John shared encouraging stats last week for IPO momentum heading into 2026. If you’re planning an IPO in the near future, you should know that there is also a focus on market quality alongside the push to “Make IPOs Great Again” (in contrast to poor framing by the WSJ).
The latest example happened last week, when the SEC posted notice & immediate effectiveness of a Nasdaq proposal that expands the exchange’s ability to deny an initial listing based on the risk of price manipulation by third parties. This Mayer Brown blog summarizes the update:
Under the proposal, Nasdaq would adopt new interpretive material, IM‑5101‑3, under Nasdaq Rule 5101 that would permit it to deny an initial listing if it determines, based on a qualitative assessment, that the company’s securities are susceptible to manipulation or present comparable risks. This authority would apply even if the issuer otherwise meets Nasdaq’s existing listing requirements.
Nasdaq explains that the change would allow consideration of broader risk indicators suggesting susceptibility to problematic or unusual trading. Under the proposed rule, if Nasdaq denies a listing pursuant to this authority, it must issue a written determination explaining the basis for its decision. The issuer would have the right to appeal the determination to a Nasdaq hearings panel and would be required to publicly disclose the denial and the concerns identified by Nasdaq.
Nasdaq’s rule change aligns with the SEC’s recent trade suspensions based on alleged market manipulation – as the WSJ article had noted, there have been at least 12 trading suspensions since September, which is more suspensions than the previous 4 years combined.
It also follows other recent efforts by Nasdaq to clean up penny stocks. Meredith shared the proposals in real time earlier this fall, and now the SEC has:
– Initiated proceedings to determine whether to approve or disapprove a proposal to adopt additional initial listing criteria for companies primarily operating in China
– Approved a proposal, as amended, to amend certain initial listing requirements for de-SPAC transactions
– Approved a proposal, as amended in its entirety, to increase the minimum market value of unrestricted publicly held shares for companies that are pursuing an initial listing under the net income standard on either the Nasdaq Capital Market or the Nasdaq Global Market
When it comes to Nasdaq’s expanded discretion to consider the risk of manipulation during the initial listing process, the Mayer Brown blog shares these thoughts on what companies and their counsel should do:
For issuers seeking an initial Nasdaq listing, the proposal underscores the importance of assessing qualitative risk factors alongside technical listing compliance. In-house counsel and management may wish to consider whether ownership structures, jurisdictional features, public float characteristics, management experience, or the regulatory history of advisors involved in the offering could raise concerns under the proposed framework.
Advisors should also be mindful that Nasdaq may consider broader market patterns and past outcomes associated with similar listings when reviewing applications, rather than focusing exclusively on issuer-specific facts. Issuers and their advisors should consider how this expanded authority, if approved, could affect listing readiness, timing, and engagement with the exchange during the application process.
In case you missed it, the White House published an executive order late last week to give federal workers a holiday from December 24th through December 26th. As far as I can tell, the 5-day weekend won’t have much impact on issuers. Here’s what I can glean as of the time of this blog:
– The executive order permits agency heads to keep staff on-duty and stay open in their discretion.
– As of the time of this blog, the SEC hasn’t updated its website to announce any additional closures beyond the permanent federal holidays.
– In other years where there’s been a temporary holiday for federal workers, if the SEC is planning to be fully closed, it announces that – for example, see the announcement posted last year.
– The stock exchanges are sticking to their already-established holiday schedule of closing early on December 24th (at 1:00 pm ET) and operating a regular full trading day on December 26th, according to this Reuters article.
– So, perhaps there will be fewer folks reporting into the office, but for now it seems like Edgar is still open and the 24th and 26th will count as “business days.”
Here are holiday greetings from SEC Chair Paul Atkins and the staff in each division. I love the festive spirit!
Update: Helpfully, a few hours after this blog was published, the SEC has now posted a formal announcement that EDGAR will be closed this Wednesday through Friday, resuming normal operations on Monday, December 29th. That means no EDGAR filings will be accepted and December 24-28 are not “business days” for purposes of filing deadlines.
About a year ago, we brought Meaghan Nelson onboard here at CCRcorp – and she’s been busy! In addition to her full-time job as a Partner at Stoel Rives and handling annual updates to our treasure trove of essential handbooks, one of the most significant things Meaghan has done was relaunching The Mentor Blog for our members.
