This past Friday, the SEC posted notice of filing & immediate effectiveness of a proposed NYSE rule change to enable trading of securities on the exchange in tokenized form during the pendency of the DTC tokenization pilot program. The pilot program received no-action relief back in December – and the SEC approved a corresponding Nasdaq proposal last month.
Here’s an excerpt from the NYSE notice:
The proposed rule change would establish that Exchange member organizations that are eligible to participate in the DTC Pilot Program (“DTC Eligible Participants”) may trade tokenized versions of those equity securities and exchange traded products on the Exchange that are eligible for tokenization as part of the DTC Pilot Program (“DTC Eligible Securities”), pursuant to the terms of the No-Action Letter. Pursuant to the proposed changes, DTC Eligible Securities would be able to trade on the Exchange within the current national market system, using DTC to clear and settle trades in token form, per order handling instructions that DTC Eligible Participants may select upon entering their orders for DTC Eligible Securities on the Exchange.
The Exchange’s rules do not currently permit the trading of tokenized securities on the Exchange and, unless the Exchange adopts the proposed rules, the Exchange would lack a clear framework for DTC Eligible Participants to designate, at order entry, that a DTC Eligible Security be cleared and settled in tokenized form pursuant to the DTC Pilot Program.
The Exchange accordingly proposes to amend its rules to enable the trading of DTC Eligible Securities in tokenized form on the Exchange during the pendency of the DTC Pilot Program, subject to the same conditions and restrictions as the Nasdaq rule change approved by the Commission. The Exchange believes that the existing regulatory structure mandated by Congress applies to tokenized securities, regardless of whether such securities have certain unique properties like the ability to be settled on a blockchain, much like it did when the Commission allowed securities to be decimalized and electronified and when exchange traded funds and other novel securities were initially approved. The Exchange believes that no significant exemptions or parallel market structure constructs are needed for tokenized securities to trade alongside other securities, and that the markets can accommodate tokenization while continuing to provide the benefits and protections of the national market system.
Under the NYSE rules as amended by this proposal, the term “tokenized” refers to digital representations of paper securities that utilize digital ledger or blockchain technology, as opposed to “traditional” securities, which are also digital representations of paper securities, but do not utilize blockchain technology. As long as DTC Eligible Securities are fungible with, have the same CUSIP number and trading symbol as, and afford their holders the same rights and privileges as traditional securities of an equivalent class, the Exchange will trade DTC Eligible Securities in tokenized form together with traditional securities on the same order book and according to the same
execution priority rules.
For more on this topic, listen to this recent podcast that Meredith recorded with Scott Kimpel at Hunton, check out this Cooley blog that I penned with my colleague Reid Hooper, and visit our “Crypto” Practice Area.
For a recent episode of the “Mentorship Matters with Dave & Liz” podcast, Dave and I spoke with “community involvement” powerhouse Kathy Jaffari, who is a Partner at Cozen O’Connor, where she serves as Chair of the Corporate Governance Practice and Co-Chair of the Capital Markets & Securities Practice, and Chair of the ESG Practice. Kathy is also involved with the Philadelphia Bar Association and the American Bar Association, among many other pro bono and community activities. Check out this 30-minute podcast to hear:
1. Kathy’s path to leadership in local and national Bar Associations, non-profits, and other community organizations.
2. Tips for lawyers at any stage of their career who are looking to get involved in their communities.
3. Unique professional development opportunities that Bar Associations provide, and the contributions that the Philadelphia Bar Association and American Bar Association have made to the greater legal community in recent years.
4. Potential mentorship gaps for junior corporate and securities lawyers – and how senior lawyers can fill them.
Thank you to everyone who has been listening to the podcast! If you have a topic that you think we should cover or guest who you think would be great for the podcast, feel free to contact Dave or me by LinkedIn or email.
During the ABA Business Law Section’s “Dialogue with the Director” last Friday, Corp Fin Director Jim Moloney gave an update on the semi-annual reporting proposal that the SEC is expected to issue. As you might recall, mandatory quarterly reporting has been on the hit list since it somehow attracted the attention of the President last fall. Around the same time, the Long-Term Stock Exchange announced a rulemaking petition on the topic.
The prospect of moving to semi-annual reporting seems to have a lot of buzz, even though most securities lawyers might scratch their heads over whether eliminating Form 10-Q filing requirements would change much in practice. So, here are six things to know if your clients ask what this proposal could mean for them:
1. Like all proposals, it will be subject to notice & comment and actual adoption isn’t guaranteed. Accounting firms are adamantly opposed, so you can expect to see some criticism.
