JD Supra recognized Anna Pinedo, Editor of Free Writings & Perspective, as a Top Author for securities law topics as part of its 2025 Readers Choice Awards.  This is the third year in a row and the fifth time Anna has received this recognition.  Anna is ranked in the top 10 most read authors from a pool of 6,700 lawyers covering securities law.

Over 70,000 authors publish content on JD Supra.  The Readers Choice Awards recognize thought leaders for achieving the highest visibility and engagement among readers in their area of expertise. 

Read about the 2025 Readers Choice Awards.  Access Anna’s content on JD Supra and, of course, here on Free Writings & Perspectives.  We congratulate our colleague for her well-deserved recognition!

On February 28, 2025, House Financial Services Committee Chairman French Hill (R-AR), Senate Banking Committee Chairman Tim Scott (R-SC), and Senator Tom Cotton (R-AR) sent a letter (the “Letter”) to Securities and Exchange Commission (the “Commission”) Acting Chair Mark Uyeda requesting that the Commission launch a comprehensive review of all aspects of the Consolidated Audit Trail (CAT”), the Commission-mandated reporting system that collects data regarding trading in the U.S. equities and options markets.

Specifically, the Letter calls on the Commission to take steps to pause CAT’s most controversial elements – namely, (i) the collection of personally identifiable information (“PII”) of investors and (ii) the problematic funding structure (which a majority of the current Commission voted against).  The Letter also calls on the Commission to pause and reconsider its position with respect to ongoing litigation relating to CAT.

The Letter follows the Commission’s recent order exempting the reporting of certain PII – names, addresses, and years of birth – to CAT on February 10, 2025.  In this regard, the Letter states that “[t]he prohibition on collecting investor PII must be formally codified (rather than via rescindable exemptive relief) and already-collected PII must be expunged.”  In addition, the Letter states that “[c]ybersecurity measures for CAT’s remaining data must be enhanced” and its “bloated out-of-control budget must be addressed.”

On February 27, in what is likely the first of many statements about crypto assets, the Staff of the U.S. Securities and Exchange Commission’s Division of Corporation Finance (the “Division”) posted a statement on Meme Coins (the “Statement”).  In the Statement, the Division’s Staff shared its views that transactions in “meme coins,” which are “a type of crypto asset inspired by internet memes, characters, current events, or trends for which the promoter seeks to attract an enthusiastic online community to purchase the meme coin and engage in its trading,” do not involve the offer and sale of securities under the federal securities laws. Accordingly, offers and sales of such meme coins do not need to be registered or exempt from registration under the Securities Act of 1933, as amended, and those who transact in such coins do not have the benefit of protection under the federal securities laws.

The Staff opined that meme coins, which are speculative in nature and so prone to market price volatility, are generally like other collectibles, purchased for entertainment or other non-financial value.  Buyers are notified of these risks–in other words, buyers should be aware that meme coins are for fun, rather than financial gain.  The Staff went on to explain that a meme coin “does not generate a yield or convey rights to future income, profits, or assets of a business,” unlike the common financial instruments that are considered to be securities such as stocks, notes, and bonds.[1]

Because an “investment contract” can be a security, the Staff then considered whether a meme coin may be offered and sold as part of an investment contract (and therefore still be subject to the US federal securities laws).  Under the test established by SEC v. W.J. Howey Co.,[2] the Staff evaluated the“economic realities” of the purchase and sale of meme coins, i.e., “whether there is an investment in an enterprise premised on a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others.”  The Staff answered this question in the negative because (i) purchasers are not making an investment in an enterprise (i.e., funds are not pooled together for a related constructive purpose), (ii) purchasers do not expect a profit based on the efforts of others; instead, value is derived from the speculative trading market described above, and (iii) meme coin promotors do not undertake “managerial and entrepreneurial efforts” that would lead meme coin purchasers to expect a profit.  In sum, the Staff’s view is that meme coins do not satisfy any of the prongs of the test described in Howey.

The Division Staff clarified that the Statement only applies to meme coins meeting the description therein, and that the characteristics of a meme coin, not the name of the instrument, will control when determining whether or not a meme coin is a security.  In addition, other federal and state laws governing fraudulent conduct continue to apply to the sale of meme coins, even though the federal securities laws do not.

