Month-In-Brief: Securities Law

CURRENT MONTH (June 2025)

SEC Holds Roundtable on Executive Compensation

By Rani Doyle

On June 26, 2025, the U.S. Securities and Exchange Commission (“SEC”) held a roundtable on the disclosure requirements regarding executive compensation. Panels explored:

• How public companies set compensation for their executive officers, including who sets compensation, the factors that influence compensation decision-making, and the process by which compensation decisions are made.
• How investors consider executive compensation in making investment and voting decisions.
• The evolution of executive compensation disclosure, and whether the rules have achieved their policy objectives, the challenges in preparing the required disclosure, the types of disclosure that investors find material, and what the disclosure requirements should look like in the future.

Remarks by SEC Chair Paul S. Atkins and Commissioners Hester M. Peirce, Caroline A. Crenshaw, and Mark T. Uyeda are linked as noted herein.

SEC Holds Crypto Task Force Roundtable on “DeFi and the American Spirit”

By Rani Doyle

On June 9, 2025, the SEC Crypto Task Force held the last of five planned roundtables as part of its ongoing discussions regarding crypto asset regulation. This roundtable addressed “DeFi,” including what it means for finance to be “decentralized.” SEC Chair Atkins, in his introductions, thanked participants in the roundtable program for undertaking a “mighty endeavor.” He said that the title of this last panel was apt because it reflected the “American values of economic liberty, private property rights, and innovation are in the DNA of DeFi.” Commissioner Peirce stated that DeFi “exemplifies the promise of crypto, as it allows people to act without intermediaries.”

The roundtable was recorded, and videos (part one (roundtable) and part two (Q&A)) are posted on YouTube.

Remarks by SEC Chair Paul S. Atkins, and Commissioners Hester M. Peirce, Caroline A. Crenshaw, and Mark T. Uyeda are linked as noted herein and indicate where the SEC is heading today on DeFi, and blockchain technology’s potential to revolutionize evidence of ownership and transfer of intellectual and economic property rights.

Sierra Club Foundation Terminating BlackRock as Asset Manager due to ESG Pullback

By Rani Doyle

Amid continuing adjustments by market participants in addressing so-called ESG issues, which should probably be characterized as sustainability or long-term value management, Sierra Club Foundation announced on June 25, 2025, that it is leaving it is leaving BlackRock/Aperio as an asset manager and moving funds (reportedly about $10.5 million) to Nia Impact Capital and Xponance. The move follows three years of “active engagement” with BlackRock and “refusal by BlackRock to address the systemic financial implications of the climate crisis in its investment and stewardship decisions.”

Morningstar, Inc. Report on 2025 Shareholder Proposals re: AI Oversight Published by Harvard Law School Forum on Corporate Governance

By Rani Doyle

On May 30, the Harvard Law School Forum on Corporate Governance published a report by Lindsey Stewart and River Meng from Morningstar, Inc. assessing fifteen recent shareholder proposals at US public companies regarding their leadership’s oversight and their corporate transparency on the use of artificial intelligence (“AI”). Highlights from the report include:

• On average, shareholder support for resolutions on AI has exceeded support for proposals on other environmental and social themes.
• Average adjusted support for the fifteen resolutions on AI was 30 percent, almost double the support for the 400 environmental and social resolutions in the 2024 proxy year (16 percent). The seven significant resolutions also achieved higher average support than 107 significant environmental and social proposals in 2024.
• Twelve of the fifteen resolutions were filed at just five Big Tech companies: Alphabet, Amazon, Apple, Meta Platforms and Microsoft. Chipotle Mexican Grill, Netflix, and Warner Bros. Discovery also featured.
• The four most successful resolutions on AI targeted the same two issues (misinformation and disinformation, and AI-driven targeted advertising) at two companies: Meta Platforms and Alphabet.
• As with environmental and social themes more generally, US and European asset managers are taking very different approaches to voting on resolutions addressing AI.
• Average support for AI resolutions among the twenty US asset managers reviewed was 30 percent—less than half the 77 percent observed for fifteen European peers. The gap for significant resolutions is narrower.
• In the US, BlackRock supported only one of the fifteen proposals (7 percent), and State Street and Vanguard did not support any. Fidelity, MFS, and Principal were the strongest US supporters of AI proposals (all 70 percent or more).
• In Europe, Allianz GI, Amundi, Candriam, and Nordea supported all fifteen resolutions. The lowest level of support by a European asset manager was 43 percent.

