Yesterday, the SEC announced that, after just seven months on the job, Director of Enforcement Judge Margaret Ryan has resigned from her position. Here’s an excerpt from the SEC’s press release:
“Our goal has been to the lead the Division of Enforcement back to Congress’ original intent: enforcing the federal securities laws, particularly as they relate to fraud and manipulation,” said SEC Chairman Paul S. Atkins. “I am pleased to report significant progress toward this objective.”
Chairman Atkins continued, “Judge Ryan has served with honor and distinction since joining the Commission last year, hallmarks that have served her incredibly well throughout her distinguished career and will continue to do so. Under her leadership, the division reprioritized enforcing the nation’s securities laws, with a focus on pursuing fraud. I thank Meg for her many contributions and wish her very well.”
“I extend my thanks to Chairman Atkins, the Commission, and the staff of the Enforcement Division for the opportunity to continue my public service in a different role,” said Judge Ryan. “As I recently said, I did not seek the role of Director of the SEC’s Division of Enforcement. Rather, this role found me. And for that, I am grateful. I am confident that the foundation I helped to shape – working together with Chairman Atkins – will continue to serve investors and the markets well.”
The press release says that Principal Deputy Director Sam Waldon will serve as Acting Director of the Division of Enforcement.
The SEC didn’t announce a reason for Judge Ryan’s departure, but the whole situation is very odd. Given her background as a military appellate judge and academic, Judge Ryan seemed an unlikely choice for the position in the first place, and she kept a very low public profile throughout her tenure. In fact, she made her first public remarks as Enforcement Director only last month. Now, she’s gone. Your guess is as good as mine as to why.
Rule 15c2‑11 generally prohibits brokers from publishing quotations for OTC securities unless specified, current information about the issuer is publicly available. Yesterday, the SEC announced proposed amendments that would limit the Rule’s application to equity securities only. Here’s the 76-page Proposing Release and here’s the one-page Fact Sheet. This excerpt from the Fact Sheet explains what this proposal is about:
In 2020, Rule 15c2-11 was amended to require that specified information be current and publicly available for brokers and dealers to publish a quotation for, or maintain a continuous quoted market in, a security in a quotation medium. Following the adoption of the 2020 amendments to Rule 15c2-11, numerous industry participants stated that they never understood Rule 15c2-11 to apply to non-equity securities and expressed concerns with the potential burdens of applying the amended rule to fixed-income securities.
After industry participants shared their concerns regarding Rule 15c2-11’s application, the Commission provided exemptive relief and the staff issued a no-action letter addressing the vast majority of fixed-income securities. Accordingly, the Commission is proposing amendments to Rule 15c2-11 to replace the term “security” with “equity security,” as defined in Exchange Act Rule 3a11-1.
Comments on the proposal are due 60 days after publication in the federal register.
In other rulemaking news (and at the risk of “burying the lede”), the WSJ is reporting that the SEC may issue its long-anticipated proposal to eliminate mandatory quarterly reporting as soon as next month. Stay tuned.
Be sure to tune in at 2 pm Eastern tomorrow for the CompensationStandards.com webcast – “Pre-IPO Through IPO: Compensation Strategies for a Smooth Transition” – to hear Morgan Lewis’s Timothy Durbin, Alpine Rewards’ Lauren Mullen, Cooley’s Ali Murata, Pearl Meyer’s Aalap Shah, and Latham’s Maj Vaseghi share practical guidance on key compensation considerations from the pre-IPO phase through the offering and into the first chapter of public company life. Our panelists will also address questions submitted by members in advance (the deadline was March 13th).
Topics include:
– Assessing Existing Arrangements and IPO Impact
– Designing and Adopting New Equity Plans and ESPPs; Share Pool Strategy
– Managing “Cheap Stock” Issues; 409A Valuations
– Designing and Communicating Special IPO Awards
– Negotiating New Employment Agreements; Change-in-Control and Severance Terms
– Navigating Lockups, Blackout Periods and Post-IPO Selling Mechanics
– Establishing the Post-IPO Executive Compensation Program
– Building Compensation-Related Policies, Governance and Controls
– Communicating with Executives and Employees Through the Transition
– Transitioning Director Compensation (time permitting)
– Q&A: Answering Questions Submitted in Advance (15 minutes)
Members of CompensationStandards.com can attend this critical webcast (and access the replay and transcript) at no charge. Non-members can separately purchase webcast access. If you’re not yet a member, you can sign up for the webcast or a CompensationStandards.com membership by contacting our team at info@ccrcorp.com or at 800-737-1271. Our “100-Day Promise” guarantees that during the first 100 days as an activated member, you may cancel for any reason and receive a full refund.
We will apply for CLE credit in all applicable states (with the exception of SC and NE which require advance notice) for this one-hour webcast. You must submit your state and license number prior to or during the live program. Attendees must participate in the live webcast and fully complete all the CLE credit survey links during the program. You will receive a CLE certificate from our CLE provider when your state issues approval, typically within 30 days of the webcast. All credits are pending state approval.
