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Securities law

Shift in Regulatory Tone at the U.S. Securities and Exchange Commission

Strategic Insights

— 2 min read

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), with Chairman Paul Atkins signaling a relaxation of regulation on crypto-currency and a pullback from climate change and ESG-related regulations. The agency has reduced its pace of regulatory activity, withdrawing certain rules and delaying others, and has worked outside the formal rulemaking process to address certain agenda items through disclosure guidance and no-action relief. Key takeaways include the SEC's emphasis on investor protection, capital formation, and maintaining fair, orderly, and efficient markets, as well as its focus on traditional securities fraud cases.

Key Takeaways:

  • The SEC has reduced its pace of regulatory activity in response to the "Regulatory Freeze Pending Review" executive order issued by President Trump on January 20.
  • Certain SEC rules have been delayed or withdrawn entirely, including climate change disclosures and digital asset regulation.
  • The SEC has worked outside the formal rulemaking process to selectively address certain agenda items through disclosure guidance and no-action relief.
  • 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 13D.
  • 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.
  • On February 12, the SEC published Staff Legal Bulletin (SLB) 14M, which rescinds previous SEC guidance that limited the ability of SEC reporting companies 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.
  • The concept release on the definition of "foreign private issuer" (FPI) under U.S. securities laws was issued on June 4, soliciting public comment on the definition of FPI.
  • Canadian issuers that report as FPIs, including those relying on the MJDS, may be impacted by any revisions to the FPI definition.
  • The SEC hosted a roundtable on June 26 to consider the appropriateness of existing executive compensation disclosure requirements.
  • Chairman Atkins indicated that the SEC has decreased its headcount by 15%, which may impact future rulemaking initiatives.

Statistics:

  • The SEC reduced its headcount by 15% in response to the new administration.
  • 14 proposed rules issued under the prior administration were withdrawn on June 12.
  • 1 C&DI was issued on February 11 regarding the eligibility of shareholders to file beneficial ownership reports on Schedule 13G.
  • 1 Staff Legal Bulletin (SLB) 14M was published on February 12 rescinding previous SEC guidance on shareholder proposals.
  • 1 no-action letter was issued on March 12 providing interpretive guidance on what constitutes "reasonable steps" to verify purchasers' accredited investor status in offerings conducted under Rule 506(c) of Regulation D.
  • 1 concept release on the definition of "foreign private issuer" (FPI) under U.S. securities laws was issued on June 4.

Sources:

  • U.S. Securities and Exchange Commission, Withdrawal of Proposed Regulatory Actions, June 12, 2025.
  • U.S. Securities and Exchange Commission, Exchange Act Sections 13(d) and 13(g) and Regulation 13D-G Beneficial Ownership Reporting, February 11, 2025.
  • U.S. Securities and Exchange Commission, Shareholder Proposals: Staff Legal Bulletin No. 14M (CF), February 12, 2025.
  • U.S. Securities and Exchange Commission, No Action Letter: Latham & Watkins, March 12, 2025.
  • U.S. Securities and Exchange Commission, Concept Release on Foreign Private Issuer Eligibility, June 4, 2025.
  • U.S. Securities and Exchange Commission, SEC Announces Roundtable on Executive Compensation Disclosure Requirements, May 16, 2025.

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