SEC Proposes Rescission of Climate-Related Disclosure Rules

On May 29, the SEC announced the filing of a proposal to rescind the climate-related disclosure rules previously approved by the Commission in 2024. The rules require registrants to disclose, among other things, material climate-related risks, activities to mitigate or adapt to such risks, information about the registrant’s board of directors’ oversight of climate-related risks and management’s role in managing material climate-related risks, and information on any climate-related targets or goals that are material to the registrant's business, results of operations, or financial condition. For larger companies, the rules also mandate, on a phased-in basis, disclosure of Scope 1 and/or Scope 2 greenhouse gas emissions, and the filing of related reports.

Soon after adoption, the rules were challenged in court, leading to consolidated litigation before the U.S. Court of Appeals for the Eighth Circuit. On April 4, 2024, the SEC announced that it would stay implementation of the new rules pending resolution of the litigation. Under the new presidential administration, in March 2025, the SEC voted to end its defense of the rules before the Eighth Circuit. In July 2025, the Commission informed the Eighth Circuit that it did not intend to review or reconsider the climate disclosure rules and requested that the court lift the current stay on the litigation and continue considering the parties’ arguments regarding the scope of the agency’s power to adopt the climate disclosure requirements. In September 2025, the court rejected the request, putting the ball back in the Commission’s court: “It is the agency’s responsibility to determine whether its Final Rules will be rescinded, repealed, modified, or defended in litigation.”

The SEC has now taken steps to rescind the rules. A Fact Sheet describing the proposal summarizes the key policy reasons that the SEC is relying on to propose rescission of the rules now, including:

• They are unnecessary and inconsistent with a registrant-specific, materiality-based approach to disclosure;
• They stray well beyond the policy concerns of the federal securities laws;
• They impose substantial costs that are not justified by the informational benefits they may provide to some investors; and
• They are at odds with the Commission’s policy objectives of facilitating capital formation and promoting public company status.

The proposal is subject to formal notice and public comment; the comment period will remain open until 60 days after publication of the proposing release in the Federal Register.

As discussed in the March 12, 2026, edition of the PCAP Roundup, on March 3, the Nasdaq Stock Market (Nasdaq) filed a rule proposal with the SEC that would allow it to delist companies where the SEC has previously suspended trading and Nasdaq determines it appropriate and in the public interest to do so. As background, the filing notes that “Nasdaq has recently observed problematic or unusual trading in certain listed companies, apparently effectuated through recommendations made to investors by unknown persons via social media to purchase, hold, and/or sell the securities.” After the Commission initially demurred on approving the rule and designated a longer period in which to take action, Nasdaq filed a superseding amendment on May 21 that the Commission approved pursuant to a notice and order published on June 3.

As approved, Nasdaq may exercise its authority under Nasdaq Rule 5101 to delist the security when it determines that doing so is necessary to protect investors (even when the security and the listed company otherwise satisfy all applicable Nasdaq listing standards at the time of determination). Nasdaq indicates that it would exercise this authority after considering whether the listed securities may be susceptible to manipulation based on factors related to concerns Nasdaq and other regulators have identified with companies that previously were the subject of problematic or unusual trading, including considerations related to the company’s advisors (including auditors, underwriters, law firms, brokers, clearing firms, or other professional service providers that are currently or have in the past worked for the company). In particular, Nasdaq will consider the following factors:

• Where the company is located.
• Whether a person or entity exercises substantial influence over the company and, if so, where that person or entity is located.
• Whether the public float, share distribution, and trading patterns in the company’s security raise concerns about adequate liquidity and potential concentration.
• Evidence of third-party social media activity or similar schemes designed to influence price and demand in the security.
• Disclosures of material news by the company and whether such disclosures adequately explain the trading activity observed.
• Whether the company has recently issued securities and the terms of any such issuances, including the size of any discounts.
• Whether there are issues concerning the company’s advisors (including auditors, underwriters, law firms, brokers, clearing firms, or other professional service providers).
• Whether any of the company’s advisors were involved in other transactions where the securities became subject to a pattern of concerning or volatile trading.
• Whether the company’s management and board have experience or familiarity with US public company requirements, including regulatory and reporting requirements under Nasdaq rules and federal securities laws.
• Whether there are any FINRA, SEC, or other regulatory referrals related to the company or its advisors, or the trading of the company’s securities.
• Whether the company currently has, or recently has had, a going concern audit opinion.
• Whether there are other factors that raise concerns about the integrity of the company’s board, management, significant shareholders, or advisors.
• Any other material information.

The rule change will go effective on the 30th day after the date of publication of notice in the Federal Register; however, interested persons are invited to provide comments on the rule during the three-week period commencing on the notice publication date.