Later that same day, Commissioner Caroline Crenshaw posted a rebuttal to the Statement.  In her strongly-worded response, Commissioner Crenshaw characterized the Statement as an “incomplete, unsupported view of the law to suggest that an entire product category is outside the bounds of SEC jurisdiction.”  Criticizing the Statement for its lack of a clear definition of “meme coin,” she continues by stating that that this shortcoming “alone makes the value of this guidance questionable, except perhaps as a roadmap for crypto enterprises looking to evade oversight by labeling themselves as a meme coin.”

In particular, Commissioner Crenshaw highlighted that fact that the Howey test (described above) focuses on the “economic reality” of a transaction, including whether there is a reasonable expectation of profits based on the efforts of others; an analysis that Commissioner Crenshaw believes the Staff declined to undertake.  In her view, the “reality is that meme coins, like any financial product, are issued to make money” for both promoters and owners, not for a non-financially based entertainment value.  Further, offerings, buybacks, promises of future exchange listings and other actions by promoters can and do impact the value of meme coins, perhaps satisfying the “efforts of others” detailed in Howey.  Overall, in her opinion, the Statement is vague, “a broad statement of general principles that provide little clarity or predictability as to any given coin,” rather than a well-reasoned interpretation of the law.

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

[1] See Sections 2(a)(1) of the Securities Act of 1933 and 3(a)(10) of the Securities Exchange Act of 1934 for a definition of the term “security.”

[2] 328 U.S. 293 (1946).

Webinar | March 20, 2025
12:00 p.m. – 1:00 p.m. EST
Register here.

Join us for the latest installment in the Banking & Financial Services Litigation webinar series, Supreme Court Roundup: Recent Decisions and Upcoming Cases. The current term of the US Supreme Court will see rulings on many important business issues, including class action standards, environmental law, administrative law, and ERISA. Mayer Brown partners Andy Pincus and Nicole Saharsky will discuss the practical consequences of last term’s decisions, and the cases on this term’s docket.

Join us at the Practising Law Institute’s Private Placements and Hybrid Securities Offerings 2025 conference.

This annual conference provides an overview of the legal framework applicable to private and exempt offerings, covering the basics of private placements, resales of restricted securities, Rule 701, Rule 144, Section 4(a)(1-1/2) transactions and block trades, and private secondary transactions.  The second half of the program focuses on doing deals.  Topics include the documentation, principal negotiating issues, and market developments relating to late-stage or pre-IPO private placements, traditional private placements, PIPE transactions, equity lines of credit, Rule 144A offerings, registered direct offerings, at the market offerings and confidentially marketed public offerings.  This year’s program features a new session on 4(a)(2) debt private placements (“insurance” private placements)

Given the anticipated changes to the accredited investor definition and to the securities offering framework, contemplated in recent legislation and discussed by the SEC’s Acting Chair, the panelists will provide useful insights on the growth of the private markets, reliance on hybrid offerings, areas of potential change and more.

Chaired by Anna Pinedo, co-author of PLI’s Exempt and Hybrid Securities Offerings, this year’s conference features experienced practitioners, including Mayer Brown partner Jennifer Zepralka, as well as in-house counsel and bankers.

For more information, visit the event website.

On 26 February 2025, the European Commission (“Commission”) published its “Omnibus I” or “Sustainability Omnibus” package as part of its mission to improve the competitiveness of the European Union. The Omnibus Package foresees changes to several EU instruments pertaining to sustainability reporting under the Corporate Sustainability Reporting Directive (“CSRD”) and Taxonomy Regulation, sustainability due diligence under the Corporate Sustainability Due Diligence Directive (“CSDDD”), and imports of carbon-intensive products under the Carbon Border Adjustment Mechanism (“CBAM”). The Commission aims to “cut red tape” and “simplify EU rules for citizens and business” by means of this Omnibus Package.

Continue reading our Legal Update.

Members of the US Securities and Exchange Commission (the “Commission”) continue to share their views about the Commission’s current priorities, and Monday was Acting Chairman Mark Uyeda’s turn.  Speaking at the Florida Bar’s 41st Annual Federal Securities Institute and M&A Conference on February 24, 2025, Acting Chairman Uyeda provided his thoughts on where the Commission should go.

