The SEC staff’s comments on management’s discussion and analysis have emphasized the requirements in Item 303 of Regulation S-K and the related disclosure objectives, including a focus on:

– The discussion and analysis of results of operations, including the description and quantification of each material factor, offsetting factors, unusual or infrequent events, and economic developments causing changes in results between periods

– The discussion of known trends or uncertainties that are reasonably expected to impact near- and long-term results (e.g., supply chain disruptions, inflation, increase in interest rates)
Metrics used by management in assessing performance, including how they are calculated and period over period changes

– Critical accounting estimates, including the judgments made in the application of significant accounting policies, sensitivity to change, and the likelihood of materially different reported results if different assumptions were used

– Liquidity and capital resources, including clear discussion of drivers of cash flows and the trends and uncertainties related to meeting known or reasonably likely future cash requirements.

The other topical areas included in PwC’s report are non-GAAP measures, segment reporting, revenue recognition, debt, quasi-debt, warrants and equity, goodwill and other intangibles, business combinations, disclosure controls and ICFR, research and development, and inventory and cost of sales. A separate section of the report also explores industry-specific comment trends.

– John Jenkins

Although the paper approaches this issue from the perspective of mutual funds, I think much of what the authors say has relevant to those who work on the corporate side. They argue that the discipline of disclosure strengthens internal governance, and that this pays dividends to investors whether they read those disclosures or not. This excerpt summarizes their argument on the governance benefits of disclosure:

First, disclosure empowers lawyers.Funds typically assign responsibility for drafting and revising disclosures to fund counsel, and that designation is consequential. Stewardship of the disclosure process elevates the authority of lawyers within organizations that financial professionals would otherwise dominate. SEC-enforced disclosures give lawyers the authority to rein in straying portfolio managers and to say, “This is in your prospectus.… This is how it’s disclosed to shareholders, and this is what we need to do.”

Second, disclosure builds a culture of compliance. Drafting a prospectus and updating it annually is a cross-department exercise recruiting portfolio managers, risk teams, accountants, marketing personnel, compliance officers, and independent trustees into periodic collaborations. Leading this process, in-house lawyers and outside counsel work collaboratively, discerning SEC priorities and requirements for internal teams and translating complex financial frameworks for external audiences.

In-house lawyers acquire the character of “good inspectors” rather than enforcement cops, building trust and gaining access to information, while anticipating problems before they arise. Outside counsel provide an industry-wide view by benchmarking funds’ practices against market trends, which tells funds whether they are safely “in the antelope herd” or “about to get picked off by the lions.” Compliance culture isn’t about altruism. A fund’s reputation for doing the right thing is a highly prized asset that establishes its status within the industry, the trust that the SEC has in the fund, and most important, its brand value among investors.

Disclosure forces institutional learning. Annual reviews compel funds to revisit their disclosures, kick the tires, and reconcile public representations with operational reality. Interviewees described disclosures as the “blueprint,” the “playbook,” and “gold standard,” guiding fund operations from top to bottom with current information. Lawyers, in turn, cross-pollinate among funds—sharing best practices related to disclosure drafting and revision through bar committees, trade associations, law firms, and professional contacts. Disclosure language and compliance methods spread through this network, producing a degree of industry-wide convergence that command-and-control regulation alone could not deliver.

Over on The Business Law Prof Blog, Prof. Ann Lipton cites this paper in support of her opposition to the SEC’s semiannual reporting proposal.  As she puts it, “a switch to semi-annual reporting may not simply mean less information to investors; it loosens the obligations of boards, and managers, to oversee the company.”

– John Jenkins

– Multitasking Isn’t a Thing
– A Day to Leave Early
– Flashback to the ’90s
– Never Stop Reading

You’ll love Meaghan’s stuff – she brings a unique perspective to our team and is confronting many of the same challenges a lot of our members face in juggling a career in corporate law with the responsibilities of a young family. I think we probably get more positive feedback from our members on Meaghan’s blogs than just about anything else on the website. If you’re not reading her blogs, you’re missing out!

– John Jenkins

This one’s a little longer than our typical quick survey, but it covers a lot of ground, including the likelihood of adopting semiannual reporting, anticipated changes in disclosure practices, insider trading policies, and reactions to Nasdaq’s extended trading hours.

We expect that this anonymous, multiple-choice survey will take you about 10 minutes to complete, and we’ll share the results on this website. You don’t have to be a member of TheCorporateCounsel.net to take the survey, so we invite all of our readers to take a few minutes to complete it. We think you’ll find that it’s worth the effort!

