It has been hard to keep track of everything that has happened during the first 100 days of the second Trump administration. Executive Orders targeting the nation's most prestigious law firms and universities have been issued. Punishing tariffs have been threatened, imposed, withdrawn and, in some cases, imposed again. The stock markets have been in turmoil. And those are just some of the headlines.
This dizzying array of activity has also been evident at the Securities and Exchange Commission (the "SEC"), where expected and unexpected guidance has been provided on many significant matters, old priorities have been pushed aside, and a new regime has taken over.
Trying to keep up with it all has been a challenge. To help provide some order to the chaos, we set out below a high-level snapshot of 10 significant developments involving the SEC that all capital markets participants and their advisors should know.
1. New Sheriff in Town
On April 21, 2025, Paul Atkins was sworn into office as the 34th Chairman of the SEC.1 Chairman Atkins, who previously served as a Commissioner of the SEC from 2002 to 2008, was nominated by President Trump on January 20, 2025 and confirmed by the Senate on April 9, 2025. During his confirmation hearing, Chairman Atkins stated that he "will strive to protect investors from fraud, to keep politics out of how our securities laws and regulations are applied, and to advance clear rules of the road that encourage investment in our economy to the benefit of all Americans." He also declared that "It is time for the SEC to return to its core mission that Congress set out for it: investor protection; fair, orderly, and efficient markets; and capital formation."2 At the same time that the SEC prepared to welcome a new Chairman, it also welcomed members of Elon Musk's Department of Government Efficiency, who have been undertaking an ongoing investigation to make the SEC more efficient.
2. Expanded Ability to Submit Confidential Filings
In an effort to further facilitate capital formation and make the public offering process less burdensome, on March 3, 2025, the SEC announced enhanced accommodations that will expand the types of forms eligible to be submitted as draft registration statements for nonpublic review and permit reporting companies to submit draft registration statements for nonpublic review regardless of how much time has passed since their initial public offering. In addition, companies will have added flexibility to start the registration statement review process earlier by omitting certain underwriter disclosures from their initial submissions.3
3. Abandonment of Defense of Climate-Related Disclosures
In March 2024, the SEC adopted new rules that require disclosure of climate-related risks and greenhouse gas emissions. On April 4, 2024, the SEC issued an order voluntarily staying the implementation of the climate-related disclosure rules. The stay followed a number of petitions for review filed against the SEC that challenged the legality of the rules. The rules remained stayed and under review by the U.S. Court of Appeals for the Eighth Circuit. As had been widely expected following the November elections, on March 27, 2025, the SEC voted to end its defense of the climate-related rules. Following the vote, the SEC staff sent a letter to the court stating that the SEC withdraws its defense of the rules and that SEC counsel are no longer authorized to advance the arguments in the brief the SEC had previously filed defending the rules.4
4. EDGAR Next is Now
This, technically, is not a new one. In September 2024, the SEC adopted final rules intended to improve access to and management of accounts on its EDGAR system that are related to certain technical changes to EDGAR (collectively referred to as "EDGAR Next"). The changes will require individual account credentials to log into EDGAR (allowing identification of the specific person making each submission) and multifactor authentication. Filers will also be required to authorize individuals to manage their EDGAR accounts on a new EDGAR Next dashboard.
Enrollment in EDGAR Next opened on March 24, 2025. All filers must enroll in EDGAR Next on or prior to September 15, 2025. Filers who do not enroll in EDGAR Next will still be able to file through the legacy EDGAR system until September 12, 2025. Thereafter, existing filers may continue to enroll until December 19, 2025, but enrollment will be a prerequisite to filing. Beginning December 22, 2025, filers who have not enrolled in EDGAR Next or received access through submission of an amended Form ID will be required to submit an amended Form ID to request access to their existing accounts.5
5. Updated Guidance Regarding Passive Investor Status
On February 11, 2025, the Staff of the Division of Corporation Finance of the SEC (the "Staff") issued updated Compliance and Disclosure Interpretation ("C&DI") 103.11 and new C&DI 103.12 that, together, expand the nature and scope of activities the Staff views as "influencing control of the issuer", thereby potentially limiting the types of activities in which otherwise passive beneficial owners of more than 5% of a public company's securities may engage before losing eligibility to file ownership reports on Schedule 13G.
