One of the things we used to be able to count on was a surge in SEC enforcement settlements during the last several weeks of September. The agency always seemed to time a healthy chunk of high-profile enforcement actions to coincide with the government’s September 30 fiscal year end, but that didn’t happen this year – and I’m not the only one who noticed. Here’s what Michelle Leder from Footnoted.com had to say:
For as long as I’ve been covering the SEC, September has always been something of a sprint, with the agency racing to file charges before the end of its fiscal year. Sometimes, there would be 5 or 6 enforcement actions on the same day! But not this year. While the SEC has put out 19 press releases this month, almost all of them have been about rule changes. I counted only a single enforcement action, which seems almost unbelievable! Compare that to last year, when there were 51 releases and 41 of those were enforcement-related.
This didn’t happen during the first Trump Administration under SEC Chair Jay Clayton. In September 2018, roughly two-thirds of the SEC’s releases were enforcement related.
It looks like the enforcement hiatus isn’t just a September phenomenon either. On LinkedIn, William Floyd pointed out that the SEC issued only one Accounting and Auditing Enforcement Release in the last 99 days – and that release involved the reinstatement of a previously barred person.
The Division of Enforcement’s inactivity on the settlement front may have something to do with the fact that a new Director was named just a little more than a month ago and may just be getting her feet on the ground. However, Enforcement was one of the areas that was particularly hard hit by the SEC’s staff reductions earlier this year, so resource constraints also may be a factor.
According to the various law profs who make up the “Shadow SEC,” it isn’t just the Division of Enforcement where things appear to be moving a little slowly. Citing an August 2025 OIG report on Corp Fin’s disclosure review program and research from Olga Osvyatsky, a recent blog from the Shadow SEC says that there’s been an alarming decline in the number of comment letters and points to this year’s staff reductions as the cause:
Data document that there has been a dramatic, and worrisome, decline in 2025 of staff comment letters and that there are longer delays in the letters. We note here that the SEC historically has managed its mandated Disclosure Release Program with fewer than 300 employees; this task is challenged by the report of Chair Atkins that since the beginning of 2025 there has been about a 10% reduction in the disclosure review staff and that he “did not rule out further reductions.”
SEC comments are valued by the market and contain new information that is not already priced into stock prices. As observed, we are witnessing a sharp decline in the number of SEC comment letters released on EDGAR between January and August 2025.
The SEC has lost 27 of its 299 disclosure review employees since February according to an August 26 Office of Inspector General Report. “When experienced regulators depart in large numbers, the SEC will have fewer employees with a deep understanding of securities regulation and agency practices. With these experienced employees leaving so abruptly, the remaining staff will find it difficult to take overactive cases or begin new investigations both due to knowledge gap and the increased workload.”
Olga’s a little more circumspect when it comes to attributing the decline in comment letters to staff reductions, noting that it’s “difficult to attribute the decline in released comment letters to a specific cause because both the total number of reviews conducted and the SEC staff’s materiality judgments about whether to issue comments are unobservable.”
On the other hand, Olga says the delay in the release of comment letters is very evident. Olga points out that in the past, the Staff usually adhered to its internal guidance calling for those letters to be released within 20 business days following the issuance of a closing letter. That dissemination lag grew from 28 days in April 2025 to 100 days in August 2025.
Of course, the government shutdown isn’t going to improve this situation one bit. According to this Government Executive article, the SEC’s Shutdown Operations Plan calls for over 90% of the agency’s employees to be furloughed during a government shutdown.
It’s only been a couple of days since the government shutdown began, and there’s already been significant collateral damage. Fresh on the heels of a triumphant farewell tour with the rest of The Wu-Tang Clan, Ghostface Killah was set to go on tour with his new album this month. Unfortunately, that’s been delayed by the shutdown. This HotNewHipHop.com article has the details:
In support of the new project, Ghostface Killah was set to go on tour starting this month. Unfortunately, however, plans have changed. Last night, he took to Instagram to announce that the tour has been postponed. According to him, the decision was made due to the United States government shutdown.
