SEC Chairman Vows to Make IPOs Great Again

In his keynote address at the John L. Weinberg Center for Corporate Governance’s 25th Anniversary Gala on October 9, Securities and Exchange Commission (SEC) Chairman Paul Atkins laid out three pillars to reinvigorate initial public offerings in the United States. The pillars consist of:

• Simplifying and scaling the SEC’s disclosure requirements to reduce the costs of preparing SEC filings while making them more comprehensible. 
• De-politicizing shareholder meetings and returning their focus to voting on director elections and significant corporate matters. 
• Reforming the litigation landscape for securities lawsuits to eliminate frivolous complaints while enabling shareholders to continue to bring meritorious claims.

Chairman Atkins addresses at some length the background of Rule 14a-8 and precatory proposals (those calling for votes on actions that are not binding on the company), concluding that a fundamental reassessment of the rule is in order. With respect to litigation reform, he discusses legislation adopted in Delaware that prohibits mandatory arbitration of federal securities law claims and fee shifting in federal securities law cases found to be frivolous. Chairman Atkins urges the Delaware legislature to revisit these prohibitions.

On October 7, in his keynote address at the 25th Annual A.A. Sommer, Jr. Lecture on Corporate, Securities, and Financial Law, SEC Chairman Atkins spoke at length about the importance of the Wells process in the SEC’s enforcement program. As noted by Chairman Atkins, broadly speaking, 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 SEC. The potential respondents or defendants are then provided an opportunity to make written or video submissions to the SEC setting forth their interests and position on the subject matter of the investigation. In the Chairman’s view, “The Wells process remains a critical due process mechanism that promotes fairness and transparency in the SEC’s enforcement program.” He plans to revisit and refresh the Wells process. Chairman Atkins also discussed the SEC’s recent policy statement adoption allowing for the simultaneous consideration of settlement offers and related requests for waivers from collateral consequences resulting from enforcement actions.

For the first time in decades, the SEC has authorized the launch of a new stock exchange. The SEC approved the Form 1 application under the Securities Exchange Act of 1934 (Exchange Act) of the Texas Stock Exchange LLC (TXSE) to register as a national securities exchange under Section 6 of the Exchange Act. In granting its approval, the SEC found that the proposed rules of TXSE are consistent with Section 6 of the Exchange Act because, among other things, they are designed to prevent fraudulent and manipulative acts and practices, promote just and equitable principles of trade, foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, and remove impediments to and perfect the mechanisms of a free and open market and a national market system. According to its press release announcing the approval, the TXSE expects to begin trading corporate listings in 2026. It further articulates a long-term goal of helping to reverse the decline in the number of U.S. public companies by reducing the burden of going and staying public while maintaining some of the highest quantitative standards in the industry. That said, the SEC’s order does indicate that the TXSE’s proposed listing standards, including corporate governance standards, are substantially similar to the current rules of the New York Stock Exchange and Nasdaq Stock Market (Nasdaq).

The California Air Resources Board (CARB) has posted a bulletin that includes a preliminary list of reporting/covered entities under the Corporate Greenhouse Gas Reporting Program and the Climate-Related Financial Risk Disclosure Program, authorized by Senate Bills (SB) 253 and 261. CARB prepared the list based on the statutory requirements of being US-based, meeting the annual revenue threshold of $500 million or more, and doing business in California. Under SB 253, business entities formed under the laws of California, the laws of any other state of the United States or the District of Columbia, or under an act of the Congress of the United States, with total annual revenues in excess of $1 billion that do business in California to annually disclose their scope 1, 2 and 3 emissions for the prior fiscal year. The initial annual emissions disclosures are required to address scope 1 and 2 emissions with third-party limited assurance requirements and in subsequent years must include scope 3 emissions. Under SB 261, public and private U.S. companies that do business in California with annual revenues of $500 million must publish biennial climate-related financial risk reports. A link to download a spreadsheet with the list of covered entities can be found in the bulletin by clicking View Entity List here.

