Remarks by Commissioner Uyeda on Corporate Penalties and Individual Accountability

Posted by Mark T. Uyeda, U.S. Securities and Exchange Commission, on
Wednesday, November 4, 2026
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Mark T. Uyeda is a Commissioner of the U.S. Securities and Exchange Commission. This post is based on his recent remarks. The views expressed in this post are those of Commissioner Uyeda and do not necessarily reflect those of the Securities and Exchange Commission or its staff.

On January 19, 2006, in the clear blue Florida sky, an Atlas V rocketed off from Cape Canaveral carrying a small spacecraft called New Horizons.[1] This mission, planned by NASA (that is the National Aeronautics and Space Administration, not the other NASAA, the North American Securities Administrators Association), exited the Earth at more than 36,000 miles per hour for a long term “voyage to visit the planet Pluto and then beyond.”[2] That same month, the Securities and Exchange Commission launched something of similar importance, at least in my view,[3] namely its Statement Concerning Financial Penalties, also known as the “Corporate Penalty Statement.”[4]

Announced in conjunction with two settled accounting fraud cases, one with a $50 million civil penalty and the other with no penalty,[5] the Corporate Penalty Statement was issued in a unanimous decision of 5 to 0 under the leadership of Chairman Cox, after over 40 hours of meetings reconciling differing views amongst the Commissioners.[6] The Statement is a concise document with a specific mission, which is to provide an analytical framework so when the Commission imposes a civil penalty on a corporate issuer, it can explain why, and that explanation should rest on what Congress authorized and why it authorized it.[7] As a measure approved by Commission vote, the Statement should have a similar stature to other regulatory guidance provided by the Commission, whether in amicus briefs, adjudicatory opinions, administrative orders, interpretive releases, or otherwise.

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Untamed Unicorns: Why Startup Finance is Broken and How to Fix It

Posted by Renée Jones (Boston College Law School), on
Wednesday, November 4, 2026
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Renée M. Jones is Professor of Law and Dr. Thomas F. Carney Distinguished Scholar at Boston College Law School. This post is based on her recent book.

Disgraced Theranos founder Elizabeth Holmes is back in the news, dominating the screen in You Can See Everything which recently opened to critical acclaim and surprising box office success. As voyeuristic entertainment the film delivers, allowing viewers to see and believe what they want to see and believe. By focusing so intently on Holmes’s unknowable state of mind, however, the film leaves a critical question unanswered: Why did so many experienced investors and respected public figures disregard mounting evidence of Holmes’s deception, thereby enabling and helping perpetuate her devastating fraud?

When we dwell on Holmes’s pathology, as the film invites us to do, we risk overlooking the flaws in the startup ecosystem that helped propel the Theranos ruse, flaws that have contributed to other major startup scandals. My book, Untamed Unicorns: Why Startup Finance is Broken and How to Fix It (Harvard University Press), analyzes the legal structure that contributes to startup fraud, shifting the spotlight from the colorful personalities that animate these stories to the decades of deregulation of securities markets that helped set the stage for Theranos and similar scandals.

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AI and the Escalating Threat of Nation-State Cyber Operations

Posted by Martin Lipton, Wachtell, Lipton, Rosen & Katz, on
Wednesday, November 4, 2026
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Martin Lipton is a Founding Partner at Wachtell, Lipton, Rosen & Katz. This post is based on a Wachtell Lipton memorandum by Mr. Lipton, Kevin S. Schwartz, and David M. Adlerstein.

We have previously written about the critical importance of public company boards maintaining focus on cybersecurity risk oversight, including in the face of burgeoning cybersecurity risks arising from the proliferation of advanced AI models and tools. An issue meriting immediate specific focus is the growing threat posed by nation state and state sponsored actors conducting malicious cyber operations, including espionage, theft, and sabotage of critical infrastructure.

