Securities Regulation

Skadden Discusses Proposed SEC Expansion of Custody Rule Safeguards for Investment Advisers

By Anna Rips, Anastasia T. Rockas, TJ Wells and Marc Sana April 4, 2023 by renholding

On February 15, 2023, the Securities and Exchange Commission (SEC) proposed new rules and amendments (Proposal) to Rule 206(4)-2 (Custody Rule) under the Investment Advisers Act of 1940 (Advisers Act). The Proposal would, if adopted as written:

• Redesignate the current

…

Davis Polk Discusses New SEC Cybersecurity Requirements for Regulated Market Participants

By Robert A. Cohen, Greg D. Andres, James W. Haldin, Gabriel D. Rosenberg and Zachary J. Zweihorn March 29, 2023 by renholding

The SEC proposed an array of new cybersecurity-related requirements in the form of: (1) an expansive new Rule 10, (2) extending the reach of Regulation SCI, and (3) expanding Regulation S-P, including to require incident response programs. The SEC also …

Gibson Dunn Offers 2022 Year-End Securities Litigation Update

By Craig Varnen, Brian M. Lutz, Monica K. Loseman, Jefferson E. Bell, and Mark H. Mixon, Jr. March 28, 2023 by renholding

Although the number of securities lawsuits filed this year remained steady compared to 2021, we have seen many notable developments in securities law. This year-end update provides an overview of the major developments in federal and state securities litigation since …

Climate Disclosure Line-Drawing and Securities Regulation

By Virginia Harper Ho March 27, 2023 by renholding

In 2022, the Securities and Exchange Commission (SEC) proposed climate disclosure rules requiring each public company to tell investors specifically about the financial effects of climate risk on the company and how the company assesses those risks. The rules will …

Covington Discusses SEC’s Focus on Cybersecurity Incident Disclosure

By David Engvall, Ashden Fein, Gerald Hodgkins, Ian Macdonald and Micaela McMurrough March 27, 2023 by renholding

On March 9, 2023, the Securities and Exchange Commission (the “SEC”) Enforcement Division’s Crypto Assets and Cyber Unit announced a settlement with Blackbaud, Inc. involving allegations of inadequate disclosure controls and procedures and material misstatements and omissions concerning a 2020 …

SEC Chair Gensler Speaks on Requirement to File Electronically

By Gary Gensler March 23, 2023 by renholding

Today [March 22], the Commission is considering a proposal under the Exchange Act to require broker-dealers and other registrants to submit forms electronically. I am pleased to support this proposal because, if adopted, it would advance the Commission’s efforts to

…

Shadow Trading, Corporate Investments, and Macroeconomic Risk

By Yoon-Ho Alex Lee, Lawrence Liu and Sandro Romano March 22, 2023 by renholding

Corporate insiders engage in “shadow trading” when they use private information about their own firm to trade in the shares of economically connected companies such as suppliers, customers, or competitors. While legal scholars have long recognized that shadow trading can …

SEC Chair Gensler on Recent Bank Failures, Enhanced Cybersecurity for Market Entities

By Gary Gensler March 16, 2023 by renholding

Good morning. This is an open meeting of the U.S. Securities and Exchange Commission on March 15th, 2023. I want to welcome members of the public who are listening in.

Before we get to today’s agenda, I want to address

…

How Changes to Form 8-K Disclosure Rules Affect Corporate Innovation

By Yangyang Chen, Yue Luo, Jeffrey Pittman and Qin Tan March 15, 2023 by renholding

Studies have shown that the disclosure of information can affect a company’s technological innovation in different ways, depending on how complete or timely it is. The complete disclosure can promote innovation by making capital providers more receptive to providing financing, …

How Litigation Risk Affects Companies’ Liquidity

By Tommaso Oliviero, Min Park and Hong Zou March 7, 2023 by renholding

Securities litigation has become a major source of risk to businesses. From 2007 to 2016 the number of securities class actions (SCAs) filed each year increased by roughly 70 percent in the U.S. and by 115 percent worldwide (PricewaterhouseCoopers, 2017).…

