Many US and other non-EU financial institutions which lend or undertake trade finance business on a cross border basis into Europe do so in reliance upon exemptions under local law.  These exemptions typically permit these non-EU entities to undertake such business without the need to obtain authorisation or licence from the local regulator (the “national competent authority”) and/or maintain a branch or subsidiary in the relevant EU member state.

CRD6 came into force on 9 July 2024 with staggered implementation.  It will impose a new licencing regime for “core banking activities”, the full provisions of which will need to be transposed into national law and come into effect on 11 January 2027.  This new regime will have extraterritorial effect and, subject to certain limited exemptions, will require non-EU financial institutions (e.g. US and Asian banks) providing core banking activities to establish branches in the EU and obtain authorisation from the relevant national competent authority.  This harmonisation of rules across the EU under CRD6 will mean that existing exemptions for commercial lending and trade finance activities in individual EU member states will to a large extent be replaced with the new EU-wide licencing regime.

Non-EU institutions which are required to establish branches will be subject to capital, liquidity and other prudential requirements.  Non-EU financial institutions with existing branches in the EU may opt to convert these into subsidiaries in order to provide core banking activities cross border into other member states using the CRD passport.

What are the new rules under the licencing regime in CRD6?

Unless an exemption applies, under Article 21c (see also Article 47(1)) of CRD6, in-scope non-EU financial institutions will be required to seek authorisation and establish a branch in the relevant EU member state before commencing or continuing “core banking activities”.  National competent authorities will also have powers to require the establishment of a subsidiary instead of a branch.

Core banking activities are defined to include:

  • lending, including consumer credit, credit agreements relating to immovable property, factoring (with or without recourse), financing of commercial transactions (including forfeiting);
  • guarantees and commitments; and
  • taking deposits and other repayable funds*.

*There remains ambiguity as to how taking deposits and other repayable funds will be interpreted under the local laws of individual members states, e.g. whether this would include custody services or the issuance of capital markets instruments (each of which currently benefit from exemptions in certain member states).

Which non-EU entities fall into scope of these new rules?

The new licencing regime applies to non-EU entities which would meet the criteria for “credit institutions” under the EU Capital Requirements Regulation (“CRR”) if they were an EU entity (this definition will also include systemic large investment firms which are not banks). 

Credit institutions are defined under CRR as a business which consists of any of the following:

  • taking deposits or other repayable funds from the public and grant credits for its own account (most non-EU deposit taking banks will fall into this category, even if they do not take deposits in Europe); and/or
  • which carries out the EU MIFID II investment activities of dealing on own account (i.e. trading against proprietary capital in securities, derivatives and other MIFID financial instruments) or the underwriting or placement of securities, derivatives and other MIFID financial instruments (on an individual entity basis or as part of a group), in each case:
    • where the total value of the consolidated assets (in or outside the EU) is equal to or exceeds EUR30 billion; and/or
    • where the total value of the MIFID II investment activities undertaken on an individual entity or group basis is equal to or exceeds EUR30 billion.

The above thresholds do not apply to the business of taking deposits and other repayable funds, which are caught irrespective of the size of the credit institution.  The legal interpretation amongst EU member states of taking deposits and other repayable funds will be a key area of consideration for financial institutions falling within scope who issue debt securities and currently rely on national law exemptions for this activity.   

Credit institutions falling within scope will exclude any entities which fall into the following categories:

  • a commodity and emission allowance dealer; or
  • an insurance undertaking; or
  • a collective investment undertaking (in broad terms, these entities are mainly UCITS/alternative investment funds (AIFs), the characteristics of which include raising capital from investors for investment, not commercial purposes, with a view to generating a pooled return for those investors in accordance with a defined investment policy).

However, for all other core banking activities, it is clear that the rules are targeted at large banks (>EUR30 bn) and will exclude non-EU funds and non-EU insurance and reinsurance companies lending into the EU.   

What exemptions will apply to the licencing requirement?