In particular, new C&DI 103.12 provides in relevant part that "Generally a shareholder who discusses with management its views on a particular topic and how its views may inform its voting decisions, without more, would not be disqualified from reporting on a Schedule 13G. A shareholder who goes beyond such a discussion, however, and exerts pressure on management to implement specific measures or changes to a policy may be 'influencing' control over the issuer." Examples of the types of activities that a shareholder may take that may cross the line and thus render such shareholder ineligible to use Schedule 13G include (A) recommending that the issuer take a specific action regarding an ESG policy and, as a means of pressuring the issuer to adopt the recommendation, explicitly or implicitly condition such stockholder's support of one or more of the issuer's director nominees on the issuer's adoption of its recommendation, and (B) discussing with management the voting policy of such shareholder on a particular topic and how the issuer fails to meet such stockholder's expectations on such topic, and, to apply pressure on management, stating or implying during such discussions that such shareholder will not support one or more of the issuer's director nominees unless management makes changes to align with such shareholder's expectations.6 It was reported that the new guidance, and the confusion that it generated, caused BlackRock and Vanguard, the nation's largest asset managers, to temporarily pause shareholder engagement meetings with public issuers.7
6. New Guidance Regarding Accredited Investor Verification for Rule 506(c) Offerings
In a no-action letter issued on March 12, 2025, the Staff confirmed that, under certain circumstances, issuers may rely on the amount of their investors' subscriptions to determine "accredited investor" status when conducting private placements under the safe harbor afforded by Rule 506(c) of Regulation D under the Securities Act of 1933. By adopting specified minimum investment thresholds (i.e., $200,000 for natural persons (or $300,000 including a spouse or spousal equivalent) and $1,000,000 for legal entities) and requiring appropriate representations from investors, an issuer may confidently engage in general solicitation and general advertising to market its offering under the Rule 506(c) safe harbor without being required to register the offering with the SEC.8
7. Potential Changes to EGC Definition and Filer Categories
In an effort to promote the IPO market, Mark Uyeda, Acting Chair of the SEC prior to the installation of Chairman Atkins, in a speech at the Florida Bar's 41st Annual Federal Securities Institute and M&A Conference, announced that he had directed SEC staff to review the definition of "emerging growth company" ("EGC"), with a particular focus on the criteria to qualify for, and the duration of, EGC status. In general, EGCs are subject to reduced regulatory and disclosure burdens than companies that do not qualify as EGCs. The goal of any such adjustments would be to allow more companies to qualify for EGC status, and for those companies that qualify for that status to continue to qualify as EGCs for a longer period of time, thereby incentivizing more private companies to undertake IPOs. For similar reasons, former Acting Chair Uyeda also directed SEC staff to review a potential realignment of the SEC's filer categories (i.e., large accelerated filer, accelerated filer, non-accelerated filer and smaller reporting company) to reflect the size and makeup of public companies today, given that the dollar amounts associated with such filer categories have not been indexed for inflation. To date, no changes have been formally proposed or adopted on these items.9
8. SLB No. 14M Replaces SLB No. 14L
In November 2021, the SEC issued Staff Legal Bulletin No. 14L ("SLB 14L"),10 which significantly diminished the ability of public companies to exclude shareholder proposals under rule 14a-8 of the Securities Exchange Act of 1934 on grounds that such proposals were not economically relevant (Rule 14a-8(i)(5)) or constituted "ordinary business" of the company that should be left to management (Rule 14a-8(i)(7)). Following the issuance of SLB 14L, the SEC proposed amendments, consistent with SLB 14L, regarding the exclusion of shareholder proposals under Rule 14a-8, which proposals have not yet been adopted. On February 12, 2025, the SEC rescinded SLB 14L and replaced it with new Staff Legal Bulletin No. 14M ("SLB 14M").11 SLB 14M revised guidance on the excludability of a shareholder proposal under Rule 14a-8 on the basis that a proposal lacks "economic relevance" or is related to the "ordinary business" of a company. As a result, shareholder proposals that lack "economic relevance" or are related to the "ordinary business" of a company will no longer be protected from exclusion under Rule 14a-8 if such proposals concern a significant social policy matter. Rather, shareholders that advance proposals that raise "social or ethical issues" must "tie those matters to a significant effect on the company's business." In addition, SLB14M reinstates guidance, which had been rescinded by SLB 14L, making it easier for companies to exclude shareholder proposals that seek to "micromanage" them. It is expected that the overall effect of the foregoing actions will be to make it easier for companies to exclude ESG-related shareholder proposals from their proxy statements.