So, for our “Mentorship Matters with Dave & Liz” podcast, it seemed fitting for Dave and I to sit down with Meaghan to discuss the blog and all of the twists & turns that she’s seen so far in her career. Check out this 27-minute episode to hear:
1. Meaghan’s role in relaunching The Mentor Blog on TheCorporateCounsel.net – including the topics she’s covering and what she hopes corporate and securities practitioners will glean from it.
2. Meaghan’s career journey and how mentors and mentees have played a role in her success.
3. Advice for handling big decisions.
4. Meaghan’s book recommendations for 2026.
We’ve been getting great feedback about the thoughtful observations and advice that Meaghan has been sharing for corporate and securities law practitioners. I know I’m enjoying it! Make sure to subscribe to The Mentor Blog to see the new posts.
Thanks to everyone as well for the positive reach-outs on 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.
According to PwC’s 2026 US Capital Markets Outlook, the state of the IPO market in 2025 gives us plenty of reasons to think that 2026 will be a strong year. Here are some of the signs of strength that PWC cites in its report:
– Through November 30, 72 traditional IPOs have raised more than $33.6 billion—surpassing the full-year totals of 2024 (62 IPOs; $27 billion), 2023 (35 IPOs; $17.7 billion), and 2022 (28 IPOs; $7.1 billion). Momentum accelerated meaningfully in late summer and early fall, with September becoming the busiest month for new listings in years.
– Notably, eight companies were still able to price their IPOs during the October-early November government shutdown, underscoring the depth of investor appetite and the resilience of the issuance window. The shutdown did, however, pause SEC operations and delay several in-process offerings, ultimately pushing many issuers into 2026.
– Sponsor-backed IPO activity strengthened further in 2025, marking the busiest year for sponsor-backed issuance since 2021. Year to November 30, 17 sponsor-backed companies have raised more than $8.9 billion, already surpassing the full-year total for 2024, when 13 deals raised $8.8 billion. The 2025 cohort has delivered an average return of approximately 22% since debut, reflecting solid investor demand for scaled, cash-generative businesses with clear deleveraging paths.
– VC-backed IPOs also strengthened in 2025. Year to November 30, 34 VC-backed companies have raised approximately $16.4 billion, compared to 29 issuers raising more than $8.6 billion in all of 2024. Although fewer in number than in earlier cycles, the 2025 cohort has been larger, more profitable and more operationally mature than their 2021 counterparts.
– SPAC issuance posted its most active stretch since 2021. Year to November 30, 122 SPACs have raised approximately $22.2 billion, far surpassing the 57 SPAC IPOs that raised $8.7 billion in 2024.
Sectors that PwC expects will lead the IPO charge in 2026 include AI infrastructure, insurance and specialty risk companies, and software—particularly AI-enabled platforms. It says that momentum is also building in industrials and the manufacturing sector, including reshoring, aerospace and defense.
Revitalizing IPOs was a topic that featured prominently in SEC Chairman Paul Atkins’ recent speech on revitalizing America’s markets at the NYSE. During his remarks, he stressed that “[r]aising capital through an IPO should not be a privilege reserved for those few “unicorns,” and discussed regulatory reforms designed to enhance the IPO on-ramp and make it easier for smaller companies to engage in initial public offerings.
This recent Mayer Brown blog says that it will take more than regulatory changes like these to bring back small cap IPOs:
While all of these measures are undoubtedly important and necessary steps to improve capital formation, there are significant issues that disproportionately affect smaller companies that would not be addressed by any on-ramp regardless of its slope or length. Since the 1990s, the market has changed. There are fewer institutional investors focusing on small- and mid-cap stocks. We cannot make them reappear.
There is less research coverage dedicated to smaller companies—this is well documented by the reports that have been published over the years by the Office of the Advocate for Small Business Capital Formation. The lack of research coverage negatively impacts the liquidity of the securities of smaller public companies.
This, in turn, makes it more difficult for these companies to raise capital in follow-on offerings and raises their cost of capital even though these companies chose to become public, in part, to improve their access to capital and to lower their cost of capital. The companies are then forced to turn to less appealing, higher cost capital-raising alternatives that also are more dilutive. That negatively impacts their stock price. A downward spiral.
While these market conditions aren’t likely to be fixed through regulatory reform, the blog highlights some additional regulatory impediments that the SEC should consider addressing beyond enhancements to EGC status and tweaking filer status thresholds and filer status-based disclosure requirements.