The requirement to establish a branch in the relevant EU member state will not apply in the following circumstances:

  • Grandfathering of existing financings: Contracts to provide core banking activities which were executed prior to 11 July 2026 will fall outside of the licencing requirements.  This means non-EU credit institutions will be able to continue to provide services relating to these arrangements without the need for a licence after 11 January 2027.  Whilst no guidance has been provided, it is unlikely that renewals or extensions of grandfathered contracts will be permitted.
  • Reverse Solicitation: This occurs where the EU based client requests the core banking services itself and approaches the non-EU credit institution “at its own exclusive initiative”. For this exemption to apply, the non-EU credit institution cannot market or solicit the core banking activities, nor can it instruct another person or entity (acting on its behalf) to market or solicit the core banking activities. The request for the provision of the core banking activity must be initiated by the EU based client itself.  Following this initiative by the EU based client, the non-EU credit institution is only permitted to market and solicit “any services, activities or products necessary for, or closely related to the provision of the service, product or activity originally solicited by the client”.
  • Ancillary activities to MIFID investment services: Core banking activities which are provided by a non-EU credit institution to an EU-based client, where such activities are ancillary to a MIFID investment service provided to that client (e.g. trading, placement or underwriting of securities) are excluded from CRD6.  In practice, this exemption will not be beneficial to most non-EU credit institutions as the provision of such investment services requires separate authorisation/licencing under MIFID.
  • Bank to Bank lending: Lending and other core banking services provided by a non-EU credit institution to an EU credit institution are exempted under the rules. The regulation will not impact interbank lending/treasury transactions.  However, such transaction may fall within scope of other EU regulations.
  • Intra-group transactions: Under this exemption, activities undertaken with members of the same group as the non-EU credit institution will fall outside of scope of CRD6.

When are “core banking activities” treated as being performed in the relevant EU member state?

There is no clarity in CRD6 on when activities will be treated as being performed “in” an EU member state.  As such, in the absence of further guidance from the European Banking Authority, this may lead to a fragmentation of approach amongst the member state.  For example, where a US bank lends to a borrower incorporated in Spain and undertakes all of the lending activity in the US with no travel to Spain, does the core banking activity take place in a member state?

When do the new rules under CRD6 come into effect?

CRD6 came into force in July 2024, but a staggered approach will be taken to the implementation of the third country branch requirements.  A list of some of the key dates are included below:

  • EU member states have until 10 January 2026 to transpose CRD6 into national law.
  • Any contracts for the provision of core banking activities will cease to benefit from exemption for grandfathering from 11 July 2026.
  • By 11 January 2027, all provisions relating to non-EU credit institutions establishing third country branches under CRD6 will need to be transposed into national law and be operative.
  • Norway, Iceland and Lichtenstein as members of the European Economic Area (EEA) are also expected to transpose CRD6 into national law.

What are next steps for US and other non-EU firms?

  • A scoping exercise will be necessary to determine whether or not your institution (or its affiliates) falls within scope of CRD6 as a consequence of its EU lending and other core banking activities.
  • Non-EU firms should undertake an assessment of whether there are any exemptions on which they may rely  Note that in practice, there will be limited legal and commercial scope for non-EU entities to transfer their EU core banking activities into entities within the group which fall outside the definition of “credit institution” as described above.
  • A review of alternative financing methods where your institution would not operate as the lender of record but still obtain exposure to EU based borrowers (e.g. funded or unfunded sub-participations, credit derivatives etc.).If licencing is required, a review of which EU member states a branch (or subsidiary) should be established in will be a key consideration.

On April 11, 2025, the staff (the “Staff”) of the U.S. Securities Commission’s Division of Corporation Finance (the “Division”) issued seven new Compliance and Disclosure Interpretations (“CDIs”), the third update to the CDIs by the Division in the last few months.  Six new Exchange Act Forms CDIs relate to the clawbacks-related checkboxes on the cover pages of Exchange Act annual reports, as well as the disclosure required by Regulation S-K Item 402(w)(2), while the remaining new CDI, included in the Exchange Act Rules CDIs, addresses co-registrant target companies in de-SPAC transactions.

