In depth

October

• SEC Grants Temporary Relief on Regulation NMS Compliance Deadlines Amid Appropriations Lapse: The SEC has issued an exemptive order delaying certain compliance dates under Regulation NMS to provide market participants with additional time amid recent disruptions. The amended minimum pricing increment rules and access fee caps will now take effect in November 2026, while the requirement for exchange fees to be determinable at execution is deferred until February 2026. Exchanges also have temporary relief from filing rule changes related to the round lot definition until 30 days after the lapse in appropriations ends. This action, following a court’s denial of a petition for review, is intended to ensure clarity and maintain orderly market operations during the transition. Asset managers should be aware of changes to regulatory requirements in this post-shutdown environment.
• FINRA Launches Review of Small-Cap Offering Practices and Trading Oversight: FINRA has launched a comprehensive review of member firm practices related to small-cap offerings of exchange-listed issuers with foreign operations, including in China, covering roles such as underwriters, bookrunners, and placement agents, as well as firms involved in trading these securities. The review seeks detailed information on supervisory procedures, compliance policies, due diligence, engagement agreements, anti-money laundering programs, and monitoring tools, along with tabular lists of all offerings from January 1, 2023, to September 30, 2025. This initiative underscores FINRA’s heightened scrutiny of small-cap offerings and related trading activities, emphasizing the need for robust compliance and supervisory controls. Even in a deregulatory environment, robust compliance programs are critical—especially for asset managers operating in high-risk or politically sensitive environments.

November

• New York LLC Transparency Law: Dual Reporting Challenges for Financial Institutions: Effective January 1, 2026, NYLLCTA will require all LLCs—whether organized in New York or authorized to do business in the state as a foreign LLC—to file Beneficial Ownership Information (BOI) reports or exemption attestations with the New York Department of State, identifying individuals with 25% or more ownership or substantial control, plus the formation applicant. Existing LLCs must comply by January 1, 2027, while new entities have 30 days after formation. Non-compliance can trigger penalties up to USD 500 per day and loss of good standing, affecting banking and contractual eligibility. For financial institutions, this creates a dual-reporting regime alongside the federal Corporate Transparency Act, demanding integration of NYLLCTA requirements into KYC and AML programs to avoid regulatory scrutiny, onboarding delays, and reputational risk. Although the federal Corporate Transparency Act compliance remains in limbo, states are stepping in. Understanding the patchwork of state-level compliance will remain critical regardless of the result at the federal level. (See also, United States: NY Amends LLC Transparency Act).
• SEC’s Project Crypto: A Clear Path for Digital Asset Regulation Anchored in Howey and Economic Reality: The SEC’s “Project Crypto” aims to bring clarity and fairness to digital asset regulation while respecting the limits of its authority. Chairman Paul S. Atkins emphasized that tokens are not perpetually securities simply because they were once part of an investment contract. Anchored in the Howey test, the framework recognizes that investment contracts—and their promises—end as networks mature and control disperses. By drawing clear lines, the SEC seeks to reduce uncertainty, prevent innovation flight offshore, and keep US markets competitive.
  The initiative balances innovation with investor protection. The SEC plans tailored exemptions for offerings tied to investment contracts and will permit non-security tokens to trade on Commodity Futures Trading Commission- (CFTC) or state-regulated platforms. Anti-fraud rules remain intact, and coordination with Congress is key to codifying a comprehensive market structure. The goal: foster an environment where entrepreneurs and investors thrive under clear, fair rules that reflect economic reality. Continued clarity regarding digital asset regulation is welcome and will help to grow this burgeoning market.
• SEC Issues Post-Shutdown Guidance: Registration Statements and Filings to Resume Under Standard Rules: After the government shutdown, issuers filed over 900 registration statements, and the SEC’s Division of Corporation Finance is working quickly to clear the backlog. Registration statements filed without a delaying amendment during the shutdown will generally become effective after 20 days under Section 8(a), but issuers remain responsible for accuracy and compliance with antifraud provisions. The Division has clarified that acceleration requests, post-effective amendments, proxy filings, and Form 10 registrations will proceed under normal rules. Filings and draft submissions made during the shutdown will be reviewed in the order received as operations resume. Expect the shutdown backlog to create impacts throughout the remainder of the year.
• SEC Division Scales Back Rule 14a-8 Oversight: New ‘No-Objection’ Policy Raises Governance Concerns: The SEC’s Division of Corporation Finance announced that, due to “resource and timing considerations”, it will not substantively review most  no-action requests under Rule 14a-8 this proxy season. While the headline suggests neutrality, the policy allows companies to obtain “no-objection” letters simply by citing a rule provision—without staff evaluating the merits of the exclusion. This approach risks creating the impression that the SEC agrees with issuers’ positions, even when staff has not reviewed them, effectively granting companies broad discretion to omit shareholder proposals. The announcement also introduces an exception for precatory proposals, inviting companies to rely on counseled opinions under state law to exclude such items. Critics argue this shift undermines shareholder rights and corporate governance by replacing substantive oversight with procedural rubber-stamping. Although the Division cites existing guidance as sufficient, it acknowledges prior staff responses are non-binding, leaving issuers and investors navigating uncertainty under a framework that favors management over shareholder engagement. Chairwoman Crenshaw’s statement highlights legitimate governance concerns with the SEC’s new No-Objection policy. While the policy is welcome to create efficiency in the post-shutdown environment, it remains to be seen whether this relief will be limited to the upcoming proxy season or is a hint of things to come.
• SEC Releases 2026 Examination Priorities: Cybersecurity, AI Oversight, and Core Investor Protections in Focus: The SEC Division of Examinations’ 2026 priorities emphasize investor protection and emerging risks. Key areas include fiduciary duties, conflict management, best execution, and disclosures for investment advisers, with added scrutiny on complex products and newly registered firms. Investment companies will face reviews of compliance programs, fees, and portfolio practices, while broker-dealers must ensure adherence to financial responsibility rules and Regulation Best Interest. Cross-cutting priorities target cybersecurity, privacy compliance, AI-driven tools, algorithmic trading, and anti-money laundering programs. Registrants should update compliance frameworks, strengthen cyber and privacy safeguards, and train staff to meet evolving regulatory expectations.
  Based on these priorities, please find below three Actionable Compliance Tips:

1. Strengthen Cybersecurity and Privacy Controls: Review governance frameworks, access controls, and incident response plans to address ransomware and AI-related threats. Ensure compliance with updated Regulation S-P and Regulation S-ID requirements.
2. Enhance Oversight of Complex Products and Conflicts: For advisers and broker-dealers, revisit policies on fiduciary duties, best execution, and disclosure practices—especially for private funds, alternative investments, and leveraged ETFs.

• Update AML and Emerging Tech Protocols: Align anti-money laundering programs with current Office of Foreign Assets Control (OFAC) sanctions guidance and implement monitoring for AI-driven tools, automated advice platforms, and algorithmic trading to meet evolving regulatory expectations.

Deregulation does not mean no regulation – expect the SEC to continue to closely review areas impacting investor protection and emerging areas of risk.

• SEC Charges Six Firms for False Form ADV Filings and Misrepresentation of Assets and Operations: The SEC has charged six entities— Bluesky Eagle Capital Management, Supreme Power Capital Management, AI Financial Education Foundation, AI Investment Education Foundation, Invesco Alpha, and Adamant Stone— for making material misrepresentations in their Form ADV filings. The complaints allege false statements regarding office locations, assets under management, and private fund relationships, as well as claims of being public companies without supporting evidence. These firms also failed to provide records to substantiate their filings. The SEC seeks injunctive relief and civil penalties for violations of Sections 204(a) and 207 of the Investment Advisers Act of 1940, with investigations ongoing. Incorrect and untimely filings – whether foot faults or material misrepresentations – remain an important compliance area. Establishing robust policies and procedures to ensure you do not fall behind are critical in maintaining compliance.