I am very sad to note the passing of my dear friend and mentor Cathy Dixon. Cathy was a wonderful person who accomplished so much during her time at the SEC and in private practice, and who taught me a great deal about the securities laws and the profession.
Following judicial clerkships, Cathy started her legal career as a trial attorney in the DOJ’s Antitrust Division and then joined the SEC in the appellate litigation section of the Office of the General Counsel. Cathy also served as counsel to Commissioner Steven M.H. Wallman. In the Division of Corporation Finance, Cathy served as Chief of the Office of Mergers & Acquisitions and the Office of Disclosure Policy, and then as Chief Counsel of the Division.
Cathy served as co-author of the well-known treatise on the federal proxy rules, Aranow and Einhorn on Proxy Contests for Corporate Control, a book that I refer to often! Cathy also taught a course on mergers & acquisitions at Georgetown University Law Center for a number of years. I had the opportunity to work closely with Cathy when she served as chair of the ABA Business Law Section’s Federal Regulation of Securities Committee, particularly when I served as her vice-chair. Cathy was a partner at Weil for the past 25 years, acting as a true thought leader in our profession and as a trusted counsel to public companies, boards and financial intermediaries.
As Liz and I have been exploring in our podcast series “Mentorship Matters with Dave & Liz,” mentorship is so critical to us as professionals at any stage of our career. I greatly appreciate Cathy’s mentorship at various stages of my career, including at the SEC and when making the leap to private practice. In many ways, I have modeled my career trajectory after Cathy’s, whether consciously or subconsciously. In fact, I always credit Cathy with providing me with the advice that has guided me for the past 18 years of my post-SEC career. She advised me that you can leave the SEC and five years later no one will recall that you were the Chief Counsel of Corp Fin, or you can instead do everything that you can to distinguish yourself as a leader in the profession, and people will recognize your SEC experience and all of your contributions since that time. I feel like I have been faithful to Cathy’s advice and it has truly made me the lawyer that I am today.
So it is with great sadness that I bid farewell to Cathy, who was truly a legend in everything that she did. My condolences go out to her family, friends and colleagues. Her life will be celebrated in Washington, DC next Thursday, May 8.
The Financial Times reported over the weekend on draft legislation prepared by Republican lawmakers that would, if enacted, shut down the PCAOB and fold its operations into the SEC. This draft legislation, which was published on Friday by the leadership of the House Committee on Financial Services, is intended to be included in a large tax and spending bill that is being worked on in Congress. As John noted back in December, elimination of the PCAOB is one of the policy objectives outlined by Project 2025.
The draft legislation contemplates the transfer of intellectual property retained by the PCAOB in support of its programs for registration, standard-setting and inspection to the SEC and the referral of pending PCAOB enforcement and disciplinary actions to the SEC and other regulators. All duties and powers of the PCAOB would be transferred to the SEC and employees of the PCAOB would be offered equivalent positions at the SEC. The legislation contemplates the transfer of any unobligated funds collected by the PCAOB to the U.S. Treasury and an end to collection of the accounting support fee.
The Financial Times article notes that this legislative initiative does face some additional hurdles:
It faces procedural hurdles, however. The full House Committee on Financial Services will consider the legislation in the coming days, but whether it will be included in the tax and spending bill, known as a reconciliation bill, will depend on negotiations within the Republican leadership in the House and Senate and whether it is deemed a budgetary measure.
While the Sarbanes-Oxley Act provisions that directed the establishment of the PCAOB represented a bipartisan effort seeking to address significant concerns with the accounting profession highlighted by the corporate scandals of the early 2000s, the regulator has been a lightning rod for criticism since its inception. For example, then-SEC Chairman Harvey Pitt resigned following criticism of his selection of Judge William Webster to serve as the first Chairman of the PCAOB, after reports emerged that Pitt failed to inform the other SEC Commissioners that Webster once served on the board of a company accused of fraud. In 2017, the entire PCAOB board was replaced, and subsequently Harvey Pitt was brought in to evaluate the PCAOB’s governance when issues about the Board’s leadership were identified through whistleblower complaints. For more on the history of the PCAOB, check out the SEC Historical Society’s Gallery: “Auditing the Auditors: Creating the Public Company Accounting Oversight Board.”
