Securities Snapshot: 4th Quarter 2025
As 2025 comes to a close, we reflect back on a relatively quiet quarter at the SEC and look ahead to possible regulatory reforms in the coming year. In this Snapshot, we review renewed calls to retool executive compensation disclosures, a recent Executive Order aimed at proxy advisors, and updated risk factor disclosures ahead of annual reporting season. In addition, we address updated listing standards from Nasdaq and summarize recent trends in SEC enforcement and anticipated enforcement priorities.
SEC Chairman Calls for Executive Compensation Disclosure Reform
On December 2, 2025, SEC Chairman Paul Atkins addressed the New York Stock Exchange (“NYSE”) where he previewed several policy initiatives to “revitalize” the agency, including two key measures aimed at reforming public company disclosure obligations.
Among Atkins’ goals was a specific call to reduce the scope and complexity of executive compensation disclosure requirements, which he characterized as emblematic of a broader disclosure regime that has become untethered to its core purpose of investor materiality. Atkins argued that years of layered, burdensome rulemaking—particularly following the 2008 financial crisis—have resulted in compensation disclosures that are lengthy, costly to prepare, and of diminishing practical value to investors.
In his view, the current framework has evolved into exhaustive, highly prescriptive narratives that increase costs and page counts without meaningfully improving investor decision-making—an outcome he noted runs counter to the SEC’s foundational disclosure principles. Atkins noted when the SEC’s disclosure regime “has been hijacked to require information that is unmoored from reality, investors do not benefit.”
The Chairman’s push for reform builds upon an earlier June 2025 roundtable that brought together public companies, investors, law firms, and compensation consultants to discuss current pay disclosure rules. As discussed in our 2nd Quarter Snapshot, participants generally agreed the existing disclosure regime’s length and complexity limit its usefulness to investors. Those discussions, combined with Atkins’ recent remarks to the NYSE, have solidified executive compensation reporting reform as a featured item on the SEC’s policy agenda going forward.
Whether—and how quickly—Atkins’ calls translate into concrete rulemaking remains uncertain. Any effort to scale back or simplify executive compensation disclosures is likely to face pushback from investor advocates and certain policymakers alike, who view robust pay transparency as central to corporate accountability and investor protection. Still, Atkins’ comments suggest a potential inflection point in the SEC’s approach: a shift away from disclosure volume as a proxy for transparency and toward a framework that emphasizes investor utility, proportional compliance burdens, and capital formation.
Nasdaq Implements Stricter Listing Standards for Certain IPOs
On December 12, 2025, Nasdaq implemented a new rule that allows the exchange to refuse an initial public offering, even where the applicant meets all stated listing requirements. Under the new rule, Nasdaq has discretion to deny a listing on “qualitative” grounds related to suspected stock manipulation or certain concerns around corporate structure and governance, rather than strictly numerical thresholds such as market value or public float. Nasdaq’s proposal indicates it would consider factors including the issuer’s jurisdiction, the availability of legal remedies for U.S. investors in that jurisdiction, and the influence of controlling parties.
The SEC-approved rule underscores increased efforts to tighten listing rules amid concerns about market manipulation, thin liquidity, problematic issuer structures—particularly in cross-border listings involving issuers based in China, where regulatory obscurity and enforcement challenges have drawn heightened scrutiny. Indeed, in recent months, the SEC and FINRA have opened investigations into several China-based offerings, while the Federal Bureau of Investigation this summer found a 300% increase in complaints about “pump-and-dump” schemes, in which coordinated trading activity artificially inflates a stock’s price before early sellers exit, followed by rapid sell-offs that leave other investors with steep losses.
Nasdaq explained additional discretion is necessary to address instances in which certain issuers meet technical requirements for listing, but nevertheless present troublesome characteristics that suggest a heightened possibility of misconduct. The move comes as the SEC seeks to prioritize enhanced market integrity and investor protections. In practice, the new standard increases the importance of up-front listing strategy, advisor selection, and early engagement with Nasdaq, particularly for smaller and foreign issuers that will need to proactively address risk factors around governance, liquidity, and jurisdictional exposure.
SEC Pauses Responses to Most Shareholder Proposal No-Action Requests
As we previously discussed in our advisory, in November the SEC’s Division of Corporation Finance announced that for the 2025 – 2026 proxy season, it would no longer respond to no-action letter requests from companies seeking to exclude shareholder proposals under Rule 14a-8, except where exclusions are related to whether a proposal is a proper subject for shareholder action under applicable state law.
Public companies will still need to notify the SEC and shareholder proponents under Rule 14a-8(j) if they intend to exclude a shareholder proposal. However, in light of the SEC’s announcement, companies will need to navigate contested exclusions with greater reliance on internal analysis, prior guidance, and potential litigation risk rather than the traditional SEC no-action letter process.
Updated Risk Factor Considerations Ahead of Annual Reporting Season
As annual reporting season quickly approaches, many public companies should consider reviewing—and potentially updating—their risk factor disclosures on Form 10-K.
