SEC Proposes Significant Changes to the Registered Offering Framework

On May 19, the SEC announced proposed amendments to its rules and forms that would represent a significant overhaul of the registered offering framework. The proposed amendments would expand access to shelf registration on Form S-3, extending many benefits currently limited to well-known seasoned issuers (WKSIs) to a broader range of public companies. The SEC also proposes to amend rules governing offering communications and free writing prospectuses, as well as expand the availability of incorporation by reference in Form S-1 registration statements. The SEC indicates that the proposed rules are intended to facilitate capital formation, modernize offering communications, and simplify the registration process for seasoned issuers.

Most notably, the proposal would substantially broaden eligibility to use Form S-3 for primary offerings. The SEC has proposed eliminating both the current 12-month Securities Exchange Act of 1934 (Exchange Act) reporting requirement and the $75 million public float threshold for unlimited primary offerings on Form S-3. Instead, an issuer would become eligible to use Form S-3 as soon as it becomes subject to Exchange Act reporting, provided that it is current and timely in its filings and is not otherwise an “ineligible issuer.” The proposal would also eliminate the existing “baby shelf” regime, including the one-third public float limitation applicable to smaller issuers.

The proposal would also retire the current WKSI framework for domestic issuers, replacing it with two new issuer categories: “Eligible Listed Issuers” (ELIs) and “Seasoned Eligible Listed Issuers” (SELIs). ELIs would generally be Form S-3-eligible issuers with exchange-listed common equity. SELIs would be the subset of ELIs with at least 12 months of Exchange Act reporting history that would be eligible to utilize automatically effective registration statements as WKSIs are today.

The SEC provided a summary of the proposal in a Fact Sheet that accompanied the rulemaking announcement.

Comments on the proposal are due within 60 days after publication in the Federal Register.

On May 19, the SEC announced proposed amendments to its rules and forms that would simplify the filer status determinations and expand the disclosure accommodations available for many public companies. In his statement accompanying the release, SEC Chairman Paul Atkins states, “Specifically, the proposed amendments extend disclosure scaling and other accommodations, which are currently available only to newly public companies and smaller companies, to seasoned companies and mid-sized public companies.”

Key changes to the public company reporting framework that the SEC has proposed would include:

• Eliminating the categories of “accelerated filer” and “smaller reporting company,” so that all reporting companies would be either “large accelerated filers” or “non-accelerated filers,” with the smallest companies further deemed to be “small non-accelerated filers.”
• Raising the public float threshold for being deemed to be a large accelerated filer from $700 million to $2 billion, as calculated based on the average stock price over the last 10 trading days of a company’s second fiscal quarter. This public float threshold would need to be met for two consecutive years to ameliorate frequent changes in filer status. Under the proposal, large accelerated filers would need to have completed at least 60 consecutive calendar months of public reporting before qualifying as a large accelerated filer.
• Extending to non-accelerated filers all of the accommodations that are currently available to smaller reporting companies and “emerging growth companies,” including no requirement to seek advisory votes on executive compensation or the frequency of such advisory votes, scaled executive compensation disclosure, and reduced financial statement requirements.
• Creating a new sub-category of small non-accelerated filers for the smallest reporting companies, with the benefit of having more time available to file periodic reports for those companies.

The SEC provided a summary of the proposal in a Fact Sheet accompanying the rulemaking announcement.

Comments on the SEC’s proposal are due within 60 days after publication in the Federal Register.

On May 18, the SEC announced the adoption of a final rule that rescinds a longstanding policy, codified in 17 CFR 202.5(e), that when the SEC chooses to settle an enforcement action in which a sanction is imposed, it will not settle unless the defendant or respondent also agrees not to publicly deny the allegations in the complaint or administrative order.

In the press releasing announcing the rescission, Chairman Atkins states, “For more than 50 years, the Commission has conditioned settlement on a defendant’s promise not to publicly deny the Commission’s allegations.... Speech critical of the government is an important part of the American tradition. This rescission ends the policy prohibiting such criticism by settling defendants.”

In the final rule release, the SEC cites six reasons in support of the change:

• A determination that the public interest underlying original basis for the rule — to avoid creating, or permitting to be created, an impression that a decree is being entered or a sanction imposed, when the conduct alleged did not, in fact, occur — is minimal.
• A determination that the policy may create the incorrect impression that the Commission is trying to shield itself from criticism.
• Under Rule 202.5(e), if a settling defendant who agreed to a no-deny provision then publicly denied the allegations, the Commission’s recourse was to ask a district court to vacate the settlement; however, the rule adoption release states that there is no known instance of the Commission ever exercising that option.
• Technological changes in communication, particularly use of social media, have made the policy more challenging to implement.
• Eliminating Rule 202.5(e) aligns the SEC with the majority of federal agencies that do not have a similar rule.
• The belief that rescinding Rule 202.5(e) gives the SEC more flexibility in settling enforcement actions, which conserves resources, provides certainty, and may speed the return of money to injured investors (when feasible).

The final rule release also indicates that, in light of the rescission of Rule 202.5(e), the SEC will not enforce existing no-deny provisions that have already been entered.

For more on this SEC action, see our client alert.

On May 14, the SEC published a notice and order approving Nasdaq’s proposal to implement heightened listing standards for China-based companies and declared the new rules effective in 30 days. As summarized in the notice, the new rules “require that, in the case of an IPO, China-based companies must offer a minimum number of securities through a firm commitment offering in the United States to public holders that will result in gross proceeds to the company of at least $25 million. In addition, [they also impose] additional requirements for Chinese companies that are currently trading on the over-the-counter market or another national securities exchange and are seeking to list in connection with the rules applicable to a business combination and for companies seeking to list in connection with a direct listing.”

The notice and order do allow for the submission of public comments on the rules.

On May 13, David Woodcock, the new Director of the SEC’s Division of Enforcement delivered remarks at the MFA Legal & Compliance 2026 Conference, sharing how he intends to lead the Division.

Mr. Woodcock stated, “Our focus is, and will remain, on protecting investors and safeguarding markets from real harm. That means identifying and stopping fraud and manipulation in all its forms...”

With that in mind, areas of focus he highlighted include:

• Offering fraud
• False and misleading financial reporting
• Market manipulation
• Insider trading
• Private investment markets and issues related to liquidity, fees, valuations, and conflicts of interest
• Cross border fraud, targeting those who would facilitate a foreign company’s access to US markets for fraudulent purposes

To further these efforts, Mr. Woodcock announced the reinstitution of the Retail Fraud Working Group, which will focus specifically on protecting retail investors and strengthening coordination between the SEC and other state and federal agencies.