SEC’s Office of the Investor Advocate Issues “Report on Objectives” to Congress

By Rani Doyle

On June 25, 2025, the Office of the Investor Advocate (“OIA”), the independent office formed to assist retail investors with certain securities-related regulatory matters, delivered its report to Congress on its 2026 objectives. Stated priorities, as summarized in an SEC press release, include:

• Investor research and testing on existing and proposed disclosures to retail investors.
• Informing SEC activities and policy priorities through data collected from nationally representative surveys.
• Addressing and advocating for the priorities and concerns of retail investors affected by financial fraud, including through the Interagency Securities Council.
• Private market investments in retirement accounts.
• China-based variable interest entities listed on U.S. exchanges.

House of Representatives Passes Capital Formation–Related Legislation

By Marc Leong and Anna T. Pinedo, Mayer Brown

On June 23, 2025, the House of Representatives (the “House”) passed seven bills relating to capital formation. As discussed in a previous piece by one of the authors, these bills were reported to the House by the House Committee on Financial Services (the “Committee”).

The House passed H.R. 3394, the Fair Investment Opportunities for Professional Experts Act, by a bipartisan vote of 397–12. This bill will expand the “accredited investor” definition under the Securities Act of 1933 (as amended, the “Securities Act”) to include individuals with certain licenses, qualifying education, or job experience.

H.R. 3422, the Promoting Opportunities for Non-Traditional Capital Formation Act, passed the House by a bipartisan vote of 321–87. H.R. 3422 requires the Securities and Exchange Commission (“SEC”) Advocate for Small Business Capital Formation to provide educational resources and host events that promote capital-raising options for traditionally underrepresented small businesses and businesses in rural areas.

The following remaining five bills each passed unanimously by voice vote, indicating the House’s bipartisan support for capital formation:

• H.R. 1190, the Expanding Access to Capital for Rural Job Creators Act, would amend the Securities Exchange Act of 1934 (as amended, the “Exchange Act”) to require that the SEC’s Advocate for Small Business Capital Formation include rural small businesses among the categories it monitors for capital access challenges.
• H.R. 2225, the Access to Small Business Investor Capital Act, would allow a registered investment company to exclude from the calculation of “acquired fund fees and expenses” those fees and expenses incurred indirectly from investment in a business development company.
• H.R. 3301, the ELEVATE Act of 2025, would amend the Exchange Act to specify that emerging growth companies, or EGCs, would only need to present two years, rather than three years, of audited financial statements in both initial public offerings (“IPOs”) and spin-off transactions. The bill would also allow a spin-off of an EGC to benefit from the two-year financial statement accommodation, which is currently only available during an IPO.
• H.R. 3352, the Helping Angels Lead Our Startups (“HALOS”) Act of 2025, would codify SEC Rule 148 so communications made at certain “demo day” events would not constitute a “general solicitation” under the Securities Act. The bill also defines “angel investor group” and clarifies the types of sponsors and conditions under which issuers may present without triggering offering restrictions.
• H.R. 3381, the Encouraging Public Offerings Act of 2025, if passed, would codify Rule 163B under the Securities Act and allow any issuer (not just EGCs) to communicate with potential investors to determine interest in a securities offering, either before or after the filing of a registration statement (i.e., “test the waters” communications). The bill also codifies the current SEC Staff position regarding confidential submissions and would allow any issuer to submit a confidential draft registration statement to the SEC for review prior to public filing, and it updates the public filing condition to allow any IPO issuer to file its registration statement publicly ten days before the effective date of the registration statement.