SEC Commissioner Speaks at Columbia’s Going Public in the 2020s Conference

By Mark T. Uyeda March 7, 2023 by renholding

Good morning and thank you, [Columbia Law School] Dean [Gillian] Lester, for the introduction. I am honored to speak to this distinguished group of academics, practitioners, and regulators at today’s “Going Public in the 2020s” conference. My remarks reflect solely

…

Fraud-on-the-Market Liability in the ESG Era

By Kevin S. Haeberle March 6, 2023 by renholding

Fraud-on-the-market (“FOTM”) suits are thought to generate considerable benefits for society – namely, those associated with increased stock-market liquidity and price accuracy. But these suits are also said to impose outsized costs. The federal courts have thus long tried to …

Skadden Discusses SEC Guidance on Pay-Versus-Performance Disclosure

By Shalom D. Huber and Loren Koles March 6, 2023 by renholding

The staff of the Securities and Exchange Commission’s (SEC’s) Division of Corporate Finance recently issued guidance to address open questions related to the final pay-versus-performance (PVP) disclosure rules adopted in 2022. The 15 new Compliance & Disclosure Interpretations (C&DIs) are …

SEC Chair Gensler Speaks Before the Investor Advisory Committee

By Gary Gensler March 3, 2023 by renholding

Good morning. I am pleased to join the Investor Advisory Committee. As is customary, I’d like to note that my views are my own and I am not speaking on behalf of the Commission or SEC staff.

I want to

…

Davis Polk Discusses NYSE and Nasdaq Clawback Rule Proposal

By Kyoko Takahashi Lin and Ning Chiu March 2, 2023 by renholding

On February 22, 2023, the New York Stock Exchange and the Nasdaq Stock Market released their respective versions of a proposed rule that implements the SEC’s clawback rule mandated by Section 954 of the Dodd-Frank Act. The SEC’s final rule, …

Using ETFs to Conceal Insider Trading

By Elza Eglīte, Dans Štaermans, Vinay Patel and Tālis Putniņš March 1, 2023 by renholding

On August 17, 2021, the Securities and Exchange Commission (SEC) filed the first lawsuit charging insider trading in an economically related stock. A former employee of Medivation (MDVN, a mid-sized biopharmaceutical company) was charged for trading on confidential information about …

Skadden Discusses Suit Alleging NBA “Top Shot” NFTs Were Securities

By Alexander C. Drylewski, Stuart D. Levi, Daniel Michael, Samantha P. Kaplan and Shireen Lankarani February 28, 2023 by renholding

On February 22, 2023, Judge Victor Marrero of the U.S. District Court for the Southern District of New York issued an order in Friel v. Dapper Labs, Inc., denying Dapper Labs and its CEO’s motion to dismiss a putative securities …

The Great Startup Sellout and the Rise of Oligopoly

By Florian Ederer and Bruno Pellegrino February 24, 2023 by renholding

Startup acquisitions by incumbent firms have been on the rise for the last few years. These acquisitions often allow larger companies to acquire new technologies or talent, while startups gain access to resources and a wider customer base. One notable …

Davis Polk Discusses SEC Adoption of T+1 Settlement, Effective May 2024

By Maurice Blanco, Michael Kaplan, Byron B. Rooney, Richard D. Truesdell Jr. and Zachary J. Zweihorn February 23, 2023 by renholding

The SEC adopted a final rule to shorten the standard settlement cycle for most securities transactions from two business days (T+2) to one business day following the trade date (T+1). Many market participants had favored a September 3, 2024 compliance …

How to Reform Our Abysmal Insider Trading Framework 

By Marc I. Steinberg February 21, 2023 by renholding

The U.S. insider trading framework is a mess.  Principles apply that are inconsistent with one another and that treat similarly situated persons in a disparate manner. In my 2021 book and a forthcoming book chapter, I argue that, rather than …