2. The proposal will likely permit – not require – companies to move to semi-annual reporting.
3. There are plenty of reasons why established public companies, which already have well-honed quarterly reporting processes, may continue to release results on a quarterly basis – to open trading windows, raise capital, facilitate an active trading market, etc. But while the earnings release would remain, the formality of a “Form 10-Q” could disappear (depending on what the proposal and a final rule, if any, say). It isn’t unheard of to release numbers “off cycle” – i.e., not driven by a ’34 Act reporting obligation. For example, a company might release “flash numbers” if conducting an offering before issuing its regularly scheduled quarterly disclosures.
4. Newer and smaller public companies would be the most likely to benefit from the rule change, as it would give them more time to ease into quarterly reporting procedures. Think life sciences and small regional banks. It could help “Make IPOs Great Again” in this way.
5. For companies that take advantage of the semi-annual reporting regime, they would need to give notice before moving to a quarterly reporting cadence. Companies would likely move to a quarterly cadence eventually, for the reasons noted above.
6. US regulators aren’t alone in rethinking quarterly reports: Canada also recently launched a pilot project that would exempt certain issuers from filing first- and third-quarter disclosures. However, as Meredith blogged, companies that want to maintain the option of raising capital may not be able to participate in it.
The skuttlebutt is that this proposal is near the top of the pile in terms of near-term release dates, out of an exciting 22 “blockbuster” proposals that Jim flagged as being in the queue at Corp Fin. But the SEC has to carefully comply with all of the procedural steps before any rulemaking goes out the door.
In talking with our members about the status of much-anticipated SEC proposals, we hear a common sentiment: “A little less conversation, a little more action please.” Of course, rulemaking is an inherently lengthy and complex process – which in many ways is a good thing – and I don’t want to sound ungrateful for the positive things we’ve seen in terms of helpful guidance and practical applications of the rules as they currently stand. (And to be fully accurate, we do appreciate the conversation – we just also want to see the rules – but this isn’t nearly as catchy as the Elvis quote.)
When it comes to getting modernized rules on the books though, the unfortunate truth is that the SEC no longer has exclusive control over the timing of its proposals. Due to the February 2025 executive order limiting the power of independent agencies, everything has to pass through the White House’s Office of Information and Regulatory Affairs (OIRA). This Global Policy Watch blog from last August gave a 6-month update on how the new review process was working:
Also unclear at the time of the Trump order’s issuance was whether OIRA review would substantially delay independent agency rulemakings. Indeed, fear of undue delay was one main objection urged against the extension of OIRA review to independent agencies. But the experience of the last six months suggests that OIRA review does little to delay independent agency rulemakings. OIRA review of independent agency rulemakings (excluding rulemakings by the sui generis CFPB) lasted an average of 17 days, and no review took more than 29 days. To date, then, OIRA has reviewed independent agency rulemakings in a fraction of the ninety days allotted to it for regulatory reviews under the Clinton-era order.
I’m skeptical that this additional step is operating so smoothly – but with respect to SEC proposals, I hope I’m proven wrong (or at least, that some rules might be close to seeing the light of day). This dashboard shows which rules have been sent for review. Proposals on crypto assets and semiannual reporting were sent in late March – so if the average turnaround time applies, we could see those any day! The blog explains that Commissioners aren’t voting on rules until after they’ve made it through OIRA review.
I’m not sure if I’ve mentioned this in the blog, but once upon a time, I almost became an economist. Law school won out over graduate school largely because I was tired of calculus. So, I’ve always had a soft spot for the SEC’s Division of Economic and Risk Analysis – and last month at PLI’s “SEC Speaks” conference, I was reminded that this Division will have a significant role in Chair Atkins’ ambitious rulemaking agenda. Here are seven things I learned about DERA from that event:
1. DERA is a substantial operation. The division has approximately 170 people – economists, data scientists, statisticians, lawyers, and other professionals – with the majority holding PhDs in economics, finance, or related fields. It supports economic policy, examination, enforcement, analysis, data management, and risk analysis. It’s a “high impact” division.
2. DERA wants data for rulemaking. The panel emphasized that comment letters on upcoming rule proposals will be most persuasive if they contain data. DERA uses data from various sources for the economic analyses that inform Staff recommendations and Commission decisions – and data points from companies and other industry participants can reveal information that public filings do not. There’s a whole guide about how the economic analysis works for rulemaking. Ideally, submit data in structured format so that DERA can easily analyze it.
