Yesterday, the SEC announced an open meeting to be held at 10:00 am Eastern on Wednesday, September 17th. The agenda includes:
ITEM 2:Acceleration of Effectiveness of Registration Statements of Issuers with Certain Mandatory Arbitration Provisions – The Commission will consider whether to issue a policy statement addressing the presence of a provision requiring arbitration of investor claims arising under the Federal securities laws and its impact on decisions whether to accelerate the effectiveness of a registration statement.
ITEM 3:Amendments to the Commission’s Rules of Practice – The Commission will consider whether to amend its Rules of Practice relating to procedures governing Commission review of staff actions made pursuant to delegated authority in connection with the determination of the effectiveness of a registration statement or the qualification of a Regulation A offering.
On Item 2, MoFo’s Ryan Adams on LinkedIn said, “Wow, this is a big deal! Could this be the end of the SEC’s prohibition on mandatory arbitration provisions in the governing documents of those looking to go public? Sure seems like it…” If so, it would mean the death of a decades-old policy position that these clauses are contrary to public policy & potentially inconsistent with the anti-waiver provisions of the Securities Act & Exchange Act.
There has been speculation before that the SEC could change its stance on mandatory arbitration provisions (on this site, back as far as 2007 and during the first Trump administration). But this latest development goes far beyond speculation!
Yesterday, in a keynote address at the Inaugural OECD Roundtable on Global Financial Markets, which facilitates discussion of recent developments in financial markets to promote the development of consensus-based policies, Chairman Atkins shared views (subject to the SEC’s standard disclaimer) with roundtable attendees — including senior officials from ministries of finance, central banks, financial regulators and other relevant bodies. His speech touched on a number of high-priority topics for the Commission:
Accommodations for Foreign Issuers. Noting that the FPI concept release was one of his first actions this year, Chairman Atkins highlighted that the release seeks public feedback on whether “foreign companies listed in the United States should be subject to additional conditions—such as a minimum foreign trading volume or listing on a major foreign exchange—for them to receive accommodations not available to U.S. companies.”
To be clear, the SEC welcomes foreign companies that seek to access the U.S. capital markets. The concept release is not a signal that the SEC intends to disincentivize such firms from listing on U.S. exchanges. Rather, our goal is to better understand the impact on U.S. investors and the U.S. market resulting from significant changes to the population of foreign companies listed in the United States over the last two decades. Among the notable changes are the makeup of foreign companies reporting to the SEC and the trend of incorporating in a jurisdiction, such as the Cayman Islands, that differs from where the company is headquartered, operates, and is subject to a governance framework that implicates shareholder interests.
In light of these changes, does the SEC’s original rationale for extending special accommodations to all foreign companies without qualification still make sense or should our rules be updated? . . . While the official comment period closed this past Monday, the SEC of course will consider input it receives after the due date in evaluating whether to propose rule changes. I look forward to reviewing the public feedback on this topic.
Accounting Standards. Chairman Atkins expressed concern that the expansion of the IFRS Foundation’s remit in recent years (Trustees are now responsible for securing funding for both the International Accounting Standards Board (IASB) and the International Sustainability Standards Board (ISSB)) has the potential to divert its focus from its long-standing core responsibilities.
[T]he IASB must promote high-quality accounting standards that are focused solely on driving reliable financial reporting and are not used as a backdoor to achieve political or social agendas. Reliable financial reporting is critical to supporting capital allocation decisions. We all have a strong interest in the IASB’s being fully funded and operational, and I encourage the IFRS Foundation to meet its goal for “stable funding” that prioritizes the IASB and its focus on standards for financial accounting, rather than specious and speculative issues.
Notably, he says, “If the IASB does not receive full, stable funding, then one of the underlying premises for the SEC’s elimination of the reconciliation requirement for foreign companies in 2007 may no longer be valid, and we may need to engage in a retrospective review of that decision.”
Financial Materiality. Citing the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the double materiality regulatory approach they apply, Chairman Atkins expressed concern about the impact of these laws on U.S. companies with EU operations and that the costs of compliance “are potentially passed on to American investors and customers.”
Agentic Finance. Chairman Atkins imagines agentic finance in our future — “a system whereby autonomous AI agents execute trades, allocate capital, and manage risk at speeds no human can match, with securities law compliance embedded in its code.” He noted the potential benefits of “faster markets, lower costs, and broader access to strategies once reserved for Wall Street’s largest firms” and shared his view that the “government’s responsibility here is to ensure that commonsense guardrails are in place while eliminating the regulatory obstructions that stifle innovation.”
