The transition to a new U.S. administration has led to a marked shift in regulatory tone for the U.S. Securities and Exchange Commission (SEC). Chairman Paul Atkins, who was appointed by President Trump on April 29, has signaled shifting priorities for the SEC, notably relaxing regulation of crypto-currency, pulling back from climate change and ESG-related regulations, and avoiding the use of "novel" legal theories to pursue enforcement actions against corporate and other market participants. Consistent with the SEC under the first Trump administration, the agency is emphasizing investor protection, capital formation and maintaining fair, orderly and efficient markets, with an enforcement agenda aimed at more traditional securities fraud cases.
Regulatory pullback and informal guidance
On January 20, President Trump issued the "Regulatory Freeze Pending Review" executive order, directing federal agencies to pause non-final rulemaking activity for administrative review. In response, the SEC has reduced its pace of regulatory activity, and certain SEC rules have been delayed or withdrawn entirely (e.g., climate change disclosures and digital asset regulation). The most prominent example of this pivot occurred on March 27, when the SEC formally withdrew its defense of the 2023 climate disclosure rules in State of Iowa v. SEC, citing concerns about costs and regulatory overreach: the withdrawal effectively halted future advancement of that rule. On June 12, the SEC withdrew a further 14 proposed rules issued under the prior administration1.
While under this regulatory freeze, the SEC has worked outside the formal rulemaking process to selectively address certain agenda items through the issuance of disclosure guidance and no-action relief. For example:
- On February 11, the SEC's Division of Corporation Finance issued a Compliance and Disclosure Interpretation (C&DI) regarding the eligibility of shareholders to file beneficial ownership reports on Schedule 13G rather than the more detailed reports on Schedule 13D2. The C&DI clarifies that certain forms of shareholder engagement, such as conditioning support for board nominees on specific strategic changes, may disqualify investors from passive Schedule 13G reporting. The guidance appears aimed at curbing activist investors from using Schedule 13G while advancing social and political agendas, including those related to DEI or ESG priorities.
- On February 12, the SEC published Staff Legal Bulletin (SLB) 14M3, which rescinded previous SEC guidance that limited the ability of SEC reporting companies (which are subject to U.S. proxy rules) to exclude shareholder proposals that presented issues with "broad societal impact".
- On March 12, the SEC issued a no-action letter providing interpretive guidance on what constitutes "reasonable steps" to verify purchasers' accredited investor status in offerings conducted under Rule 506(c) of Regulation D, which are private offerings in which general solicitation is permitted4. Rule 506(c) requires detailed diligence efforts to verify accredited investor status, which has made this exemption less appealing since its introduction in the JOBS Act of 2012. In furtherance of the SEC's objective to promote capital formation, the no-action letter permits issuers to obtain representations from purchasers who invest at least US$200,000 (for natural persons) or US$1 million (for legal entities) in lieu of the 506(c) verification requirements, which remain in place for smaller investors.
Concept release on the definition of "foreign private issuer"
The first major indication of formal rulemaking occurred on June 4, when the SEC issued a concept release soliciting public comment on the definition of "foreign private issuer" (FPI) under U.S. securities laws5, which determines which non-U.S. companies are eligible to rely on certain SEC reporting and regulatory accommodations. The concept release is largely directed at Chinese-based companies that report with the SEC as FPIs while using offshore (Cayman/BVI) incorporation structures, because these companies—which as of 2023 represent the most common jurisdiction of incorporation for SEC-reporting FPIs—typically only have U.S. securities listing and are not subject to meaningful home country securities regulation.
While the SEC concept release articulated its general support of the U.S./Canada Multijurisdictional Disclosure System (MJDS), any revisions to the FPI definition could impact Canadian issuers that report as FPIs, including those relying on the MJDS. Torys is closely monitoring these developments and will continue to assess potential implications for FPIs, including MJDS reporting companies (for more on this topic, consult our recent bulletin).
Revisiting executive compensation disclosures
On June 26, the SEC hosted a roundtable to consider the appropriateness of existing executive compensation disclosure requirements6, which primarily apply only to U.S. domestic reporting companies. While new rules have not yet been proposed, it seems likely that there will be proposed rulemaking in the future to simplify what Chairman Atkins has described as "a Frankenstein patchwork of rules" relating to executive compensation disclosure.
The SEC in the days to come
Chairman Atkins indicated in June that the SEC has decreased its headcount by 15%, and time will tell how that will impact future rulemaking initiatives as well as the tone, volume and scope of the SEC's comment process. For now, SEC review has been operating largely in line with historical practice, both procedurally and with respect to the volume and content of SEC comments. Meanwhile, major rulemaking initiatives remain paused, although targeted efforts—such as the recent concept release on the FPI definition or any future changes to executive compensation disclosure—indicate that selective regulatory refinements may still advance. For issuers accessing U.S. capital markets, this environment presents both stability in core disclosure expectations and uncertainty as the regulatory agenda continues to evolve.
Footnotes
1 U.S. Securities and Exchange Commission, Withdrawal of Proposed Regulatory
Actions, June 12, 2025.
2 U.S. Securities and Exchange Commission, Exchange Act Sections 13(d) and 13(g) and Regulation 13D-G Beneficial Ownership Reporting, February 11, 2025.
3 U.S. Securities and Exchange Commission, Shareholder Proposals: Staff Legal Bulletin No. 14M (CF), February 12, 2025.
4 U.S. Securities and Exchange Commission, No Action Letter: Latham & Watkins, March 12, 2025.
5 U.S. Securities and Exchange Commission, Concept Release on Foreign Private Issuer Eligibility, June 4, 2025.
6 U.S. Securities and Exchange Commission, SEC Announces Roundtable on Executive Compensation Disclosure Requirements, May 16, 2025.
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