A compendium of regulatory matters for Q4 2025.
ADMINISTRATION MATTERS
SEC Chairman Atkins Announces Reforms to Wells Process and Settlement Procedures
On October 7, 2025, U.S. Securities and Exchange Commission (the “SEC” or the “Commission”) Chairman Paul S. Atkins announced reforms to the Wells process and settlement procedures. He reiterated the SEC staff’s three part mission: to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation, questioning how the SEC can enforce the federal securities laws with fairness and transparency and within the boundaries set by Congress, while vigorously responding to misconduct that distorts capital raising and victimizes investors.
Chairman Atkins noted that the Wells process is the mechanism through which the SEC’s enforcement staff notifies potential respondents or defendants of any charges—and the basis for such charges—that the staff intends to recommend to the Commission. The potential respondents or defendants are then provided an opportunity to make written or video submissions to the Commission setting forth their interests and position on the subject matter of the investigation. He noted that these “Wells submissions” provide, in most cases, a last opportunity for potential respondents or defendants to persuade the staff that an enforcement action, either in whole or in part as the staff intends to recommend, is not warranted and they also provide the Commission with a different, and potentially convincing, view of the facts and law concerning the matter. Chairman Atkins further noted that the Wells process should be viewed as an extension of due process and fundamental constitutional rights that play an integral role in protecting citizens from a powerful government agency that could become policeman, prosecutor, judge, jury, and executioner all in one. He acknowledged that the SEC staff do not always get things right the first time, and the Wells process is a valuable procedural device that helps to guard against plain mistakes, extreme legal theories, misinformation, biases, and conflicts of interest. In his remarks, he expanded on how the SEC can improve on and refine its enforcement processes while preserving their original purpose.
SEC Chairman Atkins Outlines Priorities under “Project Crypto”
On November 12, 2025, SEC Chairman Atkins described “Project Crypto” as the SEC’s effort to match the energy of American innovators with a regulatory framework worthy of them. He announced that, at its core, the next step in this effort is about basic fairness and common sense as it relates to the application of the federal securities laws to crypto assets and related transactions.
Chairman Atkins stated that, in the coming months, he anticipated that the Commission will consider establishing a token taxonomy that is anchored in the longstanding Howey investment contract securities analysis, recognizing that there are limiting principles to laws and regulations. He noted that this taxonomy would build upon the pioneering work of the Crypto Task Force that Commissioner Hester Peirce leads. He stated that Commissioner Peirce has laid out a framework for coherent, transparent treatment of crypto assets under the federal securities laws, grounded in economic reality. Chairman Atkins reiterated that, while Commission staff diligently draft amendments to rules, he wholeheartedly supports Congressional endeavors to codify a comprehensive crypto market structure framework into statute and that, what is envisioned aligns with legislation currently being considered by Congress and aims to complement, not replace, Congress’s critical work. He reported that he and Commissioner Peirce have made it a priority to support Congressional efforts, and we will continue to do so.
Core Principles of Project Crypto
Chairman Atkins stated two basic principles that guide his thinking.
First, that a stock is still a stock whether it is a paper certificate, an entry in a DTCC account, or represented by a token on a public blockchain. A bond does not stop being a bond because its payment streams are tracked using smart contracts. Securities, however represented, remain securities.
Second, that economic reality trumps labels. Calling something a “token” or an “NFT” does not exempt it from the current securities laws if it in substance represents a claim on the profits of an enterprise and is offered with the sorts of promises based on the essential efforts of others. Conversely, the fact that a token was once a part of a capital-raising transaction does not magically convert that token into a stock of an operating company.
Chairman Atkins noted that one of the primary objectives of Project Crypto is to establish a clear framework that categorizes digital assets into four main groups:
- First, as contemplated in legislation currently before Congress, “digital commodities,” or “network tokens,” are, in Chairman Atkins’ opinion, not securities. These crypto assets are intrinsically linked to and derive their value from a programmatic operation of a crypto system that is “functional” and “decentralized,” rather than from the expectation of profits arising from the essential managerial efforts of others.
