Capital Markets & Securities Law Watch

On March 12, 2025, the Securities and Exchange Commission’s Division of Corporation Finance issued a no-action letter clarifying “reasonable steps” issuers can take to verify the accredited investor status of purchasers, as required under Rule 506(c) of Regulation D, a safe harbor promulgated under the U.S. Securities Act of 1933, as amended.

On March 6, 2025, the Securities and Exchange Commission (SEC) released updated Compliance and Disclosure Interpretations (C&DIs) concerning lock-up agreements in the context of business combinations and introduced new C&DIs related to tender offers.

On March 4, 2025, the proxy advisory firm Glass, Lewis & Co. (Glass Lewis) stated in an email to its clients that it will continue to consider the diversity of a company’s board of directors when making voting recommendations with respect to the election or re-election of directors of U.S. companies.

The U.S. Securities and Exchange Commission (the SEC or Commission) is implementing significant changes to its Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system, aimed at modernizing filer access and enhancing cybersecurity protections. On December 27, 2024, the SEC adopted a new rule, EDGAR Filer Access and Account Management (the Rule), to formalize these updates. Effective on March 24, 2025, as part of the SEC’s transition to EDGAR Next, key security enhancements will be implemented to access account management, which include requiring individual account credentials and multi-factor authentication (MFA).

On March 3, 2025, the SEC staff announced its intention to expand its nonpublic review process for draft registration statements by enhancing accommodations for companies to submit draft registration statements for nonpublic review.

On February 27, 2025, the Securities and Exchange Commission (the SEC or the Commission) announced that it has filed a joint stipulation with Coinbase, Inc. and Coinbase Global, Inc. to dismiss the Commission’s civil suit against the two entities. The same day, the SEC’s Division of Corporation Finance (the Division) issued a staff statement clarifying that meme coins are not securities.

On February 12, 2025, the staff of the Division of Corporation Finance of the Securities and Exchange Commission (SEC) issued Staff Legal Bulletin No. 14M, which provides updated information for public companies and shareholders regarding shareholder proposals pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 and outlines a new approach towards excluding shareholder proposals from a company’s proxy statement. 

On February 11, 2025, the staff (the Staff) of the Division of Corporation Finance of the U.S. Securities and Exchange Commission (the SEC) issued updated and new Compliance and Disclosure Interpretations (C&DIs) related to Schedules 13D and 13G under the Securities Exchange Act of 1934 (the Exchange Act).

On February 12, 2025, the European Commission proposed shortening the settlement period for European Union transactions in transferable securities from two business days (T+2) after the date of trade (T) to one business day (T+1).

On January 21, 2025, the Nasdaq Stock Market (Nasdaq) filed a proposed rule change with the Securities and Exchange Commission (SEC) to repeal its listing rules regarding board diversity disclosures (the Nasdaq Board Diversity Disclosure Rules).

On December 11, 2024, in Alliance for Fair Board Recruitment v. SEC, the Fifth Circuit Court of Appeals (the Court) held that the Securities and Exchange Commission (the SEC) did not have the authority to approve The Nasdaq Stock Exchange’s (Nasdaq) board diversity rule (the Rule).

Recent enforcement actions targeting a CEO, CFO, and an audit committee chair underscores the SEC's focus on gatekeeper accountability.

The SEC recently adopted rule and form amendments known as EDGAR Next, which will change the existing electronic filing system. Over the next year, companies must alter their current practices to comply with these changes. 

The Securities and Exchange Commission recently announced charges and million-dollar penalties against four companies for allegedly making materially misleading disclosures regarding cybersecurity risk and intrusions relating SolarWinds hack.

On October 7, 2024, the SEC approved a Nasdaq-proposed rule amendment which impacts Nasdaq’s minimum bid price and reverse stock splits on the exchange. These changes may impose further considerations for companies as they work through the broader impact of such actions on their overall compliance status. 

A group of United States senators, including the Ranking Member of the Senate Banking Committee, has introduced the Empowering Main Street in America Act of 2024. The bill, which largely addresses issues surrounding emerging growth companies, is divided into four parts, each focusing on a specific goal to: promote capital formation, expand investment opportunities for retail investors, enhance investor confidence, and increase oversight over regulatory bodies.

On September 27, 2024, California Governor Gavin Newsom signed into law amendments to California’s first-in-the-nation greenhouse gas emissions disclosure and climate-related financial risk reporting bills. The amendments did not delay the reporting deadlines applicable to reporting entities, and companies should take action now to ensure they will be ready to report on 2025 emissions and risks starting in 2026.

The New York Stock Exchange recently proposed changes to its Listed Company Manual to clarify how its domestic and international standards for initial listing of common equity securities apply to foreign private issuers.