Publications

SEC Reveals Ambitious Regulatory Agenda

Summary: On July 7, the SEC released its Spring 2026 Regulatory Flexibility (“Reg Flex”) agenda detailing an ambitious list of thirty-eight potential rulemakings for the upcoming year.

• Key areas of rulemaking focus include rules designed to facilitate retail investor participation in private markets, recordkeeping reform for broker-dealers and registered investment advisers, modernization of the Custody Rule framework to address digital assets, streamlining amendments to Form PF, and pay-to-play reform for investment advisers.

Takeaway: The agenda aligns with the current Commission’s stated goals of reducing compliance burdens, increasing retail investor participation in private markets, and creating a regulatory framework for digital assets. Accordingly, most of the contemplated rulemaking is designated as “deregulatory.” This agenda marks a shift for the Chairman Atkins-led Commission from a focus on rolling back Chair Gensler proposals to affirmative rulemaking.

Best Practice Tip: The scope of the agenda raises questions about the Commission’s ability to execute. While specific proposals remain to be seen, it is likely to be an active summer and fall at the Commission. Firms should expect that changes to compliance programs will be necessary. Keep an eye on SEC Watch; we’ll keep you informed as the rulemaking proposals begin to roll out.

SEC Proposes Default Electronic Delivery Framework

Summary: On July 16, the SEC proposed new Regulation E-Delivery, which would permit, but not require, regulated firms and issuers to use electronic delivery as the default method for all required disclosures under the federal securities laws. As described in our alert, the rule would mark a foundational shift from the current framework under which paper remains the effective default and recipients must affirmatively opt in before a covered entity may rely on electronic delivery. Under the Proposal, E-Delivery may be used as the default method subject to a recipient’s right to opt out and receive paper materials free of charge at any time. The Proposal applies broadly to registered investment advisers, investment companies, business development companies, broker-dealers, transfer agents, and other regulated entities. Covered information includes Form ADV brochures, shareholder reports, prospectuses, proxy materials, trade confirmations, and privacy notices, among other required disclosures.

Takeaway: The Proposal seeks to modernize decades of antiquated SEC guidance and is expected to deliver significant cost savings. That said, implementation presents challenges: covered entities will need new policies, procedures, and form communications, and those wishing to convert existing paper recipients to electronic delivery must provide 180-day initial notices and 30-day follow-up notices. Fund complexes relying on Rule 30e-3 and entities maintaining shareholder list systems built around mailing addresses will need to conduct outreach to obtain electronic addresses.

Best Practice Tip: The comment period closes September 21, 2026. Firms should assess whether their current E-Delivery practices would benefit from the new default framework and begin evaluating the operational changes required to rely on it, including: (1) E-Delivery disclosures meeting the Proposal’s standards, (2) form communications for direct E-Delivery and statement-of-availability methods, (3) safeguarding processes for websites through which personal financial information will be accessed, and (4) written policies and procedures to identify and remediate failed E-Delivery. Firms that prefer the certainty of an existing opt-in consent model would be able to continue to operate on that basis if the rule is adopted. Reliance on the new framework would be voluntary.

SEC Announces Revival of Retail Fraud Working Group

Summary: On July 7, the SEC announced the reconstitution of the Retail Fraud Working Group (called the Retail Strategy Task Force when first created in 2017) which is tasked with “identify[ing] fraud and other misconduct targeting retail investors, including offering frauds, pump-and-dump schemes, market manipulation, and breaches of duties to customers by investment advisers and broker-dealers.” In announcing the working group, Enforcement Director David Woodcock said the initiative would “bring focused energy and resources” to the “mission” of “protecting those who invest their savings in our markets,” including by “generating cases, building partnerships with our regulatory counterparts, and using data and technology to find and stop those who seek to take advantage of retail investors.”

Takeaway: The announcement of the working group is another step in the Atkins Commission’s focus on protecting retail investors. The emphasis on “generating cases” in the SEC’s announcement is notable as it indicates the working group will not merely serve as a think tank but rather will support the staff’s use of its enforcement authority in the retail space.

Best Practice Tip: Stay tuned to SEC Watch for updates on any enforcement actions coming out of the new working group. To the extent your firm offers products to retail investors, ensure your house is in order with a particular focus on anything that the staff may construe as a breach of duty to customers.

First ICA Derivatives Rule Settlement Announced

Summary: On July 27, the SEC announced settled charges with a registered investment adviser to exchange-traded funds (ETFs). The SEC alleged that the RIA caused violations of Investment Company Act rules that are designed “to prevent conflicted transactions and risks that may harm investors, and to ensure disclosure of material information about fund distributions to fund investors.” With respect to the ICA Derivatives Rule, the SEC alleged that on two occasions in 2024, the RIA caused an ETF client to exceed leverage thresholds set by the Derivatives Rule. According to the SEC, under Rule 18f-4, the RIA was required, but failed, to report the breaches, which lasted five days or more, to the fund’s board within 30 days and make certain disclosures to the SEC within one day of when the breaches occurred. The SEC found that this conduct violated ICA Section 18(f)(1) and Rule 30b1-10. The SEC further found that the RIA violated ICA Sections 17(a)(1), 19(a), and Rules 19a-1 and 38a-1 thereunder. The RIA agreed to pay a civil penalty of $400,000.

Takeaway: The settlement marks the first enforcement action under the ICA Derivatives Rule. The case also demonstrates that the Atkins Commission is still willing to bring enforcement actions against investment advisers that involve purported violations of technical provisions with no obvious investor harm.

Best Practice Tip: The SEC continues to bring enforcement actions with no investor harm, suggesting that advocacy focused on the lack of investor harm may not be as compelling as once believed. This action also reflects a continued Enforcement focus on registered funds.

SEC Announces New Financial Reporting and Accounting Unit in the Enforcement Division

Summary: On August 5, the Commission announced it is establishing a new specialized unit within the Division of Enforcement focused on accounting and financial reporting fraud cases, as well as general misconduct in the accounting and auditing areas. The unit will be led by Timothy Zimmerman, who recently joined the Division of Enforcement.

Takeaway: The establishment of a unit dedicated to financial reporting and accounting is a notable development indicating a potential increase in scrutiny by Enforcement on these areas. Importantly, given finite Enforcement resources, this addition may have the practical effect of a modest shift in focus away from asset managers.

Best Practice Tip: Stay tuned to SEC Watch for updates on the activity of this new unit, as well as for any further signals that asset managers are moving out of Commission crosshairs.