When I started in Corp Fin thirty years ago, everyone in my AD Group (Shelley Parratt was my Assistant Director, or “AD”) said to me: “You really need to meet Broc!” One day, I worked up the courage and walked down the long hallway on the seventh floor of 450 Fifth Street to introduce myself to Broc Romanek, who at that time was already a Corp Fin veteran, having served at the agency for several years. After I knocked on the door, Broc told me to come in and then said to me: “Do you have a suggestion?” He pointed up to where the drop ceiling met the wall behind his desk, where a large open crack had occurred in the top of the wall, and where he had posted a sign reading “Suggestion Box” with an arrow pointing to the crack. As a very green new Corp Fin employee, I was somewhat flustered by this interaction, but the rest was history, as they say. Here I am still blogging after all of these years, thanks to that first encounter with Broc and his suggestion box.
Which brings us to the Trump Administration’s new suggestion box for eliminating bothersome rules and regulations. Earlier this month, the U.S. General Services Administration (GSA) and the White House Office of Management and Budget (OMB) announced an initiative to allow the public to submit ideas for ending existing rules and regulations through an online form on Regulations.gov. The somewhat unhinged announcement of this effort states:
Recently, the U.S. General Services Administration (GSA) and the White House Office of Management and Budget (OMB) announced a first of its kind initiative to allow the public to submit ideas for ending existing rules and regulations through an online form on Regulations.gov.
The Trump Administration has made ending harmful and business-stifling regulations a priority. Publishing this form affords the American public, who are most affected by unnecessary, unlawful, or unduly burdensome regulations, the opportunity to have their voices heard in the deregulatory process. The Administration will review and analyze submissions to understand opportunities.
“Most Americans have become used to a Government that is weaponized against them, with regulations being a favored tool to do so. Today, we’re changing that by empowering the people to use their Constitutional Petition Clause power to fight back and President Trump’s Administration is here to listen and fix it,” said Office of Information and Regulatory Affairs (OIRA) Acting Administrator Jeff Clark.
“America thrives when people can challenge burdensome rules that threaten their freedom and livelihood,” said GSA Acting Administrator Stephen Ehikian. “Overregulation stifles innovation and hurts small businesses. President Trump’s GSA is here to help change that.”
When providing a submission focus on explaining:
1. The rule’s original purpose and context
2. Reasons why the rule should be rescinded (canceled), such as:
– Conflicts with law or Constitution
– Costs outweighing benefits
– The rule is no longer relevant
– The rule unexpectedly creates problems for businesses
The key is to provide clear, constructive feedback about why the existing rule or regulation should be rescinded.
GSA’s Regulations.gov, is a platform that allows the public to access regulatory materials, increases rulemaking participation, and improves federal agency efficiency and effectiveness.
Please don’t get me started on the question of why this is a project run by the GSA, which is effectively the federal government’s landlord. In my time in government, I cannot recall the GSA ever being involved in any regulatory policy matters. Why do I suspect that Broc’s suggestion box was a more effective forum?
In any event, which SEC rules and regulations are you going to drop a dime on to the GSA/OMB? I am going to start with the conflict minerals and resource extraction issuer disclosure requirements and then go into the CEO pay ratio and pay versus performance rules. Power to the people!