Exchange Act Forms Updates

CDIStaff Guidance
104.20When an issuer revises financial statements in annual report to correct an error to previously issued financial statements, it must check the box on the cover page of its annual report disclosing that “the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.”  This applies whether a “little r” restatement or “big R” Restatement is required for any reason.[1] However, when an issuer corrects an immaterial prior period error that is recorded in the current period? (an “out-of-period adjustment”), the issuer does not need to check the box because previously issued financial statements are not being revised.
104.21When an issuer prepares a “Big R” restatement to its prior year financial statements and amends the relevant annual report, it must also analyze whether erroneously awarded executive compensation should be recovered.[2]  Even if the issuer determines that no compensation is subject to “clawback,” it must still check the box on the cover page of the amended annual report stating that the restatement “required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period” and provide an explanation. This includes when (i) executive officers did not receive any incentive-based compensation during the relevant time frame or (ii) incentive-based compensation received was not based on a financial reporting measure impacted by the restatement.
104.22When an issuer reports a “Big R” restatement to its prior year financial statements, amends the relevant annual report, and checks the “clawback” box (discussed in CDI 104.21 above) on the cover of its amended annual report, it does not need to also check the box on its current annual report, even though the amended financial statements will be included, assuming no further restatements. However, the company’s current proxy or information statement, as applicable, that includes executive compensation disclosure regarding the prior period must include the disclosure required by Item 402(w)(2) of Regulation S-K (or Form 20-F or 40-F as applicable), dealing recovery of erroneously awarded compensation.
104.23In the current year, before filing its prior year annual report, an issuer prepares a “little r” restatement of its previously issued annual financial statements and determines that no recovery of erroneously awarded compensation is required.  If the issuer checks the relevant boxes on its prior year’s annual report, filed in the current year, and provides the disclosure required by Item 402(w)(2) (or Form 20-F or 40-F, as applicable) in the current year proxy or information statement, the issuer does not need to provide the disclosure required by Item 402(w)(2) again in the subsequent year’s annual report, proxy or information statement.
104.24If an issuer initially reports a restatement of its annual financial statements on a form that does not have a cover page check box indicating that the financial statements included reflect the correction of an error to previously issued financial statements,[3] the company must check the box on the cover page of its next annual report, assuming it includes the relevant annual financial statements.
104.25If, in the fourth quarter of its fiscal year, an issuer determines it must prepare restatements for quarters 1-3 of that year, the issuer does not need to check any boxes on the cover page of that year’s annual report, even if it includes disclosure about the interim restatements in a footnote to its annual financial statements. However, the issuer must provide disclosure pursuant to Item 402(w) of Regulation S-K in its annual report, proxy or information statement, as applicable, because, for purposes of that disclosure, an accounting restatement includes an accounting restatement that impacts interim periods only.  

Exchange Act Reporting Following a de-SPAC Transaction

New Exchange Act Rules CDI 253.03 is based on the premise that, following a de-SPAC transaction in which the target company is included as a co-registrant on the Securities Act registration statement for the de-SPAC transaction, the co-registrant target becomes a reporting company under Section 15(d) of the Exchange Act upon effectiveness of the registration statement.  In this situation, once the de-SPAC transaction has closed, any co-registrant target can file a Form 15 to suspend its Section 15(d) reporting obligations if (i) the co-registrant target is wholly-owned by the combined company and (ii) the co-registrant target remains current in its Section15(d) reporting obligations through the date of filing the Form 15.[4]  The new CDI is consistent with guidance in the Commission’s 2024 SPAC rules release, and is confined to situations where the new public company established by the de-SPAC transaction will continue to be publicly reporting, such that disclosure by the target would not be additive to the total mix of information available to investors.

[1] A “Big R” Restatement corrects an error in previously issued financial statements that is material to those financial statements, while a “little r” restatement corrects an error that is immaterial to previously issued financial statements but would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.

[2] See Exchange Act Rule 10D-1(b).

[3] For example, Form 8-K or a Securities Act registration statement.

[4] See Exchange Act Rule 12h-3.

In March 2025, Nasdaq released a comprehensive set of policy recommendations intended to advance capital formation in a paper titled “Advancing the U.S. Public Markets: Unlocking Capital Formation for a Stronger American Economy.”  The paper outlines three key sets of policy reforms, which were prepared by Nasdaq in dialogue with industry stakeholders, including current and prospective public companies.  The paper observes the decline in the number of public companies, noting that since 2000, the number has gone from roughly 7,000 to 4,500, or a decline of 36%.  According to the report, this decline is harmful to the overall markets.  The report reviews a now familiar trend—that is that private companies are choosing to defer initial public offerings and remaining private longer and often choosing other liquidity alternatives.  In addition, the report notes the disparity in the growth rates of public equity versus private equity—with public equity growing at a 3% annual growth rate that pales in comparison to the 15% growth rate of private equity.