3. The Statistics & Data Visualizations page is a hit. I recently blogged about this page. Launched in August at Chairman Atkins’s direction, the statistics “white page” provides centralized, interactive statistics covering capital formation, market participants, market activity, and investors. Since launch, it has attracted 40,000+ views and 28,000+ users!
4. Structured data makes AI tools work better – but only if the data is clean. DERA’s Office of Disclosure designs “taxonomy” – that’s the list of tags that makes filings machine-readable. With more market participants using AI, it’s important to note that the models are only as good as the data they are trained on. Structured data with standard taxonomy provides the context that makes AI tools effective. The SEC’s own AI task force has worked on projects such as analyzing the tonality of narratives in filings.
5. Scaling errors are still a problem. We’ve blogged about DERA’s data quality reminders on fixing scaling errors, but apparently the problem continues. Other common errors include using outdated tags, creating custom tags for standard disclosures, and discrepancies between different parts of the same filing. While lawyers often don’t have much visibility into the detailed tagging process, you can remind filing agents to use public validation rules to check data quality before submitting a filing.
6. DERA’s data sets are getting more popular. DERA’s Office of Disclosure publishes 15 free datasets on its website that are regularly updated. In the past year, downloads of the “Financial Statements and Notes” data set has doubled – it’s one of the most downloaded items on sec.gov.
7. DERA’s economic analysis is also critical to enforcement actions. The Division helps establish whether material non-public information would cause a stock price change – e.g., through event studies – and identifies suspicious trading patterns – e.g., by figuring out the odds of making successful trades. They gave an interesting illustration of a marble jar that helped me wrap my head around how they find suspicious trades. I’ll spare you the details – but will definitely be passing it along to my 5th grade mathlete.
If you were alerted yesterday to an off-cycle Schedule 13G Amendment from Vanguard Group, Inc., you weren’t alone. Howard Dicker of Weil Gotshal pointed out to us that as of 6:40 pm ET, Vanguard Group, Inc. had filed about 1,010 Schedule 13G Amendments – here’s the current list of filings by this entity.
The filings largely stem from the realignment at Vanguard that I blogged about last year – I noted at the time that companies may need to make name changes in their beneficial ownership tables when the realignment was finalized. In the amendments, Vanguard Group, Inc. is reporting that it beneficially owns zero shares of the company. The filings state:
On January 12, 2026, The Vanguard Group, Inc. went through an internal realignment. In accordance with SEC Release No. 34-39538 (January 12, 1998), certain subsidiaries or business divisions of subsidiaries of The Vanguard Group, Inc., that formerly had, or were deemed to have, beneficial ownership with The Vanguard Group, Inc., will report beneficial ownership separately (on a disaggregated basis) from The Vanguard Group, Inc. in reliance on such release. These subsidiaries and/or business divisions pursue the same investment strategies as previously pursued by The Vanguard Group, Inc. prior to the realignment. Further in accordance with SEC Release No. 34-39538 (January 12, 1998), The Vanguard Group, Inc. no longer has, or is deemed to have, beneficial ownership over securities beneficially owned by such subsidiaries and/or business divisions.
Yesterday’s flood of Schedule 13G/As was preceded by initial Schedule 13G filings that started in February 2026 by Vanguard Portfolio Management LLC. These filings actually do show shares owned (not zero), stating:
On January 12, 2026, The Vanguard Group, Inc., the parent entity of Vanguard Portfolio Management LLC, went through an internal realignment. As of that date, The Vanguard Group, Inc. no longer performs portfolio management services or administers proxy voting. Such services are performed by Vanguard Portfolio Management LLC. In accordance with SEC Release No. 34-39538 (January 12, 1998), Vanguard Portfolio Management LLC anticipates that it and certain other subsidiaries or business divisions of subsidiaries of The Vanguard Group, Inc., that currently have, or are deemed to have, beneficial ownership with The Vanguard Group, Inc., will report beneficial ownership on a disaggregated basis from The Vanguard Group, Inc. in reliance on such release. These subsidiaries and/or business divisions pursue the same investment strategies as previously pursued by The Vanguard Group, Inc. prior to the realignment.
