Capital Markets & Securities Law Watch

On July 2, 2025, the U.S. Securities and Exchange Commission reached a preliminary settlement with SolarWinds Corp. and its chief information security officer in an effort to resolve a data breach case claiming that SolarWinds defrauded investors by concealing failures in its cybersecurity practices ahead of a major Russia-linked data breach in 2020.

On May 6, 2025, the Chairman of the Securities and Exchange Commission (SEC), Paul Atkins, informed SEC staff that the agency had reduced its full-time headcount by 15% across various offices and divisions since the start of the federal government’s fiscal year in October 2024.

California’s Climate Accountability Package (the CAP) requires large public and private companies doing business in California to disclose their greenhouse gas emissions and mandates that certain companies publicly report on their climate-related financial risks and the measures they are taking to address those risks. Recent amendments have left implementation timelines largely unchanged. While legal challenges to the CAP continue and final guidance has not yet been published, companies should prepare to comply as the regulatory environment evolves.

On June 30, 2025, the Securities and Exchange Commission’s (SEC) Division of Corporation Finance (the Division) revised two and eliminated one of its Compliance and Disclosure Interpretations (C&DIs) related to the disclosure of environmental proceedings under Item 103 of Regulation S-K. These changes updated Questions 105.01 and 105.03 pursuant to the August 2020 modernization of Items 101, 103, and 105. The Division also withdrew its previous guidance that administrative or judicial proceedings arising under “local provisions” in Item 103(c)(3) encompass environmental actions brought by a foreign government.

On June 23, 2025, the first-ever prosecution for bad-faith use of 10b5-1 trading plans resulted in Terren Scott Peizer, the former CEO and executive chairman of the publicly traded company Ontrak, Inc., being sentenced to 42 months in prison and ordered to pay $17.9 million in fines and restitution. A California federal district court found that Peizer had entered into Rule 10b5-1 plans in bad faith and while in possession of material nonpublic information to avoid more than $12.5 million in losses related to the termination of a large customer contract.

Following a series of executive orders issued by the Trump administration targeting DEI initiatives, many companies have made significant changes to their proxy statements this season. Disclosures relating to racial and gender diversity were once considered essential, and while proxy advisory firms continue to consider such disclosures when making voting recommendations, now many companies are skirting around the topic or eliminating any mention of diversity altogether. 

On June 4, the SEC published a concept release focusing on whether the current definition of “foreign private issuer” still makes sense in light of dramatic shifts in market structure and issuer profiles. The SEC seeks public comment on whether, and how, it should redefine “foreign private issuer” to better protect investors and promote capital formation.

On May 16, 2025, the SEC’s Division of Corporation Finance issued new and revised Compliance and Disclosure Interpretations (C&DIs) regarding public utility securitizations. These C&DIs were issued following a no-action letter issued to the Securities Industry and Financial Markets Association that clarified certain ambiguities related to Rule 192 under the Securities Act of 1933, the securitization conflicts-of-interest rule.

On May 12, 2025, the Securities and Exchange Commission hosted its fourth roundtable with the Commission’s Crypto Task Force, titled “Moving Assets On-chain: Where TradFi and DeFi Meet.” The SEC’s Commissioners largely expressed optimism about integrating blockchain technology into securities markets, anticipating flexibility and interoperability as well as the Commission’s ability to adapt. However, dissenting opinion expressed skepticism, warning of unresolved risks and urging regulatory restraint, highlighting a divide within the Commission on how favorably it will treat asset tokenization. For more information and resources, visit our Public Company Gateway page, a one-stop portal for the latest legal and regulatory developments as well as key checklists, guides, and other pragmatic desktop tools.

The Texas Governor signed a bill that raises the bar for shareholder proposals for Texas corporations. The new law, signed by Governor Abbott on May 19, 2025, has major implications for shareholders of certain Texas corporations and is part of a larger effort to make Texas more business-friendly.

On April 30, 2025, the Financial Services Committee of the U.S. House of Representatives voted to advance a draft bill that would abolish the Public Company Accounting Oversight Board (PCAOB) and shift its oversight duties to the SEC. 

On April 1, 2025, the SEC approved the launch of the Green Impact Exchange (the GIX), which will be the first sustainability-focused stock exchange in the United States. Trading on the GIX is expected to begin in early 2026. The exchange aims to provide a marketplace for environmentally responsible companies and attract investors committed to advancing environmental sustainability.

On April 11, 2025, the SEC’s Division of Corporation Finance issued six new Compliance and Disclosure Interpretations (C&DIs) regarding (i) clawback-related checkboxes on the cover page of Form 10-K and (ii) disclosure required by Regulation S-K Item 402(w)(2). These C&DIs provide crucial guidance for listed issuers on reporting corrections of errors in financial statements and analyzing the implications for executive compensation recovery.

The SEC staff also added a C&DI addressing whether target companies in de-SPAC transactions may suspend their Section 15(d) reporting obligations after closing.

On April 4, 2025, the Securities and Exchange Commission’s Division of Corporation Finance issued a staff statement that certain USD-pegged stablecoins do not qualify as securities under federal law. The announcement defines a narrow category of “Covered Stablecoins” exempt from registration requirements.

On March 27, 2025, the U.S. Securities and Exchange Commission voted to end its defense of its final rules requiring disclosure of climate-related risks, greenhouse gas emissions, and their impact on business operations.

On March 20, 2025, the staff of the U.S. Securities and Exchange Commission’s (the SEC) Division of Corporation Finance issued new guidance that permits Form S-3 registration statements that are not automatically effective upon filing, typically used by issuers that are not well-known seasoned issuers (WKSIs), to be declared effective after the issuer files its Annual Report on Form 10-K but before filing the proxy statement containing information required by Part III of Form 10-K (Part III Information) that was properly omitted from the issuer’s timely filed Form 10-K.

On March 27, 2025, the Securities and Exchange Commission hosted a roundtable discussion on artificial intelligence in the financial industry. Acting Chairman Mark T. Uyeda and Commissioners Hester M. Peirce and Caroline A. Crenshaw delivered remarks that highlighted the SEC’s efforts to assess AI’s evolving role in finance, including its benefits, risks, and regulatory implications.

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.