News

09 Sep, 2026

SEC Proposes to Eliminate Investment Adviser Pay-to-Play Rule

The SEC has proposed rescinding Rule 206(4)-5 in its entirety — not only the two-year compensation ban following certain political contributions, but also the restrictions on using placement agents to solicit state and local government investors. Related recordkeeping provisions would go with it. The Commission's position is that a bright-line, strict-liability regime has penalized inadvertent small-dollar contributions without evidence of quid pro quo conduct, and that political contributions belong to election law rather than to securities regulation. This remains a proposal. The rule applies to the November elections, and advisers should continue operating their existing pre-clearance and lookback procedures. Even if adopted, rescission would not end pay-to-play compliance: the Advisers Act antifraud, fiduciary, compliance, and code of ethics obligations remain, as do state and local election laws, public pension plan policies, and — often overlooked — pay-to-play undertakings written into side letters, which survive on their own terms regardless of what the SEC does. What the SEC Is Proposing The SEC is proposing to rescind Rule 206(4)-5 in its entirety. The rule currently restricts an investment adviser from providing compensated advisory services to certain government clients for two years after certain political contributions by the adviser or covered associates. Why the SEC Is Reconsidering the Rule The SEC says its experience administering the rule has revealed implementation challenges and unintended consequences, including situations where advisers broadly restrict employee political contributions to reduce compliance risk. What Could Change for Investment Advisers If the proposal is adopted, advisers would no longer be subject to Rule 206(4)-5's specific two-year compensation restriction or its related SEC recordkeeping requirements. This could significantly change how advisory firms structure policies governing political contributions by employees and covered associates. Pay-to-Play Risk Would Not Disappear Rescinding Rule 206(4)-5 would not eliminate other legal obligations involving improper political contributions or adviser conduct. Investment advisers would remain subject to the Advisers Act's antifraud provisions, fiduciary obligations, compliance requirements, and codes of ethics, while applicable federal, state, and local laws could continue to address pay-to-play conduct. Compliance Policies Would Still Matter Advisers should not treat the proposal as eliminating political-contribution risk. Firms would still need compliance controls designed to address fraud, conflicts of interest, fiduciary obligations, and unlawful quid pro quo arrangements. What Investment Advisers Should Do Now Rule 206(4)-5 remains in place while the proposal is pending. Advisers should continue following their existing compliance requirements and monitor the rulemaking process before changing political-contribution policies or related controls. The SEC's comment period will remain open for 60 days after publication of the proposal in the Federal Register. How SJKP Can Help SJKP can assist investment advisers and financial firms with securities compliance, investment management matters, internal policies, and regulatory developments. Firms reviewing political-contribution policies can work with counsel to evaluate how any final SEC action may affect their compliance programs and continuing obligations.