This Schedule 13G reflects the securities beneficially owned, or deemed to be beneficially owned, by Vanguard Portfolio Management LLC and the following affiliates of Vanguard Portfolio Management LLC or business divisions of such affiliates: Vanguard Fiduciary Trust Company. This Schedule 13G includes securities held by Vanguard funds, or sleeves thereof, over which Vanguard Portfolio Management LLC exercises dispositive power, in addition to securities held by clients over which the affiliates or business divisions of such affiliates indicated in the previous paragraph exercise dispositive and/or voting power. This Schedule 13G does not include securities, if any, beneficially owned by other affiliates of Vanguard Portfolio Management LLC or business divisions of such affiliates.
What’s with the timing, though? The internal realignment occurred on January 12, 2026. It’s not clear to me what’s driving the “zero” filings by Vanguard Group Inc. – but when it comes to Vanguard Portfolio Management LLC, it might have filed initial Schedule 13Gs in February instead of waiting until after quarter-end because its post-realignment beneficial ownership exceeded 10% for the applicable companies. Rule 13d-1(b)(2) says:
The Schedule 13G filed pursuant to paragraph (b)(1) of this section shall be filed within 45 days after the end of the calendar quarter in which the person became obligated under paragraph (b)(1) of this section to report the person’s beneficial ownership as of the last day of the calendar quarter, provided, that it shall not be necessary to file a Schedule 13G unless the percentage of the class of equity security specified in paragraph (i)(1) of this section beneficially owned as of the end of the calendar quarter is more than five percent; however, if the person’s direct or indirect beneficial ownership exceeds 10 percent of the class of equity securities prior to the end of the calendar quarter, the initial Schedule 13G shall be filed within five business days after the end of the first month in which the person’s direct or indirect beneficial ownership exceeds 10 percent of the class of equity securities, computed as of the last day of the month.
If that hypothesis is correct, you might notice Vanguard Portfolio Management LLC making additional Schedule 13G filings after quarter-end for ownership in companies above 5% but below 10%. Hopefully this background helps anyone who is fielding questions about unexpected filings!
Last week, the New Civil Liberties Alliance announced that it had filed a petition asking the US Supreme Court to hear a challenge the SEC’s “gag rule.” As we’ve shared in the past, the gag rule – more neutrally known as the “no-admit/no-deny policy” – says that defendants settling civil claims with the Commission can’t go out afterwards and deny the allegations. The policy is codified in 17 CFR § 202.5(e).
The NCLA filed the petition on behalf of a group that lost a case in the 9th Circuit last summer, which was premised on a First Amendment challenge. The way the appellate court saw it, the policy isn’t facially invalid because defendants are voluntarily waiving their First Amendment rights when they agree to a settlement. But as Meredith noted at the time, the policy may not feel “voluntary” to enforcement targets – and the court even left the door open to the possibility that the policy may be unconstitutional as applied.
Not surprisingly, the NCLA announcement leans into that perspective. Here’s an excerpt from their press release:
The Bill of Rights explicitly forbids Congress from abridging Americans’ freedom of speech or press. Yet the SEC, a mere agency, claims power Congress itself lacks. The rule is not narrowly tailored, serves no legitimate or compelling government interest, restricts speech based on content and viewpoint, and restrains future speech, violating the First Amendment. Criticizing this policy, SEC Commissioner Hester Peirce has said it is designed to improperly hide agency actions from the public.
The petition is the latest in a string of efforts to overturn this rule. In late 2023, the NCLA submitted a rulemaking petition on the topic, which it previously submitted in 2018. The NCLA is the same organization that orchestrated the end of the Chevron defense, as well as challenges to the SEC’s use of administrative law judges. We don’t know yet whether the “gag rule” challenge will make it onto SCOTUS’s docket – but it’s not NCLA’s first rodeo.
The SEC’s Enforcement Division is not the only game in town when it comes to public company litigation risks – there are also private plaintiffs to worry about. A Texas statute – part of the “SB 29” overhaul to the Texas Business Organizations Code that was signed into law last year – tries to mitigate one dimension of that risk by allowing companies to impose ownership thresholds in their articles or bylaws that prevent shareholders with small ownership percentages from instituting derivative suits.
This Gibson Dunn memo flags a recent district court case that upheld the new statute in the wake of a shareholder challenge – holding that a company could impose a threshold even if the bylaws were amended to add it after the shareholder sent a demand letter. The memo shares these key takeaways:
– Public companies incorporated in Texas now have a clear and judicially validated pathway to significantly limit exposure to shareholder derivative litigation by adopting ownership thresholds in their bylaws or certificate of formation.
– By dismissing the complaint with prejudice, the decision signals that courts will enforce those thresholds strictly and scrutinize plaintiffs’ attempts to plead around them.
