensation data disclosed in filings. Are there ways to use technology to lower the costs of the entire ecosystem, without sacrificing the quality of data provided to shareholders – and perhaps even improving data quality?

– Dave Lynn