The report organizes suggested reforms into the following categories:  proxy process modernization; scaled disclosure relief; and levelling the playing field with smart regulation.  The report contends that while the proxy process can be important for stockholders it is broken—requiring too much management time and attention and draining resources.  The report recommends, among other things, lengthening emerging growth company (EGC) status, expanding the benefits of scaled disclosure to more companies, harmonizing the definitions of EGC and smaller reporting company (SRC), and expanding the definition of well-known seasoned issuer (WKSI).  Finally, the report identifies opportunities to eliminate ineffective, inefficient and burdensome rules.  These include concerns regarding the Public Company Accounting Oversight Board’s (PCAOB) regulations and their impact on companies.  Also, stakeholders see a need for change as it relates to securities litigation.  The full text of the paper is available here.

On April 4, 2025, the Division of Corporation Finance (the “Division”) of the U.S. Securities and Exchange Commission (the “Commission”) published a statement (the “Statement”) outlining its position on stablecoins, a category of crypto asset intended to maintain a stable value in regard to a reference asset, such as the U.S. dollar, and track the value of such reference asset on a one-to-one basis.  The Statement marks the second time in recent weeks that the Division has shared its views on a type of crypto asset, marking a clear departure from the Commission’s approach under former Chair Gensler. 

The Statement is intended to apply narrowly to stablecoins meeting the following parameters:  (i) designed to maintain a stable value on a one-to-one basis to the U.S. dollar, (ii) redeemable to the U.S. dollar on a one-for-one basis, and (iii) backed by low-risk and readily liquid assets, held in a reserve, with a U.S. dollar value that meets or exceeds the redemption value of the stablecoins in circulation (“Covered Stablecoins”).  As described in the Statement, Covered Stablecoins are intended for making payments, sending money, or storing value, but not as investments.  They are minted, or created, in unlimited amounts, and sold by either the issuer or an intermediary.  They can be redeemed by the issuer at any time on a one-to-one basis with the reference asset.  According to the Statement, “through this fixed-price, unlimited mint-redeem structure, the market price of a Covered Stablecoin is likely to remain stable relative to USD.”  However, the market price of a Covered Stablecoin can fluctuate from its redemption price, such that an issuer can take action, such as minting and selling additional Covered Stablecoins, to maintain the market price relative to the redemption price.

In the Statement, the Division shared its view that the offer and sale of Covered Stablecoins, as specifically described in the Statement, does not involve the offer and sale of securities under Section 2(a)(1) of the Securities Act of 1933 (the “Securities Act”) or Section 3(a)(10) of the Securities Exchange Act of 1934 (the “Exchange Act”).  Therefore, minters (i.e., creators) or redeemers of Covered Stablecoins do not need to register those transactions under the Securities Act or fit within one of the Securities Act’s exemptions from registration.

To support this conclusion, the Statement highlights the fact that Covered Stablecoins are marketed as “digital dollars”  with payment functionality, rather than as investments, and holders are not entitled to receive any interest, profit or other returns.  Holders have no ownership interest in the Covered Stablecoin issuer, and there are no governance rights associated with holding a Covered Stablecoin.  The assets held in reserve for Covered Stablecoin redemptions are held separately from those of the Covered Stablecoin issuer, and cannot be used for operational purposes.  The Statement notes, however, that the Covered Stablecoin issuer may generate earnings (for example, interest) on the assets, which the issuer may use at its discretion.

Analysis under Reves v. Ernst & Young[1]

The Division analyzed the status of Covered Stablecoins as a security under the “family resemblance” test outlined in Reves v. Ernst & Young because Covered Stablecoins share characteristics with notes or other debt instruments.[2]  In Reves, the U. S. Supreme Court created a rebuttable presumption that, because a “note” is included in the statutory definitions of the term “security,” it will be considered to be a security.  The presumption can be refuted by showing that the note is similar to one issued in a typical commercial transaction and so is not a security.  The family resemblance test considers four factors:

Reves FactorQuestion PresentedStaff Analysis
Motivations of Seller and BuyerDoes the seller intend to raise money for a business venture while the buyer intends to generate a return on their investments, or will the note be exchanged for a commercial or consumer purpose? Covered Stablecoins are bought for stability and use as a payment mechanism; buyers are not entitled to interest or other payments so do not buy Covered Stablecoins for profit.    
Plan of DistributionIs the instrument broadly available for sale to the public; is there common trading for speculation or investment?Covered Stablecoins are widely available; however secondary market trading is not for speculation or investment.   Arbitrage opportunities are minimized where the Covered Stablecoin issuer honors redemptions on demand and mints and redeems Covered Stablecoins on a one-for-one basis with the U.S. dollar at any time.
Reasonable Expectations of the Investing PublicHow are the instruments marketed and sold?Covered Stablecoins are not marketed for investment, but rather for payment functionality and for storing value.
Risk-Reducing FeaturesAre notes collateralized or insured, or subject to another regulatory scheme that significantly reduces the risk and renders protection under the federal securities laws unnecessary?Covered Stablecoin issuers are required to maintain a reserve to honor redemptions, the contents of which must be low-risk and readily liquid.

Using the foregoing points, the Division concluded that, on balance, Covered Stablecoins are not securities under Reves.

Analysis under SEC v. W.J. Howey & Co.[3]

The Division also analyzed the status of Covered Stablecoins as “investment contracts” using the test established by SEC v. W.J. Howey & Co., which considers the “economic reality” of the instrument.  In other words, is there an investment of money in a common enterprise premised on a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others?  If so, the instrument is likely to be a security.  The Division reiterated its belief that Covered Stablecoin buyers are not intending to make a profit but are instead interested in the payment and/or value storage features of Covered Stablecoins.  Therefore, the Division concluded that, under the Howey analysis, Covered Stablecoins are not securities, in concurrence with its analysis under Reves.

Commissioner Crenshaw’s Statement

Later that same day, Commissioner Caroline Crenshaw voiced her disagreement with the Statement, explaining that she believes that the Statement substantially understates the risks associated with the U.S. dollar-based stablecoin market. 

Focusing particularly on the Staff’s view of the Covered Stablecoin issuer’s reserve as a risk reduction factor under the Reves test, Commissioner Crenshaw stressed that retail investors can generally only purchase and redeem stablecoins through intermediaries, against whom such investors have no legal recourse if the intermediary decides not to redeem a stablecoin, creating substantial risk that is not analyzed in the Statement.  In other words, because a retail investor deals only with an intermediary, the risk-reduction feature of the issuer’s reserve does not protect that retail investor, so the investor is required to redeem at market price with the intermediary, rather than on a one-to-one basis with the issuer.  In addition, the existence of the reserve does not mean that unlimited redemption requests at any time will be honored, especially in chaotic market conditions.  Commissioner Crenshaw also stated that issuers’ “proof of reserve reports,” presented as “demonstrating that a stablecoin is backed by sufficient reserves,” are unregulated and potentially unreliable, rather than a source of credible information for investors.   In sum, the “risk reduction” features that the Staff highlighted in its Reves analysis do not, in Commissioner Crenshaw’s opinion, function as such. 

Commissioner Crenshaw also highlighted some practical challenges associated with relying on the guidance in the Statement.  Since the Statement did not address the situation where retail investors purchase and redeem stablecoins from intermediaries, it leaves unconsidered the responsibilities and obligations, including disclosure requirements, of intermediaries to stablecoin investors.  She closes by firmly stating her views: “make no mistake:  there is nothing equivalent about the U.S. dollar and unregulated, privately-issued crypto assets that are opaque (clearly even to the staff), uncollateralized, uninsured, and laden with risk at every step of their multi-layer distribution chain.  They are risky business.”

Read the Statement here and Commissioner Crenshaw’s rebuttal here.

[1] 494 U.S. 56 (1990).

[2] Section 2(a)(1) of the Securities Act and Section 3(a)(10) of the Exchange Act define “security” to include “stock,” “note,” and “evidence of indebtedness.”

[3] 328 U.S. 293 (1946).