Nation state and state sponsored cyber actors have inflicted substantial damage on companies and governments for more than a decade. Examples include operations attributed to North Korea (including the Lazarus Group, linked to the 2014 Sony Pictures hack and massive cryptocurrency thefts), Russia (including the SolarWinds supply chain compromise and the NotPetya malware attack), China (including cyber enabled IP theft and efforts to infiltrate critical U.S. infrastructure) and Iran (including attacks on U.S. water systems and, this year, a destructive wiper attack on a major U.S. medical device company). The nature of the threat can vary by industry, ranging from operational sabotage for infrastructure operators and IP theft for technology and life sciences companies, to financial theft for firms with digital asset exposure. As advanced AI tools become ever more capable, they are significantly enhancing these actors’ already powerful ability to find vulnerabilities, automate attacks, and operate at scale, increasing both the likelihood and potential severity of cyber incidents affecting public companies.

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Pay Leverage, Not Percent of Pay in Equity, Is the Key Measure of Corporate Director Pay

Posted by Stephen F. O’Byrne, Shareholder Value Advisors Inc., on
Tuesday, November 3, 2026
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Stephen F. O’Byrne is President and Co-founder of Shareholder Value Advisors Inc. This post is based on his Shareholder Value Advisors memorandum.

The objectives of corporate director pay are much the same as the objectives of corporate executive pay, which are to provide strong incentives to increase shareholder value, retain key talent, and limit shareholder cost.

The conventional wisdom in executive pay is that the three basic objectives can be achieved by combining median target pay with a high percent of pay at risk. The conventional theory is that a high percent of pay at risk provides a strong incentive, not letting target pay fall below the peer median retains key talent and not letting target pay rise above the peer median limits shareholder cost. These principles have become widely embraced in corporate director pay over the last thirty years.

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Explaining Delaware’s Blunder

Posted by Itai Fiegenbaum (St. Thomas University), on
Tuesday, November 3, 2026
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Itai Fiegenbaum is an Associate Professor at St. Thomas University. This post is based on his recent article, forthcoming in the American Business Law Journal, and is part of the Controlling Shareholder Series; links to other posts in the series are available here.

Delaware’s judiciary is widely regarded as the most sophisticated corporate law judiciary in the United States. Its judges are not only experts in corporate law, but also keenly aware of the political forces that shape Delaware’s position as the jurisdiction of choice for publicly traded corporations. That institutional sophistication has historically allowed Delaware’s courts to navigate threats to the state’s corporate law franchise without inviting unnecessary confrontation. How, then, did Delaware’s judiciary provoke a political backlash that culminated in the hurried enactment of the 2025 amendments to Delaware’s corporate code, which displaced decades of judge made fiduciary duty doctrine and curtailed shareholder inspection rights?

To appreciate the puzzle, consider the judiciary’s handling of the litigation surrounding the federal government’s rescue of Bear Stearns during the 2008 financial crisis. The Federal Reserve orchestrated a merger between Bear Stearns and JP Morgan to prevent the investment bank’s collapse. The transaction involved aggressive deal protections designed to ensure shareholder approval, raising serious questions under Delaware corporate law. Yet when shareholders challenged the transaction, the Delaware Court of Chancery stayed the proceedings in favor of a parallel litigation in New York. Rather than strictly apply Delaware precedent and potentially thwart federal efforts to rescue Bear Stearns, the court effectively stepped aside.

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Tokenized Securities — What Corporations Should Know

Posted by Kevin Schwartz and David Adlerstein, Wachtell, Lipton, Rosen & Katz, on
Tuesday, November 3, 2026
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Kevin S. Schwartz is a Partner and David M. Adlerstein is an Of Counsel at Wachtell, Lipton, Rosen & Katz. This post is based on their Wachtell memorandum.