This program will also be eligible for on-demand CLE credit when the archive is posted, typically within 48 hours of the original air date. Instructions on how to qualify for on-demand CLE credit will be posted on the archive page.
Whenever I watch international sporting events, I’m always struck by just how many of the world’s countries have national anthems that you don’t have to be Whitney Houston to sing properly. Ireland is one of those countries – and I’d place its unofficial anthem, “Ireland’s Call,” among the very best. So, in honor of St. Patrick’s Day, here’s the Irish rugby team and thousands of proud Irish men & women belting it out:
I have several professional Irishmen in my family (my last name’s Jenkins, but my other 3 grandparents last names are Kennedy, Keefe and Gallagher), and I know I’d hear from them if I didn’t point out that Ireland’s Call isn’t the Republic of Ireland’s official anthem, and that it’s used at rugby matches for reasons that reflect the Emerald Isle’s sad & divided history.
Still, it’s a terrific song and one that both North & South are increasingly proud to sing together. I think that’s something we can all lift a glass to on this St. Patrick’s Day.
Happy St. Patrick’s Day to all of you actual or honorary sons & daughters of Erin!
The SEC’s decision to withdraw from its role as Rule 14a-8 referee has generated bipartisan howls from leading participants in the shareholder proposal industry about “silencing shareholder voices.” However, early returns suggest that companies are taking a cautious approach about telling their shareholders to “shut up.” Check out this excerpt from a recent Bryan Cave blog discussing ISS’s Proxy Season Preview (which Liz recently blogged about over on our “Proxy Season Blog”):
As discussed in our November 19, 2025 post, in most cases, companies can now decide themselves whether to exclude shareholder proposals – subject only to documenting a reasonable basis for exclusion.
However, according to ISS, a smaller percentage of companies (22%) are omitting proposals so far this year compared to 2025 (28%). This suggests that companies “may be reassessing the strategic value of omissions and the risks associated with it.”
For example, as noted in our post, companies may face litigation risks from proponents. Last month, three lawsuits were filed, with two of the companies quickly settling and agreeing to include the proposals. In one case, the complaint alleged inadequate disclosure in the company’s notice filing with the SEC.
Glass Lewis noticed the same thing in its review of how companies are handling shareholder proposals so far:
While the SEC’s change can be interpreted as giving boards free rein to set their meeting agendas, some companies appear to be taking a more cautious approach. A number of companies that filed exclusion notices prior to the November 17 announcement (Analog Devices, Apple, Costco, Starbucks and Tyson Foods) did not receive any response from the SEC, did not withdraw or refile their notices, and ultimately allowed these shareholder proposals go to a vote.
Like ISS, Glass Lewis also highlights the changing risk environment that companies face in the absence of the no-action process as likely contributing to this cautious approach. Participants in the shareholder proposal industry have proven willing to litigate, and institutional investors and proxy advisors have indicated that there will be consequences to boards that exclude proposals without solid justification.
Disclosure of executive security arrangements is a topic that’s received a lot of attention over the past year, including from SEC Chairman Paul Atkins, who suggested that the SEC’s continued treatment of executive security arrangements as a perk doesn’t reflect modern business realities. While Chairman Atkins’ comments may give companies reason to hope that perk disclosure of these arrangements may soon end, for this year at least, the old rules continue to apply.
So, with all the attention being paid to executive security, what should companies disclose about these arrangements in their proxy statements? Over on Real Transparent Disclosure, Broc recently provided some answers to that question. Here’s an excerpt:
– Rapid Growth in Executive Security Spending: Personal security services (home security, cybersecurity, security personnel, travel security) are increasing in prevalence and cost. Disclosure rates show 64% of the S&P 100, 35% of the S&P 500 – and 10% of the Russell 3000 provide executive security services, with expectations of continued growth.
– ISS’s Evolving Position on Security Perks: While ISS historically cited security expenses critically in negative Say-on-Pay recommendations, it recently relaxed its stance. ISS now indicates it is unlikely to raise significant concerns if companies provide robust proxy disclosure explaining the rationale and assessment process behind security programs.
– Disclosure Expectations from Proxy Advisors: Adequate disclosure should describe:
-The nature of the security program
– The benefit to stockholders
– The internal or third-party security assessment
– The arm’s-length decision-making process
Broc also says that companies expecting a significant increase in executive security expenditures need to involve the compensation committee and the relevant executives early on in order to ensure a robust assessment and approval process. These companies should also provide clear disclosure of that process in the CD&A in order to mitigate any criticism they might receive from proxy advisors.