On March 31, 2025, the U.S. House Financial Services Committee (Committee) penned a letter to acting Securities and Exchange Commission (SEC) Chair Mark Uyeda identifying 14 proposed and final rules that, according to the Committee, should be withdrawn in their entirety. All of the cited rules were proposed or implemented under prior SEC Chair Gary Gensler.  The Committee’s letter urged the SEC to revisit and withdraw the rules listed below, each linked to their respective proposed or adopting release, as applicable, in the interest of keeping U.S. capital markets attractive to existing and future public companies:

  1. Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure;
  2. Short Position and Short Activity Reporting by Institutional Investment Managers;
  3. Reporting of Securities Loans;
  4. Pay Versus Performance;
  5. Investment Company Names;
  6. Form N-PORT and Form N-CEN Reporting; Guidance on Open-End Fund Liquidity Risk Management Programs;
  7. Conflicts of Interest Associated with the Use of Predictive Data Analytics by Broker Dealers and Investment Advisers;
  8. Open-End Fund Liquidity Risk Management Programs and Swing Pricing;
  9. Regulation Best Execution;
  10. Order Competition;
  11. Position Reporting of Large Security-Based Swap Positions;
  12. Regulation Systems Compliance and Integrity;
  13. Outsourcing by Investment Advisers; and
  14. Enhanced Disclosures by Certain Investment Advisers and Investment Companies about Environmental, Social, and Governance Investment Practices.

The letter is part of a broader series of exchanges by the Committee with various federal agencies, including the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Consumer Financial Protection Bureau requesting the recission or significant modification of both proposed and final rulemaking largely promulgated during the Biden administration that, in view of the Committee, impedes U.S. capital formation and has negative economic consequences.  The process for repeal of a final SEC rule is largely the same as that for implementation and would necessitate a public notice and comment period, absent finding by the SEC that such notice and comment procedures are impracticable, unnecessary or contrary to public interest.  The Committee’s press release is available here, and the full text of the Committee letter to the SEC is available here.

Our Convertible Bonds: An Issuer’s Guide is available to download.  The guide has been updated to include a discussion relating to European and US issuers. 

The convertible bond market has been active as companies refinance converts issued during the pandemic.  Driven by a high interest rate environment and ongoing macroeconomic uncertainty, companies issued over $86 billion in convertible bonds in 2024.  Issuers turn to convertible securities as a strategic liability management tool, benefiting from lower interest costs relative to traditional debt and reduced dilution compared to equity.  The increase in activity is expected to continue as many companies are now considering refinancing expensive debt like term loans and high yield bonds with convertible debt and refinancing convertible debt with new convertible debt (this addresses upcoming maturities and extends out maturities).

On March 27, 2025, the US Senate Committee on Banking, Housing, and Urban Affairs (the “Committee”) convened in an open session to consider the nomination of Paul Atkins as Chair of the Securities and Exchange Commission (“SEC”).  In addition to his prepared opening remarks, Mr. Atkins fielded questions from the Committee in connection with his nomination, including questions about potential conflicts of interests related to his interest in his consulting firm, the SEC’s handling of the 2008 financial crisis during his prior term as an SEC Commissioner from 2002 to 2008, and related topics.  On April 3, 2025, the Committee approved his nomination with a vote of 13 to 11.

Below are some key takeaways from his testimony that shed light on some of his likely SEC priorities once he is confirmed:

Disclosure practices:  Mr. Atkins’ remarks signaled a willingness to pare back regulatory requirements and remove “roadblocks” for companies seeking to access the public markets.  Mr. Atkins expressed concerns with “American investors [being] flooded with disclosures that do the opposite of helping them understand the true risks of information,” and the regulatory burdens impeding IPO activity and “hurting the ability for young companies to get capital.”  He also noted that he did not believe the SEC ever fully implemented the JOBS Act and that he wants to re-examine it and make changes that will reinvigorate the new issue market.

Digital assets and crypto:  Although Mr. Atkins is a well-known advocate of cryptocurrency, he received relatively few questions on this topic.  In his remarks, Mr. Atkins highlighted his industry experience developing best practices for the digital asset industry and how he has “seen how ambiguous and non-existent regulation of digital assets create uncertainty and inhibit innovation.”  Therefore, Mr. Atkins stated a top priority as SEC Chair will be to “provide a regulatory foundation for digital assets through a rational, coherent, and principled approach.” Consistent with the work that already has started under the new Crypto Task Force, Mr. Atkins stated that he was eager to uncomplicate the regulatory environment in the crypto industry.

Creating efficiencies within the SEC:  Mr. Atkins indicated general support for greater efficiency at the SEC and noted he would not turn away DOGE or others who can help with “creating efficiencies in the agency or otherwise.”  He said he would take suggestions and work with them to “make sure that taxpayer funds are being used properly and that the work of the [SEC] is being done effectively and efficiently.”  It has been reported that more than 10% of the SEC’s roughly 5,000-person staff has taken a voluntary buyout, with some estimates being closer to 20%, and further cuts could result from further DOGE involvement.