Issuers should reassess risk factors not only for accuracy, but also to reflect evolving risks and newly emerging developments that occurred over the course of the last year. In particular, companies may need to address the effects of the federal government’s tariffs and shifting trade policy on cost structures, margins, consumer demand, and supply chains, as well as risks associated with the growing use of generative artificial intelligence, including regulatory uncertainty, cybersecurity threats, competitive pressures, and reputational concerns. Other areas may warrant refreshed disclosure include economic policy changes, geopolitical conflicts in the Middle East and Ukraine, cybersecurity vulnerabilities, immigration policies, and climate-related risks.
Companies should also consider whether the six-week government shutdown that began on October 1, 2025—the longest in U.S. history—may have materially affected business or operations in the fourth quarter, for example through travel disruptions, delayed regulatory approvals, or interruptions to federal contracting. Where material, companies should clearly disclose the nature and extent of any actual or expected impacts on their business, financial condition, or results of operations.
Finally, any updates to risk factors should be consistent with related disclosures elsewhere in the Annual Report, including MD&A, the Business section, cybersecurity disclosures, and notes to financial statements.
New Executive Order Targeting Proxy Advisors and Shareholder Proposals
On December 11, 2025, President Trump signed Executive Order (“EO”) 14366, entitled “Protecting American Investors From Foreign-Owned and Politically-Motivated Proxy Advisors,” signaling a major federal push to reevaluate the role of proxy advisory firms in corporate governance. The EO specifically names the two leading proxy advisors—Institutional Shareholder Services and Glass, Lewis & Co.—which together comprise more than 90 percent of the proxy advisory industry and wield significant influence over institutional voting on matters including shareholder proposals, board composition, and executive compensation.
The White House asserts these firms have too often used their influence to advance “politically-motivated agendas,” particularly those geared toward diversity, equity, and inclusion and environmental, social, and governance issues at the expense of investor returns and fiduciary duties.
The EO directs the SEC to conduct a comprehensive review of all rules, guidance, and memoranda related to proxy advisors and shareholder proposals, including Rule14a-8, and to consider revising or rescinding those that are “inconsistent with” the EO’s objectives. Moreover, the EO instructs the SEC Chairman to evaluate whether proxy advisory firms should be required to register under the Investment Act of 1940, enforce federal anti-fraud provisions regarding misstatements or omissions in proxy voting recommendations, and consider enhanced conflict-of-interest disclosures, particularly where DEI and ESG factors are implicated. In response to the EO, ISS emphasized its independence, noting its clients are “sophisticated institutional investors who determine how they wish to vote in accordance with their own differentiated investment objectives” rather than arbitrary dictates.
The EO also signals the administration is monitoring ongoing antitrust litigation in Texas and may pursue similar actions against proxy advisors at the federal level—continuing a trend of adopting anti-ESG strategies first tested at the state level. Although the order itself does not immediately change proxy advisor rules or the shareholder proposal process, it lays the groundwork for potential regulatory and enforcement actions that could reshape the proxy advisory landscape and shareholder engagement in 2026 and beyond.
SEC Enforcement Actions Fall to Ten-Year Low
For fiscal year 2025, the SEC’s enforcement activity—as measured by stand-alone enforcement actions—fell to its lowest level in a decade.
Compiled data indicates in fiscal year 2025, the SEC brought 313 standalone enforcement actions compared to 431 in fiscal year 2024, a decrease of almost 30% percent.[1] The year-over-year decline is largely attributed to this year’s change in administration and departure of former SEC Chairman Gary Gensler; in fact, more than 50% of the FY2025 enforcement actions were initiated before Gensler stepped down on January 20, 2025.[2] Under current Chairman Paul Atkins, the SEC has cooled its enforcement agenda and sought to pursue more traditional actions, including those involving disclosure fraud and breaches of fiduciary duty. To be sure, while the overall decrease was seen across many categories of enforcement, certain areas, including cases involving insider trading and market manipulation, saw an increase in enforcement activity.[3]
As many predicted ahead of the agency’s leadership change, SEC enforcement activity saw an undoubtedly more measured approach in the 2025 fiscal year. Chairman Atkins has long emphasized that quality, judgment, and adherence to the law should drive enforcement decisions rather than the sheer volume of cases or monetary penalties. Early indications suggest that his tenure will continue this focus on traditional investor‑harm misconduct: issuers can expect insider trading, fraudulent offerings, and market manipulation to remain clear priorities for SEC scrutiny.
[1] See Kevin M. LaCroix, SEC Enforcement Actions Decline, But Foreign Cos. Should Remain Vigilant, The D&O Diary, available at https://www.dandodiary.com/2025/11/articles/securities-enforcement/sec-enforcement-actions-decline-but-foreign-cos-should-remain-vigilant/.
[2] Id.
[3] Id.
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