- Second, “digital collectibles”, in in Chairman Atkins’ opinion, are not securities. These crypto assets are designed to be collected and/or used and may represent or convey rights to artwork, music, videos, trading cards, in-game items, or digital representations or references to internet memes, characters, current events, or trends. Purchasers of digital collectibles are not expecting profits from the essential managerial efforts of others.
- Third, “digital tools”, in Chairman Atkins’ opinion, are not securities. These crypto assets perform a practical function, such as a membership, ticket, credential, title instrument, or identity badge. Purchasers of digital tools are not expecting profits from the essential managerial efforts of others.
- Fourth, and finally, “tokenized securities” are and will continue to be securities. These crypto assets represent the ownership of a financial instrument enumerated in the definition of “security” that is maintained on a crypto network.
Chairman Atkins reiterated that Project Crypto is designed to eliminate a decade of regulatory uncertainty for the crypto industry, providing a more common-sense approach to regulation that encourages innovation while ensuring investor protection.
The SEC’s Approach to Digital Assets: Inside “Project Crypto”
SEC Division of Examinations Announces 2026 Priorities
On November 17, 2025, the SEC’s Division of Examinations published its Fiscal Year 2026 Examination Priorities, reflecting an enhanced focus on evolving market practices, investor protection, and risk-based oversight across registrant types. The 2026 Examination Priorities include the following key areas of focus:
- Fiduciary standards, standards of conduct, and product oversight, with continued emphasis on conflicts of interest and recommendations to retail investors.
- Effectiveness of compliance programs, including the design, implementation, and annual review of policies and procedures.
- Investment companies and fund oversight, including compliance with the amended Names Rule and disclosures regarding fees, expenses, and investment strategies.
- Cybersecurity and operational resiliency, including compliance with Regulation S-P and Regulation S-ID.
- Emerging financial technology, including artificial intelligence, automated tools, and complex investment products.
- Broker-dealer financial responsibility, liquidity risk management, best execution, and compliance with Regulation Best Interest.
- Anti-money laundering and OFAC compliance, including customer identification, suspicious activity reporting, and sanctions screening.
SEC Division of Examinations Announces 2026 Priorities
Trump Executive Order Relating to Proxy Advisors
On December 11, 2025, President Donald J. Trump signed an Executive Order (the “Order”) aimed at protecting American investors from foreign-owned and politically-motivated proxy advisors. The intent of the Order is to reduce the influence of DEI- and ESG‑driven voting recommendations and to ensure that proxy voting decisions prioritize financial outcomes for investors.
SEC Directive
The Order directs the SEC to review and, as appropriate, rescind or revise rules governing proxy advisors that involve DEI and ESG considerations, along with any rules related to shareholder proposals that conflict with the policies set forth in the Order. The Order also requires the SEC to enforce anti-fraud securities laws with respect to proxy advisors’ voting recommendations. In addition, the Order suggests that the SEC consider requiring proxy advisors to register as investment advisers and consider requiring proxy advisors to provide increased transparency regarding conflicts of interest.
FTC Directive
The Order calls on the Federal Trade Commission (“FTC”), in consultation with the Attorney General, to determine whether proxy advisors are engaging in unfair competitive practices or deceptive conduct. In addition, the Order instructs the FTC to review investigations involving potential antitrust violations by proxy advisors.
Department of Labor Directive
The Order tasks the Department of Labor with strengthening ERISA fiduciary rules and increasing transparency around how plan fiduciaries use proxy advisors, ensuring proxy advisors and plan managers are making decisions solely in the financial interests of workers and retirees.
SEC Issues Risk Alert on the Marketing Rule
On December 15, 2025, the SEC published a new Marketing Rule Risk Alert focused on deficient practices involving the use of testimonials, endorsements, and third-party ratings. Rule 206(4)-1 (the “Marketing Rule”) under the Investment Advisers Act of 1940, as amended, prohibits the use of testimonials and endorsements in advertisements unless the adviser satisfies certain disclosure and oversight conditions. The risk alert highlighted that testimonials and endorsements were frequently included on an adviser’s website or other platforms, by social media influencers, or as part of a refer-a-friend program, and the adviser failed to recognize that such practices constituted an endorsement or testimonial under the Marketing Rule. The SEC noted that the most common deficiency with respect to such practices was the fact that required disclosures were not made at the time the testimonial or endorsement was disseminated.