Last week, the SEC announced the creation of a Division of Enforcement task force focused on identifying and combating cross-border fraud harming U.S. investors. The press release says the task force will focus on investigating:
– U.S. federal securities law violations related to foreign-based companies (e.g., “pump-and-dump” and “ramp-and-dump” schemes)
– Violations related to companies from foreign jurisdictions where governmental control and other factors pose unique investor risks (e.g., China)
– Gatekeepers that help these companies access the U.S. capital markets (e.g., auditors and underwriters)
Cross-border fraud isn’t solely an area of focus for the Division of Enforcement. Chairman Atkins states: “I have also directed the staff in other SEC divisions and offices, including the Divisions of Corporation Finance, Examinations, Economic and Risk Analysis, and Trading and Markets as well as the Office of International Affairs, to consider and recommend other actions that would better protect U.S. investors, including new disclosure guidance and any necessary rule changes.”
This Quinn Emanuel alert says, “This isn’t just bureaucratic noise. It’s the first big enforcement signal from Chairman Paul Atkins since he took over in April. After months of staying tight-lipped on enforcement priorities, Atkins is now making it clear: old-school fraud is back in the SEC’s sights, and the agency’s going global.”
This O’Melveny Public Company Advisory Group publication reports on the results of the firm’s review of risk factor disclosures from large companies’ latest Form 10-Ks to identify common trends in reported risks across industries. Not surprisingly, risks related to AI, tariffs and the change in the presidential administration were trending up, while pandemic risk factors were trending down, and DEI risk disclosures were evolving. Here’s more info:
Artificial Intelligence. AI risks were mentioned in 86% of all Forms 10-K filed by large companies in 2025. Many large companies included a “standalone AI risk factor” that consolidated AI-related risks. AI was also referenced in these 10 other risk factors:
– Cyber threat – Actors using AI to commit cyber crimes
– Human Capital – Retaining a sufficiently skilled workforce
– Regulatory – Complying with expanding governmental oversight of AI
– Competitive – Keeping pace with technological advancements of competitors
– Use & Misuse – Misuse of AI by employees, contractors, and bad actors
– Execution – Launching new tools without vulnerabilities, bugs, or defects
– Strategic – Responding to rapid changes in technology and customer preferences
– IP – AI use leading to infringement claims by or against the company
– R&D – Recovering investments in new technologies
– Reputation – Bad publicity or liability arising from company’s use of AI
Tariffs. Tariff risks were mentioned in the Risk Factors section of 85% of all Forms 10-K filed by large companies in 2025. Those risk factors addressed:
– Tariffs and trade policies impacting availability and pricing for commodities and raw materials
– Tariffs as a factor contributing to volatility in the political and economic environment
– Tariffs and other trade restrictions causing supply chain interruptions
– Tariffs causing fluctuations in customer demand, making forecasting difficult
– Tariffs causing reduction in consumer spending
Presidential Administration Change.15% of all Forms 10-K filed by large companies in 2025 discussed risks related to the change in presidential administration. In addition to tariffs, those included:
– Risks to the company (including FCA liability) if their sustainability or other practices are deemed to be in contradiction to the Trump Administration’s “anti-ESG” policies
– Impact of the Administration’s efforts to reduce the federal workforce, in particular for companies that require federal agency approvals
– Impact of the Trump Administration’s efforts to roll back government spending, in particular for companies that rely on government contracts and subsidies
DEI. The percentage of large companies including references to DEI in risk factors declined from 2024, even while 7% of large companies added a new risk factor mentioning DEI. Where maintained or added, the risk factors often addressed the difficulty of balancing competing pressures from investors, regulators, consumers and the federal government.
The latest issue of The Corporate Executive newsletter has been sent to the printer. It is also available online to members of TheCorporateCounsel.net who subscribe to the electronic format. This issue addresses a number of very timely topics
– EDGAR Next Is Here: Our Last-Minute Guide!
– Now Available: Electronic Filing for Section 83(b) Elections
– Proxy Advisor Regulation: Texas Enters the Fray
– The SEC’s Focus on Executive Compensation Disclosure: What Have We Learned?
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Last Friday, SEC Chairman Atkins and CFTC Acting Chairman Caroline Pham issued a joint statement regarding the harmonization of SEC and CFTC regulatory frameworks, which the statement says is necessary “to ensure there is not a regulatory ‘no man’s land’ due to inaction by one or both agencies.” It follows up on a joint statement by the Staff of both agencies regarding the trading of certain spot crypto asset products, clarifying the views that SEC- and CFTC-registered exchanges are not prohibited from facilitating the trading of certain spot crypto commodity products.