In particular, the blog notes how the stock exchanges’ shareholder approval requirements for private placements in close proximity to M&A transactions have a disproportionately negative impact on smaller public companies, and how Staff interpretations of the volume limits in the baby shelf rules also negatively impact smaller issuers.
Nasdaq’s recent rule proposal to expand trading hours for listed equities and exchange-traded products to 23 hours a day, five days a week has prompted some pushback from others on Wall Street who think it’s a terrible idea. Here’s an excerpt from a recent article in The Street:
A lot of people on Wall Street think this is the wrong answer to a real problem. According to Forbes reporting, Wells Fargo analysts blasted the proposal as “the worst thing in the world,” arguing it would further “gamify” stocks and make equity trading look even more like a casino.
Their core argument is simple: liquidity in U.S. stocks is already heavily concentrated around the opening and closing bells, while off-peak hours are thinner and more fragile.
“Most of the complaints I hear about market structure are about poor volumes,” a Wells Fargo trading desk memo said, questioning why the response is to stretch trading across even more hours.
Jay Woods, chief global strategist at Freedom Capital and a veteran NYSE floor broker, told CNBC that companies and investors need “time to pause” to process information, hold meetings, and release news without an active tape reacting instantly. He warned that nonstop or near-nonstop trading “opens up a new set of challenges,” including burnout for traders and executives and less time for thoughtful decision making.
Concerns include spreading volume over a greater number of hours, which critics fear could lead to wider spreads and greater volatility. That volatility could be exacerbated by market reactions to overnight news, which the article says could result in investors waking up to discover “a stock blasted 10% higher or lower on thin overnight volume, driven more by traders’ knee-jerk reactions than by calm analysis. Critics also cite the higher costs resulting from competitive pressures on banks and brokerages to staff desks for overnight trading.
Proponents of 24/5 trading argue that current practices are out of sync with how people want to trade, and as Liz blogged earlier this year when Nasdaq first revealed its intention to move in this direction, the SEC already approved the “24X Exchange,” which launched in October of this year.
Over on RealTransparentDisclosure.com, Broc Romanek posted a link to this recent Labrador report reviewing public company ESG proxy disclosure practices in 2025 and offering some thoughts on how to approach those disclosures in 2026. For 2025, the report says that companies took one of three alternative approaches to ESG proxy disclosure in light of the evolving environment:
– Stay the course and retain a description of their ESG programs. For the companies that retained their disclosure in 2025, many acknowledged a clear tie to their business and long-term value creation.
– Retain some disclosure but reduce the amount of content or modify the description to delete controversial words or programs.
– Delete any ESG disclosure from the proxy statement.
Here’s how Labrador suggests that companies approach these disclosures during the upcoming proxy season:
One thing is certain – the landscape will continue to evolve as the different political parties, special interest groups and other stakeholders work to advance their priorities and search for common ground. At least in the near-term, though, many large investors still prioritize climate risk, environmental stewardship and other issues that have direct financial implications for companies.
In response, we advise that companies still include an oversight section in proxy statements that describe how sustainability-related responsibilities are allocated among management personnel, the Board and its committees. In addition, best practice companies are tying Board oversight of sustainability to the company’s strategy and stakeholder feedback. Any disclosures beyond an oversight description are dependent on a company’s particular circumstances and investor base. In all cases, though, companies should provide enough information about issues that have a direct financial implication to allow stockholders to make an informed decision when voting on a company’s directors.
Companies should always be mindful of the consistency of sustainability-related disclosures between their proxy statement and sustainability reports. Attention should be given to a thoughtful review of a company’s disclosure documents to ensure a consistent and coherent message.
The report also includes numerous sample disclosures from 2025 proxy statements and summarizes the sections of BlackRock, Vanguard and State Street’s proxy voting guidelines relating to their expectations concerning sustainability disclosures.
Gunster’s Bob Lamm – who is no fan of proxy advisors – has some words of caution for those inclined to rejoice over President Trump’s recent executive order targeting them. Here’s an excerpt from his comments:
Executive orders are not models of subtlety or nuance, and given the complexities of the proxy process (more on that below), they are likely to have any number of unintended consequences. (Can you say “ready- fire-aim”?)