The Marketing Rule prohibits the use of third-party ratings (including awards or rankings) in advertisements unless the rating meets certain criteria and the adviser clearly and prominently discloses material facts about the rating. The risk alert noted that third-party ratings were often included on advisers’ websites, social media profiles, marketing materials, press releases and other forums or materials without complying with all requirements.
Statement on the Custody of Crypto Asset Securities by Broker-Dealers
On December 17, 2025, the staff of the Division of Trading and Markets issued a statement to provide its views on the application of paragraph (b)(1) of Rule 15c3-3 under the Securities Exchange Act of 1934, as amended (“Exchange Act”), to crypto assets that are securities (“crypto asset securities”). This statement addresses any broker-dealer that carries crypto asset securities for customers, including broker-dealers that conduct a traditional securities business.
This statement is part of an effort to provide greater clarity on the application of the federal securities laws to crypto asset securities. The Division is providing its views in response to requests from market participants as an interim step while the Commission continues to consider issues relating to a broker-dealer’s custody of crypto asset securities and the feedback it has received.
Statement on the Custody of Crypto Asset Securities by Broker-Dealers
SEC Commissioner Caroline Crenshaw Departs the SEC
On January 2, 2026, Caroline Crenshaw, a Democrat who served on the SEC Commission since 2020 announced her departure from the Commission. In December 2024, the Senate Banking Committee canceled Crenshaw’s renomination vote, effectively ending her term as SEC Commissioner. This decision came amid criticism from industry leaders who felt her policies stifled innovation within the crypto space. Ms. Crenshaw’s exit leaves the Commission with three remaining Republican Commissioners with two vacancies. She had little practical power while serving as a minority Commissioner, but she issued a string of recent dissents regarding majority Commission votes. Until the two minority Commission seats are filled, SEC Chairman Atkins’ priorities, which are focused on market access, including for crypto asset access, will move forward without Commission dissension.
Statement on Departure of Commissioner Caroline Crenshaw
SEC Chairman Atkins Announces Comprehensive Review of Regulation S-K
On January 13, 2026, SEC Chairman Atkins announced that the SEC has initiated a comprehensive review of Regulation S-K, the disclosure framework governing public company reporting requirements. The review is intended to modernize disclosure requirements and focus on information that is meaningful to investors, while reducing unnecessary or duplicative disclosures.
Chairman Atkins noted that Regulation S-K has expanded significantly over time, resulting in disclosure requirements that may overwhelm investors without improving decision-making. The review will assess whether existing requirements appropriately balance investor protection with efficient capital formation and whether disclosures are presented in a manner that allows investors to identify information that is most relevant.
As part of this effort, the SEC has directed the Division of Corporation Finance to evaluate current disclosure requirements and consider potential updates, including limiting immaterial disclosures and improving the organization and clarity of required information. The SEC has begun gathering public input and is expected to continue engaging with market participants as it evaluates potential changes to Regulation S-K.
Statement on Reforming Regulation S-K
NYSE to Launch Tokenized Securities Platform for 24/7 Trading
On January 19, 2026, the New York Stock Exchange (“NYSE”) announced its development of a platform for trading and on-chain settlement of tokenized securities.
NYSE’s new platform will enable tokenized trading, including 24/7 operations, instant settlement, and stablecoin-based funding. Its design combines the NYSE’s Pillar matching engine with blockchain-based post-trade systems, including the capability to support multiple chains for settlement and custody. The platform will support both tokenized versions of traditional stocks and natively issued digital securities.
Launch of the platform is pending SEC approval, as the NYSE must secure a formal rule to move from traditional T+1 settlement to instant, 24/7 blockchain-based trading.
The NYSE announcement follows the submission of a proposed rule change in September 2025 by the Nasdaq Stock Market which would allow for the trading and settlement of tokenized securities.
The New York Stock Exchange Develops Tokenized Securities Platform
SEC Proposes Amendments to Definition of Small Entity
On January 7, 2026, the SEC proposed amendments to the rules that define which registered investment companies, investment advisers, and business development companies qualify as small entities for purposes of the Regulatory Flexibility Act (“RFA”).