The next step in the agencies’ combined efforts is a joint SEC-CFTC roundtable on regulatory harmonization to be held on September 29, open to the public (registration required to attend live) and webcast live on the SEC’s website. Potential areas of coordination to be discussed at the joint roundtable include event contracts, perpetual contracts, portfolio margining, DeFi and 24/7 markets. Here’s what the statement says about that last one:
For on-chain finance to scale, the SEC and the CFTC should collaborate to consider the possibility of further expanding trading hours, where appropriate. Factors that may be relevant to this consideration include operational feasibility and liquidity consistent with investor and customer protections. Certain markets, including foreign exchange, gold, and crypto assets, already trade continuously. Further expanding trading hours could better align U.S. markets with the evolving reality of a global, always-on economy. Expanding trading hours may be more viable in some asset classes than others, so there may not be a one-size-fits-all approach for all products.
Last Friday, Nasdaq submitted another rulemaking proposal to the SEC. This one is a bit different. This proposal seeks to integrate digital assets into the exchange’s current infrastructure and systems and, to that end, proposes to amend Nasdaq rules to allow member firms and investors to tokenize equity securities and ETPs they trade on Nasdaq.
Here’s more from this Q&A with Chuck Mack, Senior Vice President of North American Markets for Nasdaq:
[T]he filing provides a simple and clear approach to enable trading of tokenized securities under the existing regulatory frameworks, utilizing the Depository Trust Corporation (DTC) to clear and settle trades in token form.
Here’s how it would work: A security may be traded on Nasdaq in either traditional form or tokenized form.
The traditional form is a digital representation of ownership and rights, but without utilizing distributed ledger or blockchain technology
The tokenized form is a digital representation of ownership and rights, utilizing distributed ledger or blockchain technology
Upon entry of the order, a participant can select to clear and settle in regular or tokenized form, and the exchange will communicate the participant’s instruction to the DTC. All shares will be traded on Nasdaq with the same order entry and execution rules, has the same identification number (CUSIP) as, and gives its holder the same rights and benefits as a traditional share.
Nasdaq says “this is about responding to demand,” citing “potential efficiencies, including faster settlements, improved audit trails, and a more streamlined flow from order to trade to settlement.” The Q&A stresses that “tokenization is just a different method of digitally representing an asset” and “trading would still take place under the SEC’s existing federal regulations.”
That’s a key point we make in our filing: the U.S. has existing rules that don’t preclude different types of representation of a security. If you’re trading a stock and we’re having DTC tokenize it after the trade, then nothing is different from the perspective of how the market functions, how you trade, how you get your best execution, or how you buy or sell on your trading platform. Importantly, both the traditional and tokenized types of shares would have the same value, the same rights and benefits, and the same market identification number.
The Q&A also addresses some recent reports that Nasdaq has required some crypto treasury companies to obtain shareholder approval before issuing stock to buy crypto. It clarifies that these reports do not reflect any changes or new rules, but that Nasdaq, similar to any market development, is providing guidance to listed companies on the applicability of the existing shareholder approval requirements to securities issuances. These reports, together with other proposed rule changes, are separate from each other and unrelated — but for the “common thread” of “optimizing capital formation while protecting investors and ensuring market integrity.”
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What can you buy for 10 cents these days? A single-use grocery bag? Maybe a single Jolly Rancher? What about a share of a listed company’s stock? Maybe. But Nasdaq is trying to change that in what appears to be a broader effort to do some listed company clean-up.
Last week, the SEC posted this notice and request for comment for proposed changes to Nasdaq’s minimum bid price rules. The combined effect of these proposed changes is to accelerate the delisting determination and trading suspension of a security if its bid price quickly declines from above $1.00 to below $0.10. Here’s how:
Delisitng Determination: Under the current rule, if a security has a closing bid price of $0.10 or less for 10 consecutive trading days, Nasdaq issues an immediate delisting determination (notwithstanding any otherwise available compliance period) only AFTER a company’s security is already non-compliant with the $1.00 minimum bid price requirement (which happens once the security has traded below $1.00 for 30 consecutive days). With the proposed changes, Nasdaq rules would require an immediate delisting determination (and ineligibility for any compliance periods) when a security does not maintain a closing bid price of greater than $0.10 for 10 consecutive trading days whether or not the company is first non-compliant with the $1.00 bid price requirement for 30 days.