The U.S. system for issuing, trading, clearing, and holding securities rests on a book entry framework developed more than half a century ago. Familiar, time tested, and generally reliable, that framework also entails settlement delays, limited trading hours, layers of intermediaries and records, and substantial reconciliation work. Some market participants are now testing whether a different recordkeeping technology can reduce those frictions and modernize this infrastructure through tokenization, which is the representation of securities on a blockchain.

Proponents contend that tokenization could enable near instant settlement; 24/7 trading; fewer intermediaries; a potential fix for the tangled recordkeeping that complicates shareholder voting; and greater transparency on public blockchains, where activity is visible to anyone, though participants are pseudonymous. Securities in a programmable environment could also enable further efficiencies. These prospects have attracted institutions at the center of traditional securities trading, including the Depository Trust & Clearing Corporation (DTCC), which launched a tokenization service for financial institutions last week; NYSE and Nasdaq, which are developing tokenization platforms; and BlackRock, which offers an institutional on chain money market fund.

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Stewardship at an Inflection Point – From Activity to Effectiveness

Posted by Dr. Catherine Marchewitz (Governance & Values) and David Mondl (Inrate), on
Monday, November 2, 2026
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Dr. Catherine Marchewitz is a Managing Director at Governance & Values and David Mondl is the Head of Active Ownership at Inrate.

Stewardship is becoming more sophisticated. But is it becoming more effective?

Investors have never had more tools, more data or more expectations around stewardship. Engagement programs have become more structured. Voting is increasingly integrated with broader ownership strategies. Sustainability data and analytics have become more sophisticated. Regulation and stewardship codes have raised expectations around transparency and accountability.

But there is a question we think deserves more attention. Are we becoming better at stewardship or simply doing more of it?

We think this is an important distinction. More engagement meetings do not necessarily mean more influence. More votes do not necessarily mean better outcomes. And a growing number of reported milestones does not necessarily tell us how much an investor contributed to the change.

Of course, activity matters. It tells us whether investors are using their stewardship capabilities and provides an important degree of transparency. But we believe the next step is to look beyond activity and ask what happens between an investor’s intention and the outcome. This is where we see the next step in the evolution of stewardship, which is moving from measuring stewardship activity to understanding stewardship effectiveness.

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SEC Staff Streamlines Form S-8, Rule 701, and Section 16 Guidance

Posted by Michael Albano, Julia Rozenblit, and Ariel Adler, Cleary Gottlieb Steen & Hamilton LLP, on
Monday, November 2, 2026
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Michael Albano is a Partner, Julia Rozenblit is a Practice Development Lawyer, and Ariel Adler is an Associate at Cleary Gottlieb Steen & Hamilton LLP. This post is based on a Cleary Gottlieb memorandum by Mr. Albano, Ms. Rozenblit, Mr. Adler, and Bobby Bee.

On October 15, 2026, the staff of the U.S. Securities and Exchange Commission’s (SEC) Division of Corporation Finance (the Staff) released a series of new and revised Corporation Finance Interpretations (CFIs, formerly known as Compliance and Disclosure Interpretations, or C&DIs) addressing Rule 701 under the Securities Act of 1933 (the Securities Act), Form S-8 and the related registration fee rules, as well as a Form 4 filing timing question under Section 16 of the Securities Exchange Act of 1934 (the Exchange Act).[1] Most of the guidance is new, although the Staff also revised two longstanding Form S-8 interpretations, including one that reverses the Staff’s prior position on assumed awards held by former employees of an acquired company.

Taken together, the new CFIs largely resolve in companies’ favor several questions that practitioners have long treated as unclear, and in a number of respects place restricted stock and restricted stock units (RSUs) on the same footing that stock options have historically enjoyed. Below, we summarize the new guidance and highlight related existing guidance that continues to apply.

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Rule 14a-8: Perhaps Slow-Walking Recission is Best

Posted by Stefan Padfield and Allen Mendenhall, The Heritage Foundation, on
Sunday, November 1, 2026
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Stefan Padfield is a Principal and Allen Mendenhall is a Research