The RFA requires federal agencies to conduct certain analyses, with the goal of minimizing the significant economic impact of federal rulemaking on small entities. This proposal would raise the small entity thresholds for investment companies and advisers. It is designed to help the Commission better tailor its analyses to address the specific regulatory challenges that these small entities face and consider adapting its rulemaking accordingly.
“The Commission has a longstanding commitment to understanding and addressing the concerns of small entities,” said SEC Chairman Paul S. Atkins. “Today’s proposal – consistent with the SEC’s intent to modernize regulatory requirements – would further this commitment by more accurately capturing the types and numbers of investment advisers and investment companies that are ‘small.’ This, in turn, would help the Commission more appropriately promote the effectiveness and efficiency of its regulations, with the goal of minimizing the significant economic impact on small entities.”
Specifically, this proposal would:
- Increase the asset-based thresholds under which investment companies and investment advisers are deemed small entities;
- Update the way that related funds’ assets are aggregated for purposes of defining small entities; and
- Provide for inflation adjustments to the asset-based thresholds by order every 10 years.
The proposing release will be published in the Federal Register. The public comment period will remain open until 60 days after the date of publication of the proposing release in the Federal Register.
SEC Grants No-Action Relief for Retail Voting Program
On September 15, 2025, the staff of the Division of Corporation Finance of the SEC issued no-action relief to Exxon Mobil Corporation that allows for the adoption of a retail voting program. The program gives retail shareholders the ability to give Exxon standing instructions to vote on behalf of the shareholders in accordance with the recommendation of the company’s board. In seeking this relief, Exxon argued that retail investors often have limited time and resources to evaluate and vote proxies which historically has resulted in low retail shareholder participation in voting proxies.
The key features of the retail voting program are:
- Eligibility: The program is open to all retail investors, including both registered holders and beneficial owners.
- Voluntary participation: Investors can opt-in or opt-out at any time, at no cost.
- Annual Notice: Participating investors will receive annual reminders that they have opted-in and their ability to opt out.
- Availability of Proxy Materials: Participating shareholders will continue to receive all proxy materials.
While the staff of the SEC has confirmed that other publicly-traded companies that adopt a substantially similar retail voting program can rely on the Exxon relief, any registered investment company looking to put a similar program in place would likely need to seek no-action relief from the Division of Investment Management of the SEC.
SEC Announces Significant Change in No-Action Relief During 2025-2026 Proxy Season (Suspension of No-Action Relief for Most Shareholder Proposals)
On November 17, 2025, the Division of Corporation Finance of the SEC announced its role in the Rule 14a-8 process for the 2025-2026 proxy season. Due to current resource and timing considerations following the lengthy government shutdown and the large volume of registration statements and other filings requiring prompt staff attention, as well as the extensive body of guidance from the Commission and the staff available to both companies and proponents, the Division has determined to not respond to no-action requests for, and express no views on, companies’ intended reliance on any basis for exclusion of shareholder proposals under Rule 14a-8 under the Exchange Act, other than no-action requests to exclude a proposal under Rule 14a-8(i)(1).
Pursuant to Rule 14a-8(j), companies that intend to exclude shareholder proposals from their proxy materials must still notify the Commission and proponents no later than 80 calendar days before filing a definitive proxy statement. The Division reminds companies and proponents, however, that this requirement is informational only, there is no requirement that companies seek the staff’s views regarding their intended exclusion of a proposal, and no response from the staff is required.
In light of recent developments regarding the application of state law and Rule 14a-8(i)(1) to precatory proposals, the Division has determined that there is not a sufficient body of applicable guidance for companies and proponents to rely on. As such, the Division will continue to review and express its views on no-action requests related to Rule 14a-8(i)(1) until such time as it determines there is sufficient guidance available to assist companies and proponents in their decision-making process.