The 2025 amendments to the Delaware General Corporation Law have been a big topic of conversation since they were signed into law just one month ago. Tune in today at 2:00 pm eastern on DealLawyers.com for our “2025 DGCL Amendments: Implications & Unanswered Questions” webcast to hear Johnathon Schronce of Hunton Andrews Kurth, Julia Lapitskaya of Gibson Dunn, and Eric Klinger-Wilensky of Morris Nichols discuss the 2025 DGCL amendments and what the changes mean for corporate governance and dealmaking practices. Topics include:
– Overview of the DGCL amendments
– Implications for governance agreements
– Implications for acquisition agreements
– Fiduciary duties v. contractual obligations
– Unanswered questions
Members of DealLawyers.com are able to attend this critical webcast at no charge. If you’re not yet a member, try a no-risk trial now. 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. You can sign up by credit card online. If you need assistance, send us an email at info@ccrcorp.com – or call us at 800.737.1271.
We will apply for CLE credit in all applicable states (with the exception of SC and NE which require advance notice) for this 60-minute 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.
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.
As John noted last week, new SEC Chairman Paul Atkins was sworn in last Monday and we have been anxiously awaiting to hear from him about his agenda for the agency. His first remarks came at Friday’s latest Crypto Task Force Roundtable, where each of the Commissioners offered opening remarks. The speech by Chairman Atkins was short and to the point:
Welcome to the third roundtable of the SEC’s Crypto Task Force.
I am in my fourth day back at the Commission and thank my fellow Commissioners and the SEC staff for their warm welcome. I am eager to tackle long festering issues, such as regulatory treatment of digital assets and distributed ledger technologies.
In addition, my warmest personal thanks go to Commissioner Peirce for her principled and tireless advocacy for common-sense crypto policy within the United States. It is no wonder that she has earned the title of “CryptoMom.” Commissioner Peirce is the right person to lead the effort to come up with a rational regulatory framework for crypto asset markets. Thank you to the panelists for volunteering their time and expertise.
This is important work as entrepreneurs across the United States are harnessing blockchain technology to modernize aspects of our financial system. I expect huge benefits from this market innovation for efficiency, cost reduction, transparency, and risk mitigation. Market participants engaging with this technology deserve clear regulatory rules of the road. Innovation has been stifled for the last several years due to market and regulatory uncertainty that unfortunately the SEC has fostered.
I look forward to engaging with market participants and working with colleagues in President Trump’s Administration and Congress to establish a rational, fit-for-purpose regulatory framework for crypto assets.
Today’s roundtable is focused on the challenges SEC registrants face when attempting to safely custody crypto assets for their customers in compliance with the federal securities laws. For example, are changes needed to the custody rules under the Exchange Act, Advisers Act, or Investment Company Act to accommodate crypto assets and blockchain technology? Is the “special purpose broker-dealer” regime workable for market participants, or is a new crypto asset broker-dealer framework needed? The market itself seems to indicate that the current framework badly needs attention. You all can help give us direction.
Thank you all for dedicating your Friday afternoon to helping us address these important issues. I look forward to a productive discussion.
As Chairman Atkins makes more public appearances (particularly the external ones) over the coming days and weeks, we will be able to get more insight into his developing agenda.
Question: A company sponsors a 401(k) plan that permits both employer and employee contributions to be invested through a self-directed “brokerage window.” How are purchases and sales of issuer securities through the 401(k) plan pursuant to such a self-directed “brokerage window” treated for purposes of Rule 10b5-1(c)(1)?
Answer: Because the counterparty to the self-directed “brokerage window” transaction will be an open market participant, the instruction for any self-directed “brokerage window” transaction will need to satisfy all conditions of Rule 10b5-1(c)(1), including those applicable to purchases and sales of the issuer’s securities on the open market. [Apr. 25, 2025]
Question 120.33
Question: Rule 10b5-1(c)(1)(ii)(D) provides that an individual claiming the Rule 10b5-1(c) affirmative defense to insider trading may not have multiple Rule 10b5-1 plans that provide for purchases or sales of issuer securities on the open market. Rule 10b5-1(c)(1)(ii)(D)(3) provides an exception for an eligible sell-to-cover transaction. An eligible sell-to-cover transaction is a contract, instruction, or plan that authorizes an agent to sell only such securities as are necessary to satisfy tax withholding obligations arising exclusively from the vesting of a compensatory award, such as restricted stock or stock appreciation rights, where the insider does not otherwise exercise control over the timing of such sales. Does “necessary to satisfy tax withholding obligations” refer to the minimum tax withholding obligation imposed under the applicable tax rules, or to tax withholding payments calculated to satisfy the employee or director’s expected effective tax obligation with respect to the vesting transaction?