SEC Withdraws 14 Proposed Rules Regarding Investment Management, Trading, and Public Markets

By Karen Liu, Reid & Wise LLC

On June 12, 2025, the U.S. Securities and Exchange Commission (the “SEC”) announced the withdrawal of fourteen proposed rules issued by the prior administration mostly during the period from March 2022 to November 2023. The SEC indicated that it no longer intends to issue final rules with respect to any of the fourteen withdrawn proposals; rather, if the SEC decides to revisit any of those regulatory areas in the future, it will issue a new proposed rule.

Among the fourteen withdrawn proposals, the following five relate to investment management:

• Conflicts of Interest Associated with the Use of Predictive Data Analytics by Broker-Dealers and Investment Advisers (commonly known as the “AI Rule,” published in the Federal Register on August 9, 2023)
• Safeguarding Advisory Client Assets (commonly known as the “Safeguarding Rule,” published on March 9, 2023)
• Outsourcing by Investment Advisers (commonly known as the “Outsourcing Rule,” published on November 16, 2022)
• Enhanced Disclosures by Certain Investment Advisers and Investment Companies About Environmental, Social and Governance Investment Practices (commonly known as the “ESG Rule,” published on June 17, 2022)
• Cybersecurity Risk Management for Investment Advisers, Registered Investment Companies, and Business Development Companies (published on March 9, 2022)

The following remaining nine proposed rules involve trading and public markets:

• Cybersecurity Risk Management Rule for Broker-Dealers, Clearing Agencies, Major Security-Based Swap Participants, the Municipal Securities Rulemaking Board, National Securities Associations, National Securities Exchanges, Security-Based Swap Data Repositories, Security-Based Swap Dealers, and Transfer Agents (published on April 5, 2023)
• Regulation Best Execution (published on January 27, 2023)
• Order Competition Rule (published on January 3, 2023)
• Amendments Regarding the Definition of “Exchange” and Alternative Trading Systems (ATSs) That Trade U.S. Treasury and Agency Securities, National Market System (NMS) Stocks, and Other Securities (published on March 18, 2022)
• Volume-Based Exchange Transaction Pricing for NMS Stocks (published on November 6, 2023)
• Proposed Amendments to the National Market System Plan Governing the Consolidated Audit Trail To Enhance Data Security (published on October 16, 2020)
• Position Reporting of Large Security-Based Swap Positions (published on February 4, 2022)
• Regulation Systems Compliance and Integrity (commonly known as the “Regulation SCI,” published on April 14, 2023)
• Substantial Implementation, Duplication, and Resubmission of Shareholder Proposals Under Exchange Act Rule 14a-8 (published on July 27, 2022)

The SEC’s such widespread withdrawal move was commended by Chairman French Hill of the House Committee on Financial Services. The Committee sent a letter to the SEC in April 2025 requesting the recission, modification, or re-proposal of multiple proposals, ten of which were within the fourteen proposals withdrawn on June 12, 2025. Some of the withdrawals also have long been anticipated by the securities law industry, because several of the withdrawn proposals were based on Section 211(h) and/or Section 206(4) of the Investment Advisers Act of 1940, the same legal basis of the vacated private fund adviser rules.

It is worth noting, however, the long list of withdrawn proposals did not include the Customer Identification Programs for Registered Investment Advisers and Exempt Reporting Advisers (the “CIP Rule”) jointly proposed by the SEC and the U.S. Department of the Treasury on May 21, 2024. Given that the Anti-Money Laundering/Countering the Financing of Terrorism Program and Suspicious Activity Report Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers issued by the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the Department of the Treasury, becomes effective as of January 1, 2026, it is highly advisable for all investment advisers to continue to strengthen their AML and CIP compliance programs.