Trading Suspension: Generally, a timely request for a hearing will stay the suspension and delisting of a security pending the issuance of a written panel decision. Nasdaq proposes to except securities that trade at less than $0.10 for 10 consecutive trading days from this general rule so that a company that is suspended under the proposed rule could appeal the delisting determination to a Hearings Panel, but its securities would trade in the over-the-counter (OTC) market while that appeal is pending. The proposal also clarifies that compliance is achieved once the security trades at least $1.00 for a minimum of 10 consecutive business days, unless Staff exercises its discretion to extend the 10 business day period pursuant to its authority to do so.
Nasdaq says these proposals are meant to more quickly boot securities from the exchange in situations that are “indicative of deep financial or operational distress within such company, and that the challenges facing such companies, generally, are not temporary and may be so severe that the company is not likely to regain compliance.”
The SEC is seeking comments on the proposal, which Nasdaq proposes to be operative 45 days following Commission approval.
Last week, Nasdaq posted twoother proposed rule changes that would modify certain initial and continued listing requirements. As detailed by this Sheppard Mullin blog, the proposals reflect the following key changes:
– Minimum Market Value of Publicly Held Shares: A new $15 million minimum public float is proposed for companies seeking to list under the net income standard.
– Accelerated Suspension & Delisting Process: Companies falling below a $5 million market value of listed securities — while also failing other compliance criteria — will be subject to swifter suspension and delisting.
– Special Rules for China-Based Companies: Companies principally operating in China would now face a $25 million minimum initial public offering (IPO) proceeds threshold for new listings.
Here is an excerpt from Nasdaq’s submission to the SEC explaining the reasoning for the first two proposed changes detailed above:
Minimum Market Value of Publicly Held Shares
Nasdaq Listing Rules require a company to have a minimum Market Value of Unrestricted Publicly Held Shares. For initial listing on the Nasdaq Global Market, a company must have a minimum MVUPHS of $8 million under the Income Standard, $18 million under the Equity Standard, and $20 million under either the Market Value or Total Assets/Total Revenue Standards. For initial listing on the Nasdaq Capital Market, a company must have a minimum MVUPHS of $5 million under the Net Income Standard, and $15 million under either the Equity or Market Value of Listed Securities Standards. Unrestricted Publicly Held Shares are shares that are not held by an officer, director or 10% shareholder of the company and which are not subject to resale restrictions of any kind . . .
Nasdaq recently modified the liquidity requirements for initial listing such that shares registered for resale are no longer counted as Unrestricted Publicly Held Shares. As a result, a newly listing company listing in connection with an initial public offering must meet the MVUPHS based on shares being sold in the offering . . .
Following this change, Nasdaq Staff has observed an increase in the number of companies applying for listing based on Nasdaq’s net income requirement, which requires a lower MVUPHS than the other standards. As noted above, Nasdaq Staff has observed problematic trading in companies with low public floats and liquidity, and Nasdaq is concerned that companies initially listing with just $5 million or $8 million MVUPHS on the Nasdaq Capital or Global Markets, respectively, may not trade in a manner supportive of price discovery . . .
Accelerated Suspension & Delisting Process
Nasdaq believes that once the market identifies significant problems in a company otherwise deficient in the listing standards by assigning a very low market value, that company is no longer appropriate for continued trading on Nasdaq because challenges facing such companies, generally, are not temporary and may be so severe that the company is not likely to regain compliance within the prescribed compliance period and sustain compliance thereafter . . .
While Nasdaq has taken action to enhance its listing standards and more quickly delist certain companies that have repeated failures to maintain compliance with those standards, Nasdaq now proposes further enhancing investor protections by providing for suspension from Nasdaq trading and immediate delisting (rather than providing a compliance period) of any company that becomes non-compliant with a numeric listing requirement, including the bid price, market value of public float, equity, income and total assets/revenue requirements, and that has a market value of listed securities of less than $5 million.
For more, check out this Q&A with John Zecca, Nasdaq’s Executive Vice President and Global Chief Legal, Risk, & Regulatory Officer.
These proposed changes are procedurally behind the proposal to accelerate the delisting and suspension of securities trading below 10 cents and the proposal to reduce initial listing requirements for companies formed by a combination with an OTC-traded SPAC since those have already been noticed for comment by the SEC. The SEC will also have to post notices and solicit comments on these proposals on its Self-Regulatory Organization Rulemaking page before approval by the Commission.