Answer: For purposes of Rule 10b5-1(c)(1)(ii)(D)(3), “necessary to satisfy tax withholding obligations” refers to tax withholding payments that are calculated in good faith to satisfy the employee or director’s expected effective tax obligation solely with respect to the vesting transaction, consistent with applicable tax law and accounting rules. [Apr. 25, 2025]
The three withdrawn CDIs are as follows:
Question 120.02
Question: A person who has adopted a written trading plan or given trading instructions to satisfy Rule 10b5-1(c) plans to sell the securities in reliance on Rule 144. Can the person modify the Form 144 to state that the representation regarding the seller’s knowledge of material information regarding the issuer is as of the date the Rule 10b5-1 plan was adopted or instructions given, rather than the date the person signs the Form 144?
Answer: The form already includes the representation, so modification is unnecessary. [Apr. 24, 2009]
Question 120.19
Question: Does canceling one or more plan transactions affect the availability of the Rule 10b5-1(c) defense for future plan transactions?
Answer: The cancellation of one or more plan transactions would be a modification of an alteration or deviation from the plan, which would terminate that plan. See Rule 10b5- 1(c)(1)(iv). The Rule 10b5-1(c) defense would be available for transactions following the alteration such termination only if the transactions were pursuant to a new contract, instruction or plan that satisfies the requirements of Rule 10b5-1(c). See Securities Act Release No. 7881 (Aug. 15, 2000), at fn. 111 and Question 120.16. Moreover, if a person established a new contract, instruction or plan after terminating a prior plan, then all the surrounding facts and circumstances, including the period of time between the cancellation of the old plan and the creation of the new plan, would be relevant to a determination whether the person had established the contract, instruction or plan “in good faith and not as part of a plan or scheme to evade” the prohibitions of Rule 10b5- 1(c). [Mar. 25, 2009]
220.01 After the written trading plan described in Q&A 120.11 has been in effect for several months, the broker that has been executing plan sales goes out of business at a time when the person is aware of material nonpublic information. The person wishes to continue sales under the plan pursuant to its original terms. The person may transfer plan transactions to a different broker without being deemed to have cancelled the original plan and adopted a new plan if the transfer to the new broker is timed so that there is no cancellation of any transaction scheduled in the original plan, and the new broker effects sales in accordance with the original plan’s terms in compliance with Rule 10b5-1(c). [Mar. 25, 2009]
The majority of the revisions to the other Rule 10b5-1 CDIs involved tweaks to rule references and the addition of language regarding compliance with applicable conditions, while more substantive changes were made to: Questions 120.12, 120.15 and 120.16 with respect to limit orders; Question 120.18 with respect to terminations of Rule 10b5-1 plans; Question 120.21 with respect to employee contributions to a company stock fund in a 401(k); and Questions 120.22 and 120.23 with respect to 401(k) fund switching transactions.
The agenda for this meeting is focused entirely on Regulation A. The meeting will kick off with reports from the Staff on Regulation A, including information on where and how capital is being raised in reliance on Regulation A. The Committee will then consider the challenges that companies face when utilizing Regulation A and will discuss potential regulatory changes that could help facilitate capital formation.
Regulation A is receiving a great deal of attention in the new Administration and in Congress so the Committee’s recommendations will likely represent important contributions to the dialogue about the usefulness of this exempt offering alternative.