01 Sep, 2026

SEC and FDA Expand Cooperation: What Life Sciences Companies Need to Know

The FDA now has a formal channel to tell the SEC what a company told the FDA.On August 31, the two agencies signed a three-year Memorandum of Understanding establishing information-sharing protocols across the life sciences sector.Under it, the FDA may share non-public information with the SEC — excluding trade secrets and confidential commercial data — and the SEC may use what it receives in reviewing filings and in enforcement matters. Why it matters. Biotech, pharma, and device companies make statements about trial results, submissions, and review status that move prices. The FDA holds the underlying data. The gap between what a company tells its regulator and what it tells its investors was previously hard for the SEC to see. It is less so now. The practical step is unglamorous: reconcile your disclosure language against your regulatory correspondence before the next release. Timelines, endpoint characterizations, and descriptions of agency feedback are where inconsistencies appear — rarely on purpose. What the SEC-FDA Agreement Changes The new MOU establishes formal procedures for the SEC and FDA to exchange information relevant to their regulatory and enforcement responsibilities. This includes mechanisms for sharing certain non-public information involving FDA-regulated products, companies, and activities. Why This Matters for Public Companies FDA developments can have a significant impact on the market value of life sciences companies. The SEC may use information received from the FDA when reviewing public company filings or investigating whether statements concerning matters such as FDA review, product approvals, or clinical trial results comply with federal securities laws. Life Sciences Companies Could See Closer Disclosure Scrutiny Public companies operating in pharmaceuticals, biotechnology, medical devices, and other FDA-regulated industries should pay particular attention to the agreement. Greater information sharing may make it easier for regulators to compare statements made to investors with information available to the FDA. What Companies Should Review Now Life sciences companies should review their disclosure controls and internal processes for communicating regulatory developments to investors. Legal, compliance, investor relations, and regulatory teams should be aligned on statements involving clinical trials, FDA submissions, regulatory review, and product approvals. Keep Regulatory and Investor Communications Consistent Companies should carefully review whether public filings, earnings materials, investor presentations, and other market communications accurately reflect significant FDA-related developments and the information available internally. What to Watch Next The MOU took effect when it was signed on August 31, 2026 and is scheduled to remain in effect for three years unless modified, extended, or terminated. Companies should monitor whether increased SEC-FDA coordination results in additional filing scrutiny, investigations, or enforcement activity involving FDA-related disclosures. How SJKP Can Help SJKP's corporate and securities attorneys can assist public companies and life sciences businesses with securities compliance, disclosure reviews, corporate governance, and regulatory risk. Companies affected by FDA developments can work with counsel to review investor communications and disclosure procedures and assess how regulatory events may affect their securities-law obligations.

25 Aug, 2026

Proxy Advisors Face New Antitrust Scrutiny—What Companies Need to Know

The Justice Department has withdrawn a 1987 Business Review Letter issued to Institutional Shareholder Services (ISS), signaling increased antitrust scrutiny of the proxy advisory industry. The move does not establish that ISS or other proxy advisors violated antitrust law, but it could affect how public companies, institutional investors, and boards approach proxy voting and corporate governance matters. What Changed On August 5, 2026, the DOJ's Antitrust Division withdrew a Business Review Letter it issued to ISS in 1987. The original letter stated that the Division did not then intend to challenge ISS's proposed proxy advisory activities under the antitrust laws. DOJ now says the letter no longer reflects ISS's current business practices or the Division's view of those practices. Why the DOJ Is Taking Another Look DOJ pointed to changes in ISS's business model, including its expansion into corporate consulting services. It also highlighted market concentration, stating that ISS and Glass Lewis together control more than 90% of the proxy advisory market. Why This Matters for Public Companies Proxy advisors can play an influential role in shareholder voting on director elections, executive compensation, governance proposals, and other corporate matters. Increased government scrutiny could affect how proxy advisors develop recommendations, interact with companies, and operate during future proxy seasons. What Boards Should Consider Now The DOJ's action does not create new compliance requirements for public companies. Boards and legal teams should nevertheless monitor developments involving proxy advisors, document independent governance decisions, and maintain direct communication with significant shareholders rather than relying exclusively on proxy advisory recommendations. Prepare Early for Contested Votes Companies facing significant shareholder proposals, director elections, or other contested matters may benefit from reviewing proxy advisor policies early and communicating directly with institutional investors about the company's position. What to Watch Next The withdrawal itself is not an enforcement action, but it signals that the DOJ is paying closer attention to competition in the proxy advisory industry. Public companies should monitor potential investigations, regulatory developments, litigation, and changes to ISS and Glass Lewis policies as future proxy seasons approach. How SJKP Can Help SJKP's corporate attorneys can assist public companies, boards, and investors with corporate governance, shareholder matters, securities compliance, and proxy-related issues. Companies facing significant shareholder votes or changing regulatory requirements can work with counsel to evaluate governance risks and prepare an appropriate strategy.