After highlighting that the Commission “has begun the process of returning to its narrow mission to facilitate capital formation, while protecting investors and maintaining fair, orderly, and efficient markets,” Acting Chairman Uyeda discussed the steps that the Commission has taken in that direction, including establishing a crypto task force to help create a regulatory framework for crypto assets (learn more here) and delaying litigation regarding the recently-adopted climate disclosure rules (see here for more) (Acting Chairman Uyeda has been vocal in his disapproval of these rules). 

Acting Chairman Uyeda then turned to his priorities for the Commission’s next steps, as follows:

  • Explore straightforward, cost-effective ways that small businesses and start-up companies can access capital, whether through changes to the exempt offering regime (including Regulation CF) or through legislative action.
  • Improve retail investors’ ability to invest in private companies, such as through changes to the accredited investor definition, in a manner that would allow investors to weigh risks and benefits of a given investment without “paternalistic policies.”
  • Encourage initial public offerings by potentially broadening the definition of emerging growth companies, or EGCs, and considering modifications to new disclosure requirements, such as the Commission’s cybersecurity disclosure rules, to create an “on-ramp” to facilitate compliance for newer public companies.
  • Consider modifications to the Commission’s filer categories and disclosure rules based on a company’s size and resources to avoid disproportionately burdening smaller companies.

Acting Chairman Uyeda’s focus on encouraging capital raising and business innovation and facilitating investment by all is a departure from the emphasis on disclosure obligations and investor protections that marked the most recently prior Commission.  It will be interesting to watch and see what comes of these priorities once the new administration settles in and the Commission begins to consider new rulemaking initiatives.

Read Acting Chairman Uyeda’s remarks here.

On February 25, 2025, the SEC extended the compliance dates for Rule 17ad-22(e)(18)(iv)(A) and (B) under the Securities Exchange Act for eligible cash market transactions by one year to December 31, 2026, and for eligible repo market transactions to June 30, 2027.  The SEC issued a cancellation notice for its originally scheduled February 26, 2025, meeting where the compliance dates were the sole item on the agenda.  

Rule 17ad-22(e)(18)(iv)(A) and (B) mandates that covered clearing agencies providing central counterparty services for U.S. Treasury securities develop and enforce written policies and procedures designed to ensure that all direct participants submit for clearing and settlement any eligible secondary market transactions in U.S. Treasury securities where they are a counterparty. Additionally, covered clearing agencies must monitor these submissions and outline measures to address any failure to comply.

The SEC also granted a temporary exemption related to Exchange Act Rule 17ad-22(e)(6)(i).  Rule 17ad-22(e)(6)(i) requires covered clearing agencies to establish policies and procedures ensuring that margin amounts collected from a direct participant for its proprietary U.S. Treasury securities positions are calculated, collected, and held separately from margin collected in connection with transactions involving indirect participants relying on the direct participant’s services to access the clearing agency’s payment, clearing, or settlement facilities.  Compliance with the rule has been postponed from the original deadline of March 31, 2025, to a new deadline of September 30, 2025.

Read the SEC’s press release, updated final rule, and exemptive order.

Watch the US House of Representative’s Financial Services Committee hearing entitled “The Future of American Capital: Strengthening Public and Private Markets by Increasing Investor Access and Facilitating Capital Formation” today at 10 AM ET.  The hearing will consider over thirty bills, which address aspects of the IPO market, access to the public markets by smaller and medium-sized public companies, disclosure requirements for smaller reporting companies, the accredited investor definition, the Regulation A exemption, and certain regulations affecting BDCs and closed end funds. 

Mayer Brown’s Anna Pinedo will testify before the Committee on various of these matters.  

Read more on the Committee’s website.

Access Anna’s written testimony.

The SEC is set to hold an open meeting on February 26, 2025, to discuss extending compliance deadlines and granting temporary exemptions for covered clearing agencies (CCAs) handling U.S. Treasury securities. This review focuses on Rule 17ad-22(e)(18)(iv)(A) and (B) and a temporary exemption for Rule 17ad-22(e)(6)(i) and Section 19(g) under the Securities Exchange Act of 1934, as amended, which impact central counterparty services for these securities.

This comes after a coalition of trade associations, including SIFMA, the MFA, and ISDA, submitted a letter to SEC Acting Chair Uyeda raising concerns about the challenges of implementing mandatory central clearing for cash transactions and repurchase agreements involving U.S. Treasury securities. 

Read the agenda for the SEC open meeting.