Stanford’s Rock Center for Corporate Governance recently issued a report about how the adoption of AI tools will influence how boards of directors do their jobs and what is expected of them. The report says that AI will have a transformative effect on corporate boardrooms:
First, artificial intelligence offers to increase the volume, type, and quality of information available to management and boards. By making this information readily available, it reduces the information asymmetry between management and directors. Board members are much less likely to be “in the dark” about the operating and governance realities of their companies as technology makes it easier for them to search and synthesize public and private information made available to them through AI board tools.
Second, AI increases the burden on both parties to review, synthesize, and analyze information prior to board meetings. Managers and directors can expect to spend substantially more time on meeting preparation, because the quantity of available knowledge is substantially greater. Elementary information that was previously reviewed during meetings will be expected to be analyzed and digested prior to the meeting.
Third, artificial intelligence will allow for the supplementation—and in some cases, replacement—of information provided by third-party advisors and consultants. Furthermore, AI will increase the breadth of analysis available to the board, coupling the retrospective review of mostly historical data (prevalent today) with more powerful tools for predictive and trend analysis. These tools will allow boards to be more proactive and less reactive.
The report cautions that as a result of the dramatic improvements in the information provided to directors through AI, “expectations for a director’s diligence in reviewing and preparing this information will be exponentially higher, and the quality of questions, challenges, and insights will also be expected to be correspondingly higher.”
We’ll always cover SEC compliance and board governance issues associated with AI developments here, but if you’re looking for guidance on risk management and compliance issues associated with AI and other emerging technologies, be sure to check out and subscribe to our free AI Counsel Blog.
Earlier this month, Liz blogged about President Trump’s memo calling for agencies to repeal facially unlawful regulations without notice and comment, where that can be done consistent with the “good cause” exception in the Administrative Procedure Act. This Pillsbury memo says that if agencies follow the President’s direction, we’re likely to see quite a thicket of litigation:
If agencies implement the memo’s direction and repeal regulations without public input, litigation is virtually assured. Advocacy groups have already announced plans to challenge the approach. Critics argue that the administration may be overreaching—particularly by attempting to apply decisions like Loper Bright retroactively, citing the Supreme Court’s express statement that its holding is prospective.
Litigation may not proceed uniformly, given the lack of consensus among federal courts on how to evaluate good-cause claims:
– The D.C. and Second Circuits apply de novo review, independently determining whether the statutory criteria are satisfied.
– The Fifth, Eighth and Eleventh Circuits apply arbitrary and capricious review, deferring to agency reasoning if it appears reasonable and supported by the record.
– The First, Third, Fourth, Sixth, Seventh, Ninth and Tenth Circuits have not adopted a clear or consistent standard, often applying mixed or fact-specific approaches.
The memo says that the disparate standards of review increases the risk of inconsistent outcomes in these lawsuits, but it also observes that if challenges to the same regulatory repeal are filed in multiple circuits, the Judicial Panel on Multidistrict Litigation may consolidate them and potentially assign them to the D.C. Circuit where de novo review would apply.
If you’re finding it as hard to keep track of all the legal and business issues created by the ongoing tariff saga as I am, you may find this Cooley blog very helpful. It offers up a “Tariff & Trade War Playbook” listing 25 things that in-house counsel should do to help their companies navigate the current environment. While it’s targeted at in-house lawyers, there’s a lot here for outside counsel to consider as well. This excerpt has some tips on stakeholder engagement:
– Develop talking points to support consistent messaging to key stakeholders on the company’s actions and responses, including employees, customers, suppliers and regulators.
– Consider whether tariff impacts should be discussed, along with other material business and financial matters, in the CEO letter included in the annual report accompanying the company’s proxy statement.
– Consider treatment of potential questions from the floor at the company’s annual shareholders meeting (and prepare Q&A ahead of time).
– Ensure communications with stakeholders, including at the annual shareholders meeting, are Regulation FD-compliant.
Other areas covered by the blog include board and management crisis governance, risk management and compliance, business strategy and operations, compensation, and public company disclosure and trading implications.