Although the Division will not respond substantively to submissions regarding companies’ intent to exclude shareholder proposals other than no-action requests related to Rule 14a-8(i)(1), the Division recognizes that a company may wish to receive some form of a response to its notification that it intends to exclude a proposal from its proxy materials. Accordingly, if a company wishes to receive a response for any proposal that it intends to exclude pursuant to a basis other than Rule 14a-8(i)(1), the company or its counsel must include, as part of its notification pursuant to Rule 14a-8(j), an unqualified representation that the company has a reasonable basis to exclude the proposal based on the provisions of Rule 14a-8, prior published guidance, and/or judicial decisions. In those situations, the Division will respond with a letter indicating that, based solely on the company’s or counsel’s representation, the Division will not object if the company omits the proposal from its proxy materials. In providing its response, the Division will not evaluate the adequacy of the representation or express a view on the basis or bases the company intends to rely on in excluding the proposal. Accordingly, a company’s Rule 14a-8(j) notification should be limited to the information required by the rule as well as an unqualified representation that the company has a reasonable basis to exclude the proposal.
Regulation S-P Amendments Designed to Enhance Protection of Customer Information in Effect
Regulation S-P, established under the Gramm-Leach-Bliley Act (“GLBA”), governs how financial institutions protect the nonpublic information of consumers. In 2024, the SEC adopted significant amendments to Regulation S-P to modernize data protection and breach notification standards for broker-dealers, investment companies, registered investment advisers, and transfer agents. These updates mandate that covered institutions implement a formal written incident response program to detect, contain, and recover from unauthorized access to customer information. A critical new requirement is the 30-day notification rule, which obligates firms to notify affected individuals within 30 days of discovering a breach that involves sensitive customer data. Additionally, the amendments introduce stricter service provider oversight, requiring firms to ensure that third-party vendors notify them of any data breaches within 72 hours. While larger entities were required to comply by December 3, 2025, smaller institutions must achieve full compliance by June 3, 2026. The SEC continues to hold virtual compliance outreach events tailored to various registrant types, including discussion of past risk alerts on the subject, as well as the SEC perspective on the examination lifecycle for entities subject to Regulation S-P.
Regulation S-P: Privacy of Consumer Financial Information and Safeguarding Customer Information
CFTC Aligns with SEC in Enacting Wells Process Reform
On December 1, 2025, Commodity Futures Trading Commission Acting Chairman Caroline D. Pham announced the Commission is amending its Rules of Practice and its Rules Relating to Investigations. The amended Rules of Practice enhance the transparency of the Commission’s enforcement actions, including changes to ensure an accurate and complete administrative record by improving internal memoranda to the Commission when the Division of Enforcement recommends an enforcement action. The amended Rules Relating to Investigations enhance due process when the Division of Enforcement notifies persons who may be named in an enforcement action (Wells process), ensuring that notice of potential charges and relevant facts supporting the allegations are provided.
FinCEN Delays Compliance with AML Rule for Advisers until 2028
On September 4, 2024, FinCEN published the IA AML Rule, which defines certain investment advisers as “financial institutions” under the Bank Secrecy Act. The IA AML Rule requires covered IAs to establish AML/CFT programs, report suspicious activity, and keep relevant records, among other requirements.
On December 31, 2025, the Financial Crimes Enforcement Network (“FinCEN”) announced a delay in the effective date of the IA AML Rule until January 1, 2028. The Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) Program and Suspicious Activity Report (SAR) Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers had an original effective date of January 1, 2026. The effective date is now January 1, 2028. As part of this delay, FinCEN is amending the date by which an investment adviser must develop and implement an AML/CFT program.
Federal Register: Delaying the Effective Date of AML Requirements for Investment Advisers
SEC Approves ETF Share Class Exemptive Relief
In late 2025, the SEC began issuing exemptive relief to several applicants that allows for an ETF share class. These applicants requested to permit a registered open-end management investment company to offer one class of exchange-traded shares that operate as an exchange-traded fund (“ETF Shares”) along with one or more classes of shares that are not exchange-traded (“Mutual Fund Shares”).
This exemptive relief provides two broad categories of relief. First, it provides the relief necessary to permit standard exchange-traded fund operations consistent with Rule 6c-11 under the Investment Company Act of 1940, as amended. Second, it provides the relief necessary for a fund to offer ETF Shares and one or more Mutual Fund Shares. Such exemptive relief allows for more diversity and flexibility in investment structure.
SEC Grants Dimensional Fund Advisors ETF Share Class Exemptive Relief
Multi-Class ETF Fund Exemptive Relief under the Investment Company Act of 1940
COD00000977 2/26/2026
