SEC Further Expands Ability To File Confidential Registration Statements
The SEC’s Division of Corporation Finance has expanded the ability to file non-public confidential registration statements to include all registration statements.
In 2012, the JOBS Act created a path for emerging growth companies to file draft registration statements (DRS) on a confidential basis when completing an initial public offering. In 2017 the Division of Corporation Finance expanded the DRS filing option to include all Section 12(b) Exchange Act registration statements (but not 12(g) registrations), all registration statements for initial public offerings, and follow on offerings completed within 12 months of an initial public offering, for all class of issuers. See – HERE.
On March 3, 2025, the Division of Corporation Finance announced that it has further expanded the ability to utilize a DRS filing to include:
- Initial registrations under the Exchange Act, including both Sections 12(b) and 12(g) including Forms 8-A, 10, 20-F and 40-F;
- All Securities Act of 1933 (Securities Act) registration statements regardless of the amount of
Widespread “Dealer” Litigation Is Almost Over!
In August 2024, then SEC Commissioner Mark T. Uyeda made a public statement against the rampant enforcement proceedings against small cap investors claiming violations of the dealer registration requirements (see HERE). Fast forward to today, now Chair of the SEC, Mr. Uyeda, is sticking by his contentions and finally, after eight long years of numerous enforcement proceedings, is directing the SEC to roll back its position.
What Happened
This week, the SEC enforcement division entered into two joint motions halting ongoing litigation claiming violations of the dealer registration rules. The U.S. District Court for the District of Massachusetts entered an order in the case involving Auctus Fund Management staying the case while the parties wrap up an agreement to end the litigation. Under the agreement Auctus will not seek attorney fees from the government or pursue a review of the enforcement action.
In the filing, Auctus said “[T]he parties have reached an agreement in principle to dismiss this
SEC Chair Uyeda Talks SEC Priorities
Just a few weeks after SEC Commissioner Hester Peirce gave some insight into the SEC’s priorities (see HERE), acting SEC Chair Mark Uyeda got more granular on what we can expect under his regime. Commissioner Uyeda drilled down on particular SEC goals while giving a speech at the Florida Bar’s Annual Federal Securities Institute and M&A Conference.
The overarching goal of the SEC over the next few years will be to foster innovation, job creation and economic growth by maintaining cost effective regulations throughout a business’s life cycle. To accomplish these goals, the SEC intends to “return normalcy” to the SEC by being cognizant of its legal authority, policy priorities and enforcement initiatives, all of which have gone awry over the last few years.
Commissioner Uyeda highlights some of the actions already taken to facilitate these goals, including rescinding Staff Legal Bulletin 14 related to shareholder proposals and proxy statements (for more on Staff Legal Bulletin 14 see
Commissioner Peirce Gives A Sneak Peak At SEC Priorities
At the end of January 2025, SEC Commissioner Hester Peirce, who finally is not on an island alone within the SEC top brass, gave a speech at the Northwestern Securities Law Institute giving some insight into what we can expect from the SEC under the new administration.
Commissioner Peirce has been vocal over the years about her disdain for bringing political and social issues into SEC reporting and compliance management for public companies, however now, working with like-minded executives, she has solid ideas for a path forward. First and foremost, a public company should have the goal of maximizing value for its shareholders as a group. Unfortunately, in today’s world, public companies are often forced to answer to activists, non-shareholder “stakeholders” and the like, forcing executives to utilize company resources to further these groups (or individual’s) favorite cause. Commissioner Peirce notes that “[D]irectors and executive officers serve shareholders and society best by keeping the companies they guide focused on
SEC’s Fall 2024 Flex Regulatory Agenda
The SEC has published its semi-annual Fall 2024 regulatory agenda (“Agenda”) and plans for rulemaking. The Agenda is published twice a year, and for several years I have blogged about each publication. Although items on the Agenda can move from one category to the next, be dropped off altogether, or new items pop up in any of the categories (including the final rule stage), the Agenda provides valuable insight into the SEC’s plans and the influence that comments can make on the rulemaking process.
The Agenda is broken down by (i) Proposed Rule Stage; (ii) Final Rule Stage; and (iii) Long-term Actions. The Proposed and Final Rule Stages are intended to be completed within the next 12 months and Long-term Actions are anything beyond that. The number of items to be completed in a 12-month time frame is 30, down from 34 on the Spring 2024 Agenda and 43 on the Fall 2023 Agenda. Many in the industry believe the
Climate Disclosure Rules On The Way Out
On February 11, 2025 SEC Chairman Mark T. Uyeda issued a statement on the Enhancement and Standardization of Climate-Related Disclosure for Investors rule (“Climate Disclosure Rule”) adopted by the SEC on March 6, 2024 and later stayed as a result of ongoing litigation.