One such consequence may be the demise of the proxy advisory business. Some may view that as a good thing, but one reason that the proxy advisory business continues to exist is that there is a market for it; many investors need it. Simply stated, investors do not have the time to review proxy statements at all, much less review them carefully. (For example, I once asked one of my company’s major investors how much time it spent reviewing our proxy statement. The response was more or less as follows: “You are one of our major investments, so we devote more time to you than most companies – around 15 minutes.”)
With the number of investments they have to monitor, Bob says it’s not surprising to see many institutions rely on third parties for advice. He suggests that if the proxy advisory industry is squashed, some institutions won’t vote at all, which could make it even harder for companies to obtain quorums. Even worse, these institutions may reflexively vote “no” or increase their use of robo-voting.
Join us at 2 pm Eastern today for the webcast – “Anatomy of a Shelf Takedown” – to hear DLA Piper’s Era Anagnosti, Fenwick’s Amanda Rose, and Gunderson’s Andrew Thorpe provide in-depth look at the legal and practical issues involved in a shelf takedown of debt or equity securities.
Members of this site are able to attend this critical webcast at no charge. If you’re not yet a member, try a no-risk trial now by contacting us at info@ccrcorp.com or calling us at 800.737.2171. 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. The webcast cost for non-members is $595, and you can sign up for the webcast by contacting us at the email address or phone number listed above.
We will apply for CLE credit in all applicable states (with the exception of SC and NE which require advance notice) for this 1-hour webcast. You must submit your state and license number prior to or during the program using this form. 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.
Earlier this week, the WSJ’s popular “Heard on the Street” column fired a broadside at emerging growth companies and called into question the SEC’s efforts to enhance the benefits associated with EGC status. Unfortunately, the column did so by using a small group of foreign penny stock issuers to paint the entire EGC category of issuers as a scam factory. Check out this excerpt:
The U.S. government has tried to address the long decline in stock-exchange listings by relaxing the rules for small public companies. But this approach creates a persistent risk: more stock scams.
The quandary is on display now at the Securities and Exchange Commission. Its chairman, Paul Atkins, is pushing to further ease the reporting obligations for many smaller companies under a 2012 statute called the JOBS Act. The law gives special treatment to “emerging growth companies,” or EGCs, including exemptions from many accounting, auditing and disclosure requirements.
At the same time, Atkins is leading a fresh attack on stock frauds targeting individual investors. Since late September, the SEC has suspended trading in 12 companies’ stocks. That is more suspensions than in the previous four years combined. The SEC cited potential manipulation that appeared to be aimed at inflating the stocks’ prices and volume.
The critical link: All 12 are emerging growth companies under the JOBS Act. Though the acronym stands for “Jumpstart Our Business Startups,” these aren’t American companies. It is highly doubtful any of them could have gone public on U.S. exchanges without the JOBS Act and the regulatory relief afforded by their EGC status.
All 12 are based in Asia, including four in Hong Kong and one in China. Ten went public this year, and two last year, on the Nasdaq Stock Market. All 12 initially went public as “penny stocks,” pricing their IPOs at less than $5 per share. Yet most didn’t stay that way.
The article goes on to recount how the prices of these penny stocks soared during the relatively brief period following their IPOs until the SEC suspended trading.
The apparent manipulation of prices in a couple of handfuls of foreign penny stocks is a pretty slender reed upon which to rest a broader indictment of EGCs, and I think the case gets weaker as the column goes on. For example, the column says that the stock market is “awash with struggling EGCs” and points to the fact that of the 304 listed companies currently trading below $1 a share 205, or 67%, self-identified as EGCs, and that 63% of that group were foreign companies, most of which came from China or Hong Kong.
I don’t think the fact that most of the companies that trade below $1 are foreign companies is a big surprise to anyone who has been paying attention over the past 15 years. Putting that issue aside though, I’d have guessed that EGCs accounted for much more than 67% of sub-dollar stocks. That’s because most IPOs significantly underperform the market and, according to WilmerHale’s 2025 IPO Report, nearly 90% of IPO issuers have been EGCs since the enactment of the JOBS Act. (It’s also worth noting that according to an article by Nasdaq’s chief economist, less than 25% of listed companies remain below $1 after 210 days.)
An SEC spokesman is quoted as saying that “it is unreasonable to conclude” that EGCs in general “are at a higher risk of violating securities laws” just because the 12 recent stock suspensions were all at EGCs. That’s right, of course, and the WSJ’s effort to use some scammy behavior on the part of a small group of foreign penny stock issuers to call into question the accommodations provided to EGCs is really a stretch.