– After this decision, future constitutional challenges to SB 29 – particularly retroactivity and “open courts” arguments—will face an even steeper uphill battle.
– The court’s decision underscored that directors’ fiduciary duties run to — and derivative claims belong to — corporation, not individual shareholders. This enduring principle limits shareholders’ ability to assert “vested” rights or individualized injury from bylaw amendments.
The memo says that the decision reinforces the commitment of the Lone Star State to cultivate a pro-business environment that attracts incorporations.
Last week, the Staff of the SEC’s Division of Economic & Risk Analysis announced an update to its “Statistics & Data Visualizations” page to reflect the latest stats on IPOs and other public and private offerings. Here are a few high points:
Market activity increased across several categories in 2025. The updated statistics show that in 2025 there were 374 IPOs raising over $70 billion in proceeds, up from 246 IPOs raising $39 billion in 2024. The number of follow-on registered offerings increased slightly in 2025, while the amount of capital raised in the offerings decreased slightly. Amounts raised in unregistered offerings also increased in 2025. There were 34,553 Regulation D offerings in 2025 compared to 32,554 Regulation D offerings in 2024. These offerings raised $2.1 trillion in capital in 2024 and $2.4 trillion in 2025.
In 2025, there was a slight decrease in the number of corporate bond offerings—from 1,795 to 1,694—but the amount raised increased slightly from $1.17 trillion to $1.25 trillion. There were 2,320 ABS issuances in 2025, an increase from 2,032 in 2024. The number of CMBS issuances also increased with 348 issuances in 2025 compared to 302 in 2024.
Since this new page was just launched last August, it may not be top of mind – but if you’re ever looking for data, it should be! The DERA Staff said last week at PLI’s SEC Speaks that they’re committed to updating the data frequently to support more transparency around market activity. Stats on public offerings and Reg D offerings are updated quarterly – and Reg A and crowdfunding data gets a semi-annual refresh. Data on the number of reporting issuers is updated annually.
As much as you might be wishing for the conflict minerals reporting requirement to go away, that hasn’t happened quite yet – and for some companies, the Form SD process continues to be an annual ambush of last-minute panic. So, I was pleased to see this Ropes & Gray memo with 26 conflict minerals FAQs for 2026 – with plenty of time before this year’s June 1st deadline. Here’s an excerpt:
Is there anything new or different to take into account this year?
Even though there have not been changes to the Conflict Minerals Rule in the past year, registrants should consider the following:
– Do disclosures need to be updated to reflect acquisitions, dispositions or changes to product lines, segments or internal functions or departments? If there is a description of the business, is it aligned with the Form 10-K, Form 20-F and/or other relevant disclosures?
– Have there been updates to 3TG policies, procedures and/or risk mitigation measures that need to be reflected in this year’s filing?
– More generally, are disclosures and written 3TG compliance policies, procedures and risk mitigation measures in synch with actual practices? With the passage of time, changes to program personnel and changes to the business, we often find this is no longer the case.
– Does contact person or signatory information need to be updated?
– Is the forward-looking statements safe-harbor statement up-to-date?
– Is voluntary website information relating to 3TG compliance up-to-date and otherwise aligned with mandatory disclosures and current policies, procedures and risk mitigation measures?
– To the extent applicable, are US disclosures aligned with disclosures under EU and Swiss conflict minerals requirements?
– Does smelter or refiner information reported by suppliers raise potential concerns? Have suppliers listed smelters or refiners that are believed to be supporting conflict? Reported sourcing information also may be relevant to sanctions compliance, forced labor compliance under Section 307 of the US Tariff Act (including the Uyghur Forced Labor Prevention Act) and compliance with mandatory human rights due diligence legislation, as well as to human rights policies and risk assessments.
– Are there other changes in individual supplier responses or response patterns that raise potential concerns? For example, have there been meaningful changes in the quality or completeness of supplier data or supplier response rates?
– With AI advances over the past year, supplier responses relating to 3TG usage, sourcing and due diligence can more effectively and efficiently be integrated into the overall supplier compliance assessment process. AI advances also enable better use of data to help assess geographic and other sourcing risks.
– More powerful AI tools are not only benefitting registrants. This year, NGOs, other civil society organizations, social media influencers, social activists, plaintiffs’ lawyers, shareholders and others will be able to more easily identify, review, slice and dice and compare registrant-reported data. Registrants should take this into account as they prepare their disclosure.