On June 2, the SEC announced its publication of a Draft Strategic Plan that articulates the Commission’s goals for fiscal years 2026-30. The plan emphasizes three goals with underlying objectives:

1. Renew its regulatory policy focus to support innovation, capital formation, market efficiency, and investor protection.
   • Provide a firm regulatory foundation for digital assets and distributed ledger technologies.
   • Provide meaningful pathways for entrepreneurs to obtain capital.
   • Ensure that regulations balance costs and benefits.
2. Shift its regulatory practices to increase stakeholder engagement, facilitate compliance efforts of market participants, and effectively return its enforcement approach to Congress’ original intent.
   • Increase staff engagement with business and industry groups.
   • Restore enforcement approach to police violations of established law, focusing on fraud and manipulation.
   • Perform retrospective reviews of regulatory policies to ensure they meet current objectives.
   • Evaluate administrative procedures to ensure consistent with constitutional principles.
3. Optimize operational efficiency by enhancing its organizational structure, modernizing its technology, reforming employee performance management, and implementing robust internal performance reporting that incorporates accountability for resources and program success.

The SEC is soliciting public comment on the draft plan.

At the end of May, SEC Chairman Paul Atkins delivered two speeches in California centered on incentivizing more companies to go and stay public and previewing some of the themes included in the proposed strategic plan published this week.

On May 26, in a speech delivered at the Stanford Rock Center for Corporate Governance, he focused on steps the Commission has been taking to dismantle overly burdensome rules that discourage companies from going public. He highlighted:

• Reversal of the “shadow position” that prevented companies with mandatory arbitration provisions in their charters from proceeding with a registered offering.
• The release of a proposal to allow semiannual reporting instead of quarterly.
• The release of proposed rules that would expand access the shelf registration process.
• The release of proposed rules to re-calibrate disclosure requirements based on a company’s size.

Chairman Atkins went on to say that he would like to see reforms on the rules surrounding gun-jumping prohibitions and more creative thinking on how companies go public.

On May 29, Chairman Atkins spoke at the 2026 Reagan National Economic Forum and drew parallels between President Reagan’s belief in the free markets and his own view that the SEC has strayed from its core mission. He stated:

“For context, Congress has tasked the SEC with three mutually reinforcing aims: to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation. But seized by a sort of “regulatory adventurism,” past Commissions constructed around those three pillars a thicket of obligations that were unmoored from any of them. As a result, the SEC’s disclosure regime became conscripted to serve interests beyond those of the Supreme Court’s objective standard of the reasonable investor.”

Chairman Atkins highlighted actions the SEC has taken recently related to crypto currency, harmonizing oversight with the Commodities Futures Trading Commission, and launching the proposals discussed above.

On June 3, the Public Company Accounting Oversight Board (PCAOB) announced that it will hold an open meeting on June 9 to consider proposed amendments to QC 1000, A Firm’s System of Quality Control, the PCAOB’s audit firm quality control standard that is set to go effective on December 15, 2026.

QC 1000 was approved by the SEC back in September 2024, although not unanimously. In a dissenting statement, Commissioner Mark Uyeda stated, “Having quality controls when there are no engagements provides little benefits. Because of the unnecessary costs and paternalistic approach of the updated QC standard’s design-only requirement, as well as my concerns with the process, I do not support today’s action, which I find arbitrary and capricious.”

On June 4, the SEC’s Investor Advisory Committee (IAC) held a public meeting at SEC headquarters in Washington. The agenda for the meeting centered on:

1. Investor protection with respect to retail access to private market assets, particularly in the context of redemption gating, fee structures, and valuation methodologies.
2. Corporate governance and investor protection implications of the growing concentration of voting power in passive investment vehicles (e.g., index funds).
3. Recommendations pertaining to modernization of the fund proxy voting system. As discussed in more detail in its draft proposal presented for the meeting, the IAC (with three members abstaining) adopted a series of recommendations including:
   • Permitting opt-in retail voting programs such as the one adopted by ExxonMobil.
   • Creating alternative approval pathways for items requiring a quorum above 50%, such as pairing lower quorum requirements with a higher affirmative vote threshold.
   • Expanding fund board approval authority in certain situations.
   • Permitting fund boards to appoint a greater number of new independent directors.
   • Improving shareholder communication pathways.
4. Quarterly vs. semiannual reporting. With background provided in its draft proposal presented for the meeting, the IAC (with several abstentions) recommended against the pending SEC proposal to allow for semiannual reporting, asserting that a shift to a semi-annual disclosure mandate would reduce the ability of investors to make informed decisions, increase trading costs, and increase the cost of capital for public companies. The supporters of the recommendation also expressed skepticism that a shift to semiannual reporting would assuage concerns about “short termism” or encourage more companies to go public, two rationales for the new rule cited in the SEC proposal.

The SEC also announced on June 1 that four new individuals have been appointed to the IAC:

• Patrick Daugherty, partner at the law firm of Foley & Lardner
• John Liu, a senior citizen investor and former Managing Director at Accenture and co-founder of Agile Partners, who will serve as the representative of the interests of senior citizens
• Sheldon L. Ray Jr., former Senior Vice President, Investments, Portfolio Manager, at Raymond James & Associates
• Adriana Z. Robertson, Professor of Business Law at the University of Chicago Law School