“Peace family,” the post begins. “I gotta let y’all know — because of this government shutdown, we’re postponing the upcoming Supreme Clientele Sessions. This one hurts me, because I was looking forward to building with y’all face-to-face — sharing the stories, the laughs, the jewels. But I also know everybody’s feeling the weight of what’s going on right now.”
It turns out that Ghostface Killah’s tour may not be the only Wu-Tang Clan adjacent matter that might face shutdown-related delays. As you may recall, an outfit called PleasrDAO acquired the only copy of The Wu-Tang Clan’s “Once Upon a Time in Shaolin” from the DOJ a few years ago, and sold NFTs last year in order to raise sufficient funds to release the album to the public.
That Wu-Tang Clan album was originally owned by convicted fraudster Martin Shkreli (which is how it came into the DOJ’s possession), and he was prohibited from copying it. However, he apparently did, and PleasrDAO sued him. Last month, a federal judge ruled that PleasrDAO could proceed with trade secrets claims against Shkreli, but there’s unlikely to be much action in the lawsuit with the government shut down.
Barnes & Thornburg’s Jay Knight flagged a comment letter exchange in which the Staff questioned the timeliness of a company’s Form 8-K reporting a director’s resignation. Form 8-K CDI 117.01 says that an Item 5.02 8-K reporting obligation is triggered by a director’s notice of a decision to resign. The guidance is pretty clear, but as Klotho Neurosciences’ response to a Staff comment challenging its S-3 eligibility illustrates, the trick is applying it:
The Company respectfully submits that it is eligible to use Form S-3 at this time.
While the Company’s Form 8-K filed on August 30, 2024, originally stated that the resignation of director Edward Cong Wang occurred on August 25, 2024, this was later clarified and corrected in Amendment No. 1 to the Form 8-K, filed on July 22, 2025. As explained in that amendment, although Mr. Wang submitted a written resignation via e-mail on Sunday, August 25, 2024, the Company contacted him on Monday, August 26, 2024, to confirm his resignation and ask whether he intended to exercise his contractual right to designate a successor. Mr. Wang responded later that day and confirmed that he would not be appointing a replacement. Accordingly, the Company reasonably determined that the resignation became finalized and effective on Monday, August 26, 2024—the date on which the necessary corporate steps were complete and the Company could determine the resulting board vacancy and compliance implications.
Thus, the Company filed the original Form 8-K within four business days of August 26, 2024, consistent with Item 5.02 of Form 8-K and Instruction I.A.4 to Form S-3, which requires timely filing of all required reports. The correction made in the amended Form 8-K/A was intended solely to clarify the effective date in line with the Company’s good-faith interpretation of when the resignation was finalized.
The good news is that the Staff didn’t comment further on this issue, but Jay says there are some lessons in this comment letter exchange that all public companies should keep in mind. These include the need to provide directors and officers with a “rules of the road” memo that helps them understand nuances associated with determining when a director resignation triggering event has occurred, and the need to ensure that appropriate disclosure controls and procedures are in place related to director resignations.
If you’re looking for some guidance on director and NEO resignation issues, check out our Form 8-K Handbook. We have Q&As in the Handbook that address a bunch of different “did they or didn’t they?” scenarios.
According to Woodruff Sawyer’s “Looking Ahead Guide 2026,” the D&O market remains favorable for mature public companies, but not quite to the same extent that it has in recent years:
Pricing continues to decline for mature public companies, though the rate of those decreases has steadily moderated. This trend is especially evident when focusing on pricing for the primary layer of coverage. In 2025, the median premium reduction in this segment is 5%. That’s a notable shift from the high single-digit decreases seen in 2024 and the steeper 14%–22% median reductions experienced in 2023. The market appears to be stabilizing, even as buyers continue to benefit from favorable conditions.