25 Aug, 2026

SEC Updates Rule 0-1(a)(7): What Fund Compliance Teams Need to Know

The SEC has adopted technical amendments to Rule 0-1(a)(7), which sets governance standards for regulated funds relying on certain exemptions under the Investment Company Act. The change removes two requirements that were struck down by a federal court nearly two decades ago, bringing the written regulation into line with the law already in effect. What Changed in Rule 0-1(a)(7) The SEC removed language requiring at least 75% of a regulated fund's directors to be disinterested and requiring the board chair to be a disinterested director. Both requirements were vacated by a federal appeals court in 2006, but the outdated language remained in the Code of Federal Regulations. Why the SEC Made the Change Now The amendment is intended to make the regulatory text accurately reflect the court's earlier decision. The SEC emphasized that the update is technical and does not create new substantive compliance obligations. Who This Affects The amendment is primarily relevant to registered investment companies and business development companies that rely on exemptive rules tied to Rule 0-1(a)(7). Fund boards, investment management counsel, and compliance teams should be familiar with the corrected governance standards. What Fund Compliance Teams Should Review Although the amendment does not impose new requirements, compliance teams should review governance manuals, board materials, internal policies, and templates to make sure they do not continue to describe the vacated 75% independence or independent-chair requirements as mandatory. The Majority Independence Standard Remains Rule 0-1(a)(7) continues to require a majority of fund directors to be disinterested directors. Other governance provisions that were not affected by the 2006 court decision also remain in place. When the Amendment Took Effect The technical amendments became effective on August 6, 2026. Because they simply conform the CFR to a court ruling that has been legally effective since July 2006, the SEC did not establish a separate transition or grace period. How SJKP Can Help SJKP's corporate and securities attorneys can assist investment companies, fund managers, and compliance teams with regulatory reviews, fund governance matters, internal policies, and SEC compliance. Organizations reviewing their governance documentation can work with counsel to identify outdated requirements and confirm that current procedures reflect applicable federal securities law.

25 Aug, 2026

SEC Updates Rule 14a-8 Guidance: What Shareholders and Companies Need to Know

The SEC staff has stepped out of the shareholder proposal process entirely.On August 14, the Division of Corporation Finance announced it will no longer respond to any Rule 14a-8 no-action request — including requests under 14a-8(i)(1), the one category it had preserved last season. It will also stop issuing no-objection letters in response to 14a-8(j) notices, even where the company represents it has a reasonable basis to exclude.Effective immediately, unless and until the Division says otherwise. The mechanics are unchanged. A company intending to exclude a proposal still files a 14a-8(j) notice at least 80 calendar days before the definitive proxy, now through the online Shareholder Proposal Form, with a copy to the proponent. The Division's shareholder proposal email address is no longer active. What changed is who decides. Companies now make exclusion calls without any indication of how the staff sees them — and without the letter that has historically discouraged proponents from pressing further. Absence of staff objection was never a legal safe harbor, but it functioned as one in practice. That cushion is gone, and the exposure runs to shareholder litigation. One consequence worth anticipating: the 14a-8(j) notice is now written for a different audience. Not the staff, but the proponent, other shareholders, and the proxy advisors who will be forming a view without the staff's. What Changed Under Rule 14a-8 Staff Legal Bulletin No. 14M changed the SEC staff's approach to several Rule 14a-8 issues, including certain ordinary-business and economic-relevance analyses. Companies should review older no-action precedent carefully when evaluating whether a shareholder proposal may be excluded. Why This Matters The updated approach affects companies seeking to exclude shareholder proposals as well as shareholders seeking inclusion. The relationship between a proposal and the particular company's business and circumstances may play an important role in the analysis. What Companies Should Review Public companies should review their proxy-season procedures to ensure they reflect current SEC staff guidance. This includes shareholder eligibility reviews, potential grounds for exclusion, internal documentation, and procedures for escalating significant proposals to legal counsel or the board. Shareholder Engagement May Become More Important Early communication with proposal sponsors may help clarify concerns, identify existing company actions, or create opportunities to modify or withdraw a proposal before the matter becomes contested. Risks Companies Should Keep in Mind Companies should not assume that older SEC staff precedent will produce the same result under the current approach. Decisions should account for the specific proposal, company circumstances, applicable Rule 14a-8 provisions, current SEC guidance, and the documentation supporting any proposed exclusion. What to Watch Next Rule 14a-8 remains an evolving area. Companies and shareholders should continue monitoring SEC guidance, no-action developments, litigation, and future proxy-season procedures that could further affect how shareholder proposals are handled. How SJKP Can Help SJKP's corporate attorneys can assist public companies and shareholders with SEC compliance, shareholder proposals, proxy-related matters, corporate governance, and shareholder engagement. Companies preparing for proxy season can work with counsel to review Rule 14a-8 procedures, assess potential exclusion issues, and develop an appropriate response to shareholder proposals. Contact SJKP to schedule a consultation and discuss how the updated guidance may affect your organization.