ESG:  Mr. Atkins voiced concerns over the politicization of the financial markets.  Mr. Atkins stated that he would put an end to that, and put protections in place so that money managers and others will be focused on investment strategy and not on politics and social causes.

Regulation of Private Funds:  Mr. Atkins indicated that he did not have the same concerns as some of the Committee members with respect to private fund managers who may be “taking advantage of their unregulated, unregistered status” by charging higher fees while taking greater risks and providing fewer disclosures to investors than their public counterparts, stating that these investors are accredited investors, not retail investors, and therefore are more sophisticated and should be performing their own investigations into such investments.  However, Mr. Atkins did state that to the extent that any disclosures were materially incorrect, then it would be “actionable.”

Project 2025:  When questioned about his role as a special contributor to Project 2025, and in particular, the sections related to eliminating the Public Company Accounting Oversight Board (PCAOB) and the Consolidated Audit Trail (CAT) program, Mr. Atkins was careful to distance himself from Project 2025, stating that he was not involved in the drafting of Project 2025 and only “participated on a call or two” with respect to Project 2025.  When pressed further, Mr. Atkins acknowledged that the function performed by the PCAOB is vital and “needs to be done,” whether by the PCAOB or whether it is folded into the SEC.  With respect to the CAT program, Mr. Atkins similarly alluded to the importance of program, but stated that he needs to look into it further, “the way it is now, what the plans are, how efficient it is, what the costs are going to be.” 

Mr. Atkins opening remarks are available here.  A replay of the Senate hearing is available here.

Webinar | April 9, 2025

1:00 – 2:00 p.m. ET

Register here.

Hosted by the Practising Law Institute (PLI), Mayer Brown partners will be joined by SS&C Technologies to provide an overview of the current market conditions facing business development companies (BDCs). This session will cover:

  • Structural considerations when considering the launch of a BDC and deploying leverage
  • Considerations for registered and private offerings of BDC securities
  • Policy developments relating to the expanding BDC investor base
  • 1940 Act and other SEC developments for BDCs, including the fund of funds rule, derivatives-related regulation and cybersecurity disclosure rules
  • Legal and market outlook and trends for BDCs in 2025 and beyond

Webinar | April 9, 2025

11:45 a.m. – 1:00 p.m. ET

Register here.

Hosted by Intelligize, this session will focus on recent developments and trends with the US Securities Exchange Commission (SEC). Mayer Brown and CohnReznick panelists will cover topics including:

  • Recap on disclosure practices related to cybersecurity disclosures
  • Executive Perquisite Disclosures and Enforcement Actions
  • Related Party Disclosures and Enforcement Actions
  • EDGAR Next
  • 13D/G Reminders
  • FASB and SEC Accounting guidance for public companies: Segment reporting (including non-GAAP measures guidance), the new Effective Tax Rate Reconciliation and Income Statement Disaggregation

On March 20, 2025, the Financial Industry Regulatory Authority (FINRA) proposed amendments to its rules imposing restrictions on the purchase and sale of equity securities offered in initial public offerings (IPOs) (Rule 5130) and new issue allocations and distributions (Rule 5131) to exempt business development companies (BDCs) from the rules’ prohibitions.

Currently, non-traded (and private) BDCs fall under the definition of “restricted persons” under Rule 5130 so they cannot purchase shares in IPOs due to their affiliations with broker-dealers and investment managers.  The proposed changes to Rule 5130 would expand the pool of investors that can participate in IPOs by exempting non-traded BDCs from the rule’s application,  treating such entities similarly to publicly-traded BDCs and registered investment companies. Publicly-traded BDCs are already exempt from the prohibition under the existing text of Rule 5130.  The proposed amendments would not apply to private BDCs.  The proposed modifications to Rule 5131 would permit IPO allocations in some circumstances to non-traded BDCs even if such BDCs have relationships with the investment bank involved in the IPO (known as “spinning” restrictions). 

The proposed changes seek to align FINRA rules with the Securities and Exchange Commission’s treatment of BDCs and recognition of their role as capital providers to small to medium-sized businesses.  Comments on the proposal must be submitted on or before 21 days from publication in the Federal Register, and, if approved, the amendments could go into effect by year-end.  A link to the text of the proposed rule is available here.