For the excess layers on D&O program towers, two dynamics are shaping the market. For starters, new entrants are still struggling to gain traction and market share. In a competitive soft market, these unproven carriers are rarely chosen for primary layers or for critical excess positions. That’s because established carriers are aggressively moving down the tower to secure layers with more rate. As a result, buyers are seeing reductions across their total programs—but carrier appetite for the high excess layers could be close to capacity.
The Guide also has good news for less mature companies, finding that premiums for IPO issuers and mature public companies have converged and that the large gap in premium rates that existed prior to the first quarter of 2024 has mostly been eliminated.
Despite the continuing good news for D&O buyers, there may be storm clouds on the horizon. The Guide says that 83% of underwriters surveyed said that the risk environment is increasing, and ” an overwhelming majority of underwriters believe that increasing complexity and global volatility will inevitably lead to more D&O claims.”
October is here, and that means our Proxy Disclosure & 22nd Annual Executive Compensation Conferences are just around the corner. We hope to see you in person in Las Vegas on October 21st and 22nd or to have you join us virtually if travel isn’t an option. Not sure about attending? Here’s a taste of what you’ll miss out on if you don’t:
– Two “SEC All-Stars” panels featuring insights from former senior SEC staff members on today’s most pressing proxy disclosure, governance and executive compensation issues.
– Our “Year of the Clawback” panel will share insights from leading practitioners about the lessons learned from the restatements announced and clawbacks instituted in 2025 — plus ongoing considerations for your own clawback policy.
– Our “Navigating ISS & Glass Lewis” panel will offer insights from representatives of both proxy advisors to help you prepare for the 2026 proxy season, including key policy changes, disclosure dos and don’ts, tips for engaging with proxy advisors and more.
– Our “Delaware Hot Topics” panel featuring insights from leading lawyers within and outside of Delaware to help get you up to speed on the latest developments in Delaware law and share practical tips for Delaware corporations.
Of course, this just scratches the surface of what our world-class speakers will cover during our two full days of timely & topical panels at our PDEC Conferences – so sign up today! You can register online or reach out to our team by emailing info@ccrcorp.com or calling 1.800.737.1271.
If you’re attending in person, please join us on Monday, October 20th from 4:00 to 7:00 pm for a casual reception celebrating CCRcorp’s 50th anniversary and offering you an opportunity to network with your fellow attendees, sponsors, exhibitors and our CCRcorp team!
The SEC’s decision to change its policy on mandatory arbitration bylaws has received favorable reviews from public companies and their advisors, but this Mintz memo cautions companies considering such a bylaw that there are some advantages to litigating securities cases in federal court that they need to keep in mind. This excerpt discusses the PSLRA’s automatic stay provisions, which don’t apply to arbitration:
Congress designed the PSLRA in part to deny serial securities plaintiffs the opportunity to leverage strike suits and frivolous class claims to extract sometimes-handsome nuisance settlements from companies. One strategy a plaintiff may use to gain leverage in such negotiations is to exploit the significant time and expense that defendants must bear in responding to plaintiff’s discovery requests for documents, testimony and information at the outset of most lawsuits.
To correct that imbalance, the PSLRA, where applicable, imposes an automatic stay of discovery in all cases where defendants have filed a motion to dismiss, which ensures that cases that are not well-pled (i.e., that are likely frivolous) are thrown out before they cost the parties substantial sums. Arbitration, however, has no stated rule or mechanism for staying discovery. Defendants therefore may be required to pay to meet discovery obligations even when moving to dismiss a frivolous arbitration claim.
Other benefits of a federal forum noted in the memo include the PSLRA’s heightened pleading standards, the finality offered by the resolution of a class action lawsuit, the right to appeal an adverse ruling, and the possibility that in some cases, arbitration may prove to be a more expensive process than litigation.
With the possibility of eliminating mandatory quarterly reporting moving to the top of the SEC’s agenda, this Debevoise memo discusses some of the potential pros and cons of moving to a semi-annual reporting regime.
On the positive side, the memo cites the possibility of a greater long-term focus for public companies, lower regulatory compliance costs, and potential alignment with non-US jurisdictions and with the obligations of foreign private issuers. On the negative side, the memo cites the possibility of decreased transparency and lower information quality, and the absence of uniform standards for more frequent reporting.