17 Aug, 2026

New York's LLC Transparency Act Deadline Is Approaching: What Business Owners Need to Know

New York's LLC Transparency Act has a December 31 deadline — but it probably does not apply to your LLC.The Act took effect January 1, 2026. At the end of last year, the Department of State confirmed its scope is narrower than originally drafted: it reaches LLCs formed outside the United States that are authorized to do business in New York. Domestically formed LLCs are outside it. For those it does cover, a foreign LLC authorized before January 1, 2026 must file a beneficial ownership disclosure — or an attestation of exemption, if one applies — with the Department of State by December 31, 2026. Foreign LLCs authorized on or after that date file within 30 days of their application for authority. Both are annual obligations thereafter, not one-time filings. Two points that get missed. An exemption does not excuse the filing; it changes what you file. And this sits alongside the federal regime, which has moved separately — compliance with one does not answer the other.If you hold interests in New York through non-U.S. entities, the entity chart is worth reviewing before year-end.Our latest Legal News update has the details. What the Act Requires The Act applies to most LLCs formed in New York, as well as out-of-state LLCs registered to do business here. Non-exempt LLCs, generally referred to as reporting companies, must disclose beneficial ownership information, including names, addresses, and dates of birth for each beneficial owner. Exempt companies still need to file, though their filing is an attestation of exemption rather than full ownership disclosure.LLCs formed on or after January 1, 2026, face a shorter window. These newer entities must file their beneficial ownership disclosures within 30 days of formation. Every reporting or exempt LLC will also need to file annual updates going forward to keep its information current. Why This Deadline Matters Missing the filing deadline carries real consequences. An LLC that fails to file within 30 days of its applicable deadline can be marked "past due" in the Department of State's public records. Continued noncompliance can eventually lead to a "delinquent" designation, and penalties can include fines of up to $500 per day.The New York Attorney General also has authority to pursue enforcement action against delinquent LLCs, which can include suspension, cancellation, or dissolution in serious cases. Beyond the direct penalties, a company's public compliance status can affect its standing with lenders, investors, and business partners. An Evolving Compliance Landscape The New York Act shares much of its structure with the federal Corporate Transparency Act, though the two now diverge in important ways after federal reporting requirements were scaled back to focus on non-U.S. companies. New York's requirements were not similarly narrowed, which means many LLCs now face a state filing obligation that no longer has a matching federal counterpart. Business owners who assumed the federal rollback also applied at the state level may be working from outdated information.Guidance from the New York Department of State on certain procedural details, including the annual statement filing deadline, is still developing. Business owners should expect additional clarity in the months ahead, but that uncertainty is not a reason to wait on the parts of compliance that are already clear. What Business Owners Should Do Now Companies formed before January 1, 2026, still have time before the December 31 deadline, but the beneficial ownership review process can take longer than expected once ownership structures, trusts, or multiple stakeholders are involved. Reviewing formation documents and capitalization records early generally makes the filing itself far more straightforward. How SJKP Can Help SJKP's corporate attorneys are helping New York business owners assess their LLC Transparency Act obligations, determine reporting or exempt status, and prepare for the December deadline. If your business has not yet reviewed its beneficial ownership reporting obligations, now is the time to start. Contact SJKP to schedule a consultation and put a compliance plan in place before the deadline arrives.