Foley & Lardner LLP recently co-hosted a webinar with the National Association of Corporate Directors (NACD) to discuss how a new presidential administration and evolving state-driven regulations are effecting boardrooms. A summary of that discussion can be found below.
Featured Speakers:
– Christine Gorjanc, Board Director
– Ed Burbach, Partner, Foley & Lardner LLP
– Patrick Daugherty, Partner, Foley & Lardner LLP
– Louis Lehot, Partner, Foley & Lardner LLP (Moderator)
– Christopher Swift, Partner, Foley & Lardner LLP
– Jessica Lochmann, Partner, Foley & Lardner LLP
The Changing Regulatory Landscape: SEC and Antitrust Developments
The U.S. Securities and Exchange Commission (SEC) and antitrust authorities are undergoing significant shifts under new leadership. Changes will impact capital markets, digital assets, and corporate governance. Below is an overview of key regulatory insights and what they mean for company leadership.
New SEC Leadership and Regulatory Focus
Leadership Transition
Former SEC Commissioner Paul Atkins is expected to take over as chairman. Known for his market-friendly approach, Atkins has been a advocate for easing capital formation regulations and creating a more structured framework for crypto assets.
Early signals indicate that the SEC is moving away from regulation by enforcement and toward a more defined rulemaking process, with an emphasis on market engagement before implementing new policies. Additionally, the agency is expected to move away from ESG considerations, focusing instead on the direct financial impact of regulations.
Key SEC Priorities
- Digital Assets: Acting Chairman Uyeda has launched a Crypto Task Force, with Commissioner Hester Peirce leading efforts to address regulatory uncertainty. Legislative reforms related to market structure and stablecoins are expected to move forward.
- Climate Regulations: The previous administration’s climate disclosure rules are likely to be rolled back.
- Financial Fraud Oversight: Safeguarding financial disclosures remains a core SEC focus.
- Capital Markets Reform: The SEC aims to make it easier for companies to raise capital, both in public and private markets, while evaluating whether increased oversight of large private firms is necessary.
Proxy Season and Corporate Governance Shifts
Momentum for U.S. ESG and climate disclosure regulations has slowed, but companies still face compliance obligations under EU and California laws. Investors and key stakeholders continue to assess sustainability efforts, making it important for boards to evaluate how ESG considerations align with long-term value creation.
Corporate approaches to Diversity, Equity, and Inclusion (DEI) are also changing. Many companies are shifting from broad commitments to more practical implementation. Transparency in proxy statements remains pivotal to ensure consistency between public claims and internal practices.
M&A Outlook and Antitrust Enforcement
M&A activity is predicted to become streamlined under the new leadership at the Federal Trade Commission (FTC). However, the Department of Justice (DOJ) remains active in enforcing antitrust laws, continuing cases initiated under the previous administration.
Government Efficiency Measures and Dealmaking
Spearheaded by Elon Musk, the newly formed Department of Government Efficiency (DOGE) may influence regulation. Rapid budget cuts and agency restructuring has led to staff cuts, affecting the speed of regulatory reviews and enforcement actions.
Foreign Corrupt Practices Act (FCPA) Enforcement
The DOJ has temporarily scaled back FCPA enforcement, but companies should remain vigilant. Anti-bribery laws at state, local, and international levels continue to apply, and violations may still be prosecuted under future administrations.
Executive Orders and State-Level Impacts
The administration is using executive orders (EOs) to roll back regulations and implement new policies, with varying degrees of impact:
- Performative EOs generate media attention but result in little substantive change.
- Indicative EOs create uncertainty in investment decisions without immediately altering rules.
- Operative EOs directly influence business operations, such as those affecting trade and tariffs.
At the state level, attorneys general (AGs) are becoming more assertive in shaping corporate regulations. Texas, for example, has made significant changes to highlight the state as business friendly to attract more companies to incorporate there.
Trade Policy, Tariffs, and Supply Chain Considerations
Expect further tariff measures targeting the EU, China, and potentially India. Companies should engage in scenario planning to evaluate whether reshoring or relocating supply chains could mitigate long-term risks.
Technology, National Security, and AI Regulation
National security concerns continue to shape regulatory scrutiny of artificial intelligence (AI), quantum computing, and other emerging technologies. Companies working on transformative AI solutions should be prepared for heightened oversight. Boards should ensure they have clear strategies for AI adoption while maintaining compliance with evolving regulations.
Key Boardroom Considerations
- SEC Engagement: Are we actively engaging with the SEC on potential regulatory changes, particularly in digital assets and capital markets?
- Materiality Standards: Do our financial disclosures align with the SEC’s evolving focus on economic impact?
- ESG and DEI Strategy: Are our governance policies consistent with investor expectations and actual corporate practices?
- Regulatory and Trade Impacts: How do executive orders, tariffs, and shifting state policies affect our operations and long-term strategy?
As the regulatory environment continues to evolve, businesses must remain proactive in navigating these changes. Staying engaged with policymakers, adapting governance strategies, and ensuring transparency in disclosures will be key to managing risk and seizing new opportunities.