This excerpt raises the possibility that public companies may, ironically, find themselves with more frequent public reporting obligations if quarterly reports were eliminated:
Quarterly information released by companies serves to prevent fraud and market manipulation. A broad range of investors rely on quarterly reporting to cleanse material nonpublic information in connection with their asset-management and trading. Less frequent reporting could lengthen trading blackouts and reduce trading activity generally unless companies disseminate regular, voluntary financial and other updates.
To prevent this, lenders and the markets in general could push for a greater transparency and frequency of cleansing disclosures than Form 8-K—which is generally filed only when specifically triggered—presently affords them. For example, investors and lenders may advocate for an immediate reporting regime, similar to the Market Abuse Regulation in other jurisdictions, pursuant to which issuers would have to monitor continuously and proactively for inside information and be ready to disclose such information via a regulatory news service without delay.
If this sounds familiar, it may be because Dave raised this possibility when he blogged about the potential move to a semi-annual reporting system last month. Also, be sure to check out Liz’s recent blog on what this all may mean for securities lawyers.
Ideagen Audit Analytics recently published its annual report on audit fee trends. The report covers the period from 2005 – 2024 and includes data from more than 6,600 registrants. Here are some of the highlights:
– Average audit fees reached a record high of $3.26 million in 2024, representing a 9% increase from the previous year
– The Big Four firms control 69% of the audit market, with PwC leading at 21% market share and $5.5 million average fees
– Finance industry companies pay the highest average audit fees at $4.1 million, while life sciences companies pay the most relative to revenue
– Foreign private issuers consistently pay higher audit fees as a proportion of revenue compared to domestic filers
The report notes that public company audit fees have increased steadily over the past 20 years, reflecting the increasing complexity of audits and heightened regulatory oversight. The report suggests that industry consolidation and the ability of private equity funds to invest in accounting firms are likely to impact audit fee trends over the coming years.
Yom Kippur begins this evening, and we’d like to extend our best wishes for an easy and meaningful fast to all our friends who are observing the holiday.
With a potential government shutdown less than 24 hours away, Corp Fin hasn’t provided any updates to the most recent version of the government shutdown guidance that it posted in March 2025. That’s probably still the best place to look for information on what a shutdown will mean for public companies, but you may also want to check out this Ropes & Gray memo on the implications of a shutdowns for SEC filers. This excerpt offers some advice on actions companies should take before and during a shutdown:
Before a shutdown (non-WKSIs without effective registration statements only)
– Consider putting a shelf registration statement in place and submitting an acceleration request as soon as your filing is substantially complete and statutory requirements are met.
– Line up any necessary EDGAR access codes and passwords given constrained staffing during a shutdown.
During a shutdown
– Continue timely Exchange Act filings via EDGAR.
– Companies with effective shelf registration statements may proceed with offerings via prospectus supplements (and, for WKSIs, via post-effective amendments, if needed).
– Non-WKSIs that must update an effective registration statement should consider whether they can proceed without a post-effective amendment that will need to be declared effective.
– For offerings relying on Rule 430A that missed the 15-day pricing window, consider Rule 462(c) post-effective amendments to restart the 15-day period.
– If the shutdown is protracted, non-WKSIs may want to evaluate whether to use the 20-day automatic effectiveness path, if available, after carefully weighing risks (eligibility, review status, unresolved comments), including the antifraud and liability provisions of the federal securities laws, which apply equally to registration statements that go effective by operation of law.
On another shutdown related topic, although the Trump administration is threatening mass firings of government employees in the event of a shutdown, Reuters is reporting that the head of the SEC’s union has told members that there’s no reason to believe that this shutdown will be different than prior ones, or that it will result in additional staff reductions.
Update: Thanks to reader Jeffrey Rubin for giving us a heads up that the SEC adopted this updated version of its Government Shutdown Operations Plan in August 2025.