Commissioner Uyeda reiterated both he and Commissioner Peirce’s consistent view that the current disclosure rules are sufficient to cover any material climate related disclosures. Furthermore, the Climate Disclosure Rule lacks statutory authority, SEC expertise and goes beyond the SEC’s arena of capital market regulation.
Commissioner Uyeda points out (and I whole-heartedly agree) that the Climate Disclosure Rule would require a large volume of financially immaterial information overstepping the SEC’s authority.
The Rule is currently preparing for oral argument in front of the Eighth Circuit based on briefs submitted by the prior administration. Commissioner Uyeda has instructed the SEC litigation team to inform the Court that the SEC’s previously submitted briefs do not reflect the SEC’s
NASDAQ Finalizes Amendments To Accelerate Delisting Process
On January 17, 2025 the SEC approved Nasdaq’s rule change to accelerate the delisting process for companies that fail to regain compliance with the minimum bid price requirements following a second compliance period and for securities that have had a reverse stock split over the prior one-year period. The final rule was passed as last submitted by Nasdaq, though in between the SEC required substantial additional analysis delaying the process on 3 occassions.
These rule changes follow other recent rule changes meant to reduce the number of ultra micro-cap companies trading on the national exchange and tighten up compliance for those that do meet the standards. In October 2024, Nasdaq amended Rule 5810(c)(3)(A) to allow for an accelerated delisting process where a listed company uses a reverse split to regain compliance with the bid price requirement for continued listing, but that as a result of the reverse split, the company falls below other listing standards, such as the minimum
SEC Enforcement Actions For Late Form D Filings
In a first, the SEC settled three enforcement actions on December 20, 2024, for failing to timely file a Form D in connection with private offerings. The three companies included one private fund and two private operating businesses.
The SEC enforcement actions were solely related to a violation of Rule 503 (as described below) and did not include any charges of fraud or other nefarious activity. As a result of the settlements each of these companies are prohibited from relying on Regulation D in the future, unless specifically granted a waiver by the SEC.
In its release, the SEC stated that the SEC relies on Form D filings to assess the scope of the Regulation D market and whether the market is balancing the need for investor protection and the furtherance of capital formation, especially for smaller businesses. The SEC also relies on Form D to monitor compliance with the requirements of Regulation D. Likewise, state regulators rely on
Court Issues Nationwide Injunction on Corporate Transparency Act
On December 3, 2024, in what was not at all surprising, a Texas court issued a preliminary injunction blocking enforcement and staying the compliance date of the Corporate Transparency Act (CTA). The Court found that the CTA is unconstitutional as outside of Congress’s power.
A full discussion of the CTA is included below. The Texas court found that the CTA represents a federal attempt to monitor companies created under state law and eliminates the corporate anonymity feature designed by states charged with regulating corporate formation – both in violation of the U.S. Constitution and its explicit separation of powers.
The court’s opinion is strongly written, determining that the government could not justify the constitutionality of the law, regardless of every attempt. In particular, the Plaintiff’s contend that CTA violates: (i) the Ninth and Tenth Amendments by intruding on State’s rights; (ii) the First Amendment by compelling speech and burdening individuals’ rights of association; and (iii) the Fourth Amendment by
Registration Statement Undertakings
Every four years we go through a regulatory dead zone as the SEC prepares for a change in administration with new priorities, new interpretations, and a whole new rulemaking agenda, including the potential unwinding of the prior administration’s rules. While waiting for the significant changes to come, I’ll continue to dive into the endless detailed topics of disclosure and other requirements of the federal securities laws. This week I’ll cover the ongoing requirements associated with an effective registration statement – known as “Undertakings.”
Every registration statement filed pursuant to the Securities Act of 1933 (“Securities Act”), whether by a domestic company or foreign private issuer (“FPI”) requires the registrant to include a statement as to certain affirmative undertakings by such company. Item 512 of Regulation S-K sets forth the undertakings, and registration statements on Forms S-1, S-3, F-1 and F-3 must include all items set forth in Item 512. Registration Statements on Form S-8 need only include the undertakings in