Institutional Shareholder Services (ISS) has released its 2025 U.S. Governance Post-Season Review of corporate governance trends and developments from the 2025 U.S. proxy season. A copy of the report can be downloaded here (registration required). ISS identifies several key takeaways from the 2025 annual meeting season:

• Political, legal, and regulatory changes contributed to an altered landscape for governance; diversity, equity and inclusion (DEI); and sustainability issues. Specifically, there was a steep drop in environmental, social, and political contribution shareholder proposals making it to ballots
• Disclosure of the presence of “traditional” skills (e.g., CEO experience, financial expertise, M&A experience) was emphasized in proxy statement disclosure in 2025.
• Fewer directors have significant outside board commitments; investor support for “overboarded” directors declined.
• Investors may be reassessing lengthy director tenures; vote outcomes suggest more leniency on this topic.
• Shareholder proposal volume significantly declined, with a quarter of those submitted ultimately omitted from proxy ballots; governance proposals dominated the season.

The report includes an array of charts with statistics providing insight into these topic areas.

On October 2, John Galloway, Global Head of Investment Stewardship at Vanguard, Inc., published a brief with the Harvard Law School Forum on Corporate Governance reflecting the stewardship team’s analysis of portfolio companies’ corporate governance practices. The brief focuses on board composition and effectiveness, board oversight of strategy and risk, executive pay, and shareholder rights. It is based on engagements with more than 700 portfolio companies during the time period and consideration of more than 35,000 total proposals. Observations include:

• Continued trend toward enhanced disclosures related to the board’s evaluation of director skill sets and how those contribute to advancing company strategy.
  Proxy disclosure of director demographic information changed significantly; many companies scaled back or eliminated board diversity disclosures in their 2025 proxy statements.
• In engaging in oversight of strategy and risk, many boards paid particular attention to emerging risks such as artificial intelligence (AI), cybersecurity, the evolving regulatory environment, and the effects of tariffs on global trade.
• Vanguard did not support any environmental or social-related proposals at U.S. portfolio companies during the 2025 proxy year.
• Many companies have either moved away from, or are considering moving away from, compensation programs that lean heavily on stock option-based equity, which some compensation committees have stated had become less effective as a retention tool due to underwater options.
• During the 2025 proxy year, Vanguard saw management proposals at 31 portfolio companies seeking to change their state of incorporation, compared with 21 in proxy year 2024. It supported approximately 57% of reincorporation proposals in 2025.
• During the 2025 proxy season, Vanguard saw shareholder proposals at more than 60 portfolio companies requesting either the adoption or amendment of provisions enabling the company’s shareholders to call a special shareholder meeting. It supported approximately 17% of them.

In connection with the ongoing shutdown of the U.S. federal government, which has limited operations at the SEC, Nasdaq released a series of FAQs to address the impact on companies seeking to go public as well as those already listed on Nasdaq. As two examples:

Q: Would Nasdaq list a company that had cleared all SEC comments before the shutdown?

A: Nasdaq generally would list a company that satisfies the listing requirements if the company cleared all SEC comments before the shutdown, regardless of whether the registration statement was already effective before the shutdown or becomes effective during the shutdown pursuant to the provisions of section 8(a) of the 1933 Act.

Q: What is the impact of the government shutdown on currently listed companies?

A: Companies are able to file proxies to hold meetings without SEC review, although the SEC is unable to review no action requests related to shareholder proposals that a company wishes to exclude from its annual meeting proxy statement.

Companies are able to file proxies to hold meetings without SEC review, although the SEC is unable to review no action requests related to shareholder proposals that a company wishes to exclude from its annual meeting proxy statement.

On October 15, Glass Lewis announced significant changes to the proxy advisory firm’s business model. The changes will take place over the course of the next two years. First, Glass Lewis intends to assist clients with moving beyond standard voting policies by guiding them in creating voting frameworks that are reflective of the clients’ individual investment philosophies and stewardship priorities. Second, Glass Lewis will move away from singularly-focused research and vote recommendations based on its own policy, and will instead move toward providing multiple perspectives reflecting the viewpoints of the firm’s clients. Glass Lewis notes that its clients will be able to access any or all of these perspectives to inform their proxy voting decisions beginning in 2027.