9. Approval of Modified Nasdaq Initial Listing Liquidity Requirements
On March 12, 2025, the SEC approved Nasdaq's proposal to amend Listing Rules 5405 and 5505 to require that a company seeking to list on the Nasdaq Global Market ("NGM") or the Nasdaq Capital Market ("NCM") in connection with an IPO or to uplist to Nasdaq from the OTC in connection with a public offering satisfy the applicable minimum Market Value of Unrestricted Publicly Held Shares (MVUPHS) requirement solely from the proceeds from the offering. "Unrestricted publicly held shares" are shares that are not held by an officer, director or 10% shareholder of the company and not subject to resale restrictions of any kind. As per NASDAQ's listing rules, as amended, (A) for initial listing on the NGM, a company must have a minimum MVUPHS of $8.0 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, and (B) for initial listing on the NCM, a company must have a minimum MVUPHS of $5.0 million under the Net Income Standard and $15 million under either the Equity or Market Value of Listed Securities Standard. Prior to the effectiveness of the amended rules, for a company listing in connection with a public offering, in calculating MVUPHS, in addition to the shares being sold in the public offering, shares that were previously issued but registered for resale and not held by an insider, were counted as unrestricted publicly held shares. For companies uplisting from the OTC market in conjunction with a public offering, the amended rule also increases the minimum size of the required public offering from $4 million to $8 million for the NGM and from $4 million to $5 million for the NCM to align with the minimum MVUHPS requirement for each market. The amendment is intended to reduce volatility upon listing, as Nasdaq has observed that companies meeting the MVUPHS requirement by including resale shares experience higher volatility compared to those meeting the requirement with only the proceeds from the offering.12
10. Approval of Modifications to NASDAQ Minimum Bid Price Compliance Periods and Delisting Process
In January 2025, the SEC approved Nasdaq's proposed rules that modify, and in certain cases accelerate, the delisting process for noncompliance with Nasdaq's minimum closing bid price requirement of $1.00 per share. Specifically, under the amended rules, (A) companies that have been non-compliant with the bid price requirement for more than 360 days (i.e., the initial automatic 180-day compliance period and a second discretionary 180-day compliance period) will be immediately suspended from trading on Nasdaq, even if they request a hearing, and (B) companies that become non-compliant with the bid price requirement and that have effected a reverse stock split within the prior one-year period, or one or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one, will not be eligible for any compliance period and will immediately receive a delisting determination subject only to Nasdaq's appeals process. This continues a series of actions proposed by Nasdaq, and approved by the SEC, over the past few years aimed at limiting the ability of companies in financial distress to effect reverse stock splits to maintain their Nasdaq listing.13
Footnotes
1. See SEC Press Release dated April 21, 2025 available here: https://www.sec.gov/newsroom/press-releases/2025-68.
2. See Opening Statement of Paul Atkins Nomination Hearing Before the Senate Banking Committee (Mar. 27, 2025) available here: https://www.banking.senate.gov/imo/media/doc/atkins_testimony_3-27-25.pdf.
3. See SEC Press Release dated March 3, 2025 available here: https://www.sec.gov/newsroom/press-releases/2025-50, and the SEC's description of the new accommodations available here: https://www.sec.gov/about/divisions-offices/division-corporation-finance/draft-registration-statement-processing-procedures-expanded.
4. See SEC Press Release dated March 27, 2025 available here: https://www.sec.gov/newsroom/press-releases/2025-58.
5. See SEC Press Release dated March 6, 2025 available here: https://www.sec.gov/newsroom/press-releases/2025-52.
6. See revised C&DI 103.11 and new C&DI 103.12 here: https://www.sec.gov/rules-regulations/staff-guidance/compliance-disclosure-interpretations/exchange-act-sections-13d-13g-regulation-13d-g-beneficial-ownership-reporting?utm_medium=email&utm_source=govdelivery#103.11.
8. See the No Action Letter dated March 12, 2025 available here: https://www.sec.gov/rules-regulations/no-action-interpretive-exemptive-letters/division-corporation-finance-no-action/latham-watkins-503c-031225. See also the Pryor Cashman legal update, available here: https://www.pryorcashman.com/michael-t-campoli/publications/will-the-jump-start-finally-spark-the-secs-new-guidance-eases-rule-506c-verification-and-facilitates-general-solicitations-in-u-s-private-placements.
9. See the remarks of former Acting Chair Uyeda at the Florida Bar's 41st Annual Rederal Securities Institute and M&A Conference available here: https://www.sec.gov/newsroom/speeches-statements/uyeda-remarks-florida-bar-022425.
10. See Staff Legal Bulletin No. 14L here: https://www.sec.gov/rules-regulations/staff-guidance/staff-legal-bulletins/shareholder-proposals-staff-legal-bulletin-no-14l-cf.
11. See Staff Legal Bulleting No. 14M here: https://www.sec.gov/about/shareholder-proposals-staff-legal-bulletin-no-14m-cf.
12. See the SEC's Order Granting Accelerated Approval of a Proposed Rule Change, available here: https://www.sec.gov/files/rules/sro/nasdaq/2025/34-102622.pdf.
13. See the SEC's Order Granting Approval of a Proposed Rule Change, available here: https://www.sec.gov/files/rules/sro/nasdaq/2025/34-102245.pdf.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