– John Jenkins

AI-enabled tools are increasingly part of how content is created, edited, summarized and shared. Employees may view these tools as convenient when preparing posts, responding to industry developments, drafting captions, summarizing company announcements, translating content or making something technical more accessible. Even when an employee is well-intentioned, the output could be inaccurate, incomplete, off-brand or based on confidential or proprietary information that shouldn’t have been entered into the tool in the first place.

AI isn’t the primary focus of most legacy social media policies and companies don’t necessarily need a separate policy to address these risks. However, they should consider targeted updates within the existing universe of their policies, like those covering social media, confidentiality, communications and information security.

For example, companies may want to consider clarifying that:

– Employees remain responsible for content they post, regardless of whether it’s generated or assisted by AI.
– Confidential or proprietary information shouldn’t be entered into unauthorized tools.
– AI-assisted communications are subject to the same approval, accuracy and recordkeeping expectations as any other content.

These additions can help reinforce existing obligations rather than creating entirely new ones. That is, the underlying regulatory themes — like accuracy, supervision and accountability — remain unchanged, even as the tools evolve.

Other topics covered by the article include social media policy basics, the people who should be involved in drafting the policy, the need for review by outside counsel, what to think about when creating a policy, and how often the policy should be refreshed.

– John Jenkins

– How Kekst Conducted their Study
– The Headline: LLM Recommendations Lean toward Activists
– Beyond the Headline: Digging into the Data
– How LLM Recommendations Differed from Each Other
– The Sources and Rationales that Most Persuaded the LLMs
– The Sources and Rationales that Held Less Sway with the LLMs
– What this Means for Company Communications in Proxy Contests

We’ve been cranking out podcasts lately and we have several more in the hopper that we expect to post during the next month. If you’re interested in sharing your insights on a topic that you think would likely be of interest to members of TheCorporateCounsel.net or our other sites, we’d love to hear from you. You can contact me at john@thecorporatecounsel.net or Meredith at mervine@ccrcorp.com.

– John Jenkins

Citing a variety of judicial precedent, Justice Gorsuch ultimately concluded that neither the Court’s decision in Liu nor traditional equitable principles required the SEC to establish pecuniary harm in order to use disgorgement as a remedy:

What all these and a great many other cases have in common is this: Applying traditional equitable principles, a court ordered the defendant to disgorge the value of the gain attributable to his invasion of the plaintiff ’s legally protected interests without requiring a showing of pecuniary loss. And to know that much is enough to know the answer to this case. Whatever else traditional equitable principles demand, they do not require a showing of pecuniary loss before a court may issue an award of unjust profits.

This excerpt from Gibson Dunn’s memo on the case summarizes its implications:

– The decision preserves one of the SEC’s most powerful monetary remedies. The SEC may continue to seek disgorgement tied to a defendant’s net profits even where identifying individual investors or quantifying their losses would be difficult.

– The Court’s ruling limits defendants’ ability to resist disgorgement by arguing that the SEC must prove the same type of economic loss required in private securities-fraud suits. The focus remains on whether the defendant received unjust enrichment as a result of the securities-law violation and whether the disgorgement award is properly limited to that enrichment.

– Because the Court only assumed without deciding that disgorgement under Section 78u(d)(7) is an equitable remedy, defendants can still challenge SEC disgorgement requests seeking to provide the funds to the U.S. Treasury, instead of to investors, on the grounds that they constitute a penalty that implicates Seventh Amendment jury-trial concerns—a concern highlighted in Justice Thomas’s concurrence.

We’re posting memos in our “SEC Enforcement” Practice Area.

– John Jenkins

– Some Support From Big 3 Likely: For Exxon’s proposal to receive 71% support from shareholders despite both ISS and Glass Lewis recommending against means that at least some large institutional investors voted in favor of the proposal. With each of the Big 3 splitting their stewardship teams into two separate groups with different teams and voting priorities, it’s likely these weren’t unanimous “FOR” votes. It’s even possible 1-2 institutions were more against than for. But 71% implies there was at least some large institutional support for this proposal. At the same time, we do know that at least one very large active manager voted against the proposal without much internal debate. We won’t know specifics for all investors until votes are disclosed later in 2026.

– Proxy Advisors Have Drawn a Line in the Sand: For the time being, companies proposing to redomicile to Texas can expect against recommendations from ISS and Glass Lewis. ISS has gone against 13 of 15 Texas proposals, while GL has gone against 12 of 13. Note that ISS has deemed ArcBest’s approach to the optional provisions in Texas as best in class (adopting charter provisions that opt out of higher thresholds for shareholder proposals or litigation). Even despite having identified this approach as “best in class” – ISS STILL recommended against the ArcBest proposal.