Check out our latest “Timely Takes” Podcast featuring Cleary’s J.T. Ho & his monthly update on securities & governance developments. In this installment, J.T. reviews:
– New CDIs – Notices of Exempt Solicitations
– New CDIs – Broker Search Timing
– New CDIs – Spinoff Exec Comp Disclosure
– Rule 14a-8 Litigation
– Updates on Fallout from DEI Executive Order
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 Meredith at john@thecorporatecounsel.net or mervine@ccrcorp.com.
While securities fraud claims based on alleged “hypothetical risk factors” aren’t likely to be a high priority for the SEC in the current environment, they continue to get some traction in private securities litigation. The 9th Circuit’s decision earlier this month in Const. Laborers Pension Trust v. Funko, (9th Cir.; 2/26) provides further evidence of that – and highlights the potential for these claims to preclude companies from relying on the PSLRA’s safe harbor for forward-looking statements. Here’s an excerpt from The 10b-5 Daily’s blog about the case:
In [Funko], the plaintiffs alleged that Funko’s “risk disclosures” about its ability to manage its inventory in the future “concealed the facts that Funko had already failed to manage its inventory and that its business, financial condition, and operations were already adversely affected.” The district court found that these risk disclosures were protected by the PSLRA’s safe harbor because the plaintiffs failed to adequately plead actual knowledge of their falsity. On appeal, however, the Ninth Circuit panel appears to have created a new exception to the safe harbor.
In particular, the panel concluded that because the alleged omission related to Funko’s current failure to manage its inventory, the risk disclosure “implicitly serves as a comment on the present state of affairs, because it suggests that the circumstance posing the risk has not yet occurred.” And, as a result, the risk disclosure “does not fall under the safe harbor for forward-looking statements because its falsity lies not in the failure to predict the future, but in the implicit assertion about the present that the risk identified has not happened yet.” In other words, if a plaintiff alleges an “affirmative misrepresentation theory” then the otherwise forward-looking risk disclosure is converted into a statement of present fact and is not subject to the safe harbor.
The blog notes that the 9th Cir.’s position here is unusual, and that taken to its logical conclusion could essentially gut the PSLRA’s safe harbor, because “virtually every forward-looking statement securities fraud claim is based on the alleged omission of some ‘undisclosed fact tending to seriously undermine the accuracy of the statement.’”
It’s worth pointing out that federal courts have long had a somewhat tortured relationship with the PSLRA safe harbor for forward-looking statements. If you’re interested in learning more about how judges have sometimes twisted themselves into a knot to avoid applying the safe harbor, check out this article that I wrote for The Corporate Counsel newsletter a few years ago.
Over on The Business Law Prof Blog, Ben Edwards provides some interesting statistics on the jurisdiction of incorporations for companies that went public in 2025. Those statistics come from a slide deck prepared by Houlihan Lokey’s Robert Rosenberg for a PLI M&A conference in which both gentlemen participated. Houlihan Lokey’s data indicates that while Delaware was the jurisdiction of incorporation for over 80% of IPOs conducted in 2022-2024, its share fell to just under 62% in 2025. Nevada was the jurisdiction of incorporation for nearly 17% of IPO issuers in 2025, while Texas came in at just under 4%.
Does this mean it’s time for Delaware to panic? Ben doesn’t think so:
Although I can’t speak for the other panelists here, I think we all expect that Delaware will remain king of the hill by a substantial margin. There have been some shifts and some companies moving, but Delaware will continue to grow both in terms of overall numbers from private entity formation, public company IPOs, and public companies deciding to move to Delaware from other jurisdictions.
Delaware’s overall numbers depend on both DExits and DEntries. Companies sometimes shift their incorporation from one jurisdiction to another. As long as more are moving in than moving out, Delaware will continue to grow. Delaware has a dominant product. That isn’t likely to change anytime soon. But that doesn’t mean that there isn’t any room for other states to offer alternatives.
Traditionally, most companies confronted with an SEC enforcement action have opted to negotiate a settlement with the agency. However, this Dentons blog says that with the change in the SEC’s approach to corporate penalties and uncertainties regarding the continued viability of disgorgement in cases not involving investor harm, companies should give some thought to potentially litigating with the SEC:
Corporate penalties took a nose-dive following the change in administration, and this downward trend is generally expected to continue in 2026, with the possibility of a change in penalty policy. And expect the SEC to consider giving more credit for cooperation and remediation than before. There is also more uncertainty about the SEC’s use of the disgorgement remedy until the US Supreme Court decides later this year whether the SEC must show “pecuniary harm” to investors to obtain disgorgement.
Given this uncertainty, litigating instead of just settling should be carefully considered as an option in the defense toolkit. Litigation, or even the credible threat of litigation, can often yield better results, especially when regulators are seeking unreasonable monetary and non-monetary sanctions.
The blog also speculates on likely corporate enforcement targets, and says that companies with foreign ties, those with prior regulatory issues, and companies that are promoting new products (whether AI-related or not) may find themselves on the SEC’s radar.