We fully expect ISS and Glass Lewis to include redomiciling in their policy surveys this upcoming fall, as they often do with “new” governance topics. We are less confident they will actually change their stance – but that remains to be seen. At a minimum, the survey will provide incremental clarity for issuers going forward.

– Exxon is a Bellwether for Redomiciling: Prior to Exxon, most companies who made such a move had a near-controlling shareholder and/or were small, unknown companies. Exxon is a massive, well-known, public company with a normal shareholder base. Exxon simply filing its preliminary proxy drove a lot of boardroom discussions on the topic. Now that the proposal has comfortably passed, we expect the conversations to pick up in volume and Boards to analyze this much, much closer.

– Key Factors for Investors: Unlike ISS and Glass Lewis, investors seem to be taking a case-by-case approach to redomiciling. For most investors, it’s an assessment of the tradeoff between economic benefit and a potential decrease in shareholder rights. While NPX vote data won’t be available until late September, our back of the napkin analysis of support levels to date (factoring in controlling shareholders) seems to suggest shareholders are assessing companies operational presence in Texas, the way they’ve approached Texas’ optional provisions, and the company’s governance history/profile.

– Hometown Heros are Likely Next: A key reason Exxon chose to reincorporate to Texas was that its headquarters and a significant amount of its people and operations are based in Texas. Texas is Exxon’s home. Companies who can confidently say they are Texas companies will be the next ones to move (and some already are). There’s a lot of variables at play beyond location of the business that go into investor support, but we think the next litmus test is if a company with little to no presence in Texas can also get shareholder support to redomicile. That’ll truly open the floodgates.

For those of you following the DExit trend, its official scorekeeper, UNLV Law School’s Ben Edwards, has recently updated his tally of the migratory activity of Delaware corporations. Spoiler Alert: Texas has been the favorite destination for Delaware emigres in recent months, but Nevada is coming on strong.

– John Jenkins

1. Impact of the Staff’s decision to no longer serve as Rule 14a-8 referee
2. Shareholder proposal trends and success rates
3. AI disclosures in proxy statements
4. How boards are dealing with new oversight demands
5. Changes in how companies are addressing DEI-related disclosures
6. Evolution of proxy advisor policies and strategies for responding to adverse recommendations
7. Outlook for the 2027 proxy season

If you have insights on a securities law, capital markets or corporate governance issue, trend or development that you’d like to share with our members in a podcast, please email me at john@thecorporatecounsel.net or Meredith at mervine@ccrcorp.com. We’re always looking for new topics and we’d love to hear from you!

– John Jenkins

In light of the recent efforts of major U.S. exchanges to move toward 24-hour trading, the NSCC developed plans for facilitating extended trading hours. A recent report on the shift to 24-hour trading from DTCC and EY notes:

The recent announcements by the New York Stock Exchange (NYSE), Nasdaq, and CBOE to introduce near-24-hour equity trading mark a transformative change in U.S. equity market structure. The Depository Trust & Clearing Corporation (DTCC) and its equities clearing subsidiary, National Securities Clearing Corporation (NSCC), have taken concrete steps to support the industry’s evolution. In September 2024, NSCC extended its operating hours by opening its Universal Trade Capture (UTC) system for trading platforms to submit trades at 1:30 a.m. ET, approximately 2.5 hours earlier. Beginning June 28, 2026, NSCC plans to operate 24×5, from Sunday at 8:00 p.m. ET to Friday at 8:00 p.m. ET, subject to regulatory approval. This expansion enables NSCC to apply its central counterparty (CCP) guarantee immediately to overnight transactions, reducing counterparty risk and enhancing market resiliency.

While Alternative Trading Systems (ATS) have long offered extended hours access, national exchanges are now moving toward continuous trading, reshaping liquidity dynamics, global participation, risk management, and the operational and technological capabilities of member firms. By aligning NSCC’s UTC system with the extended hours of trading platforms, NSCC helps ensure seamless processing and mitigates counterparty exposure across time zones.

The report notes that implementation of the current 24×5 trading plans will occur in two phases, with the NSCC’s transition to a 24×5 schedule occurring on June 28, 2026, followed by the adoption of extended trading hours by national exchanges, which is expected between late 2026 into 2027.

The report also notes that it is expected that 1%-10% of total equity trading volume is projected to shift to overnight sessions by 2028, “creating new trading opportunities and enhancing global market access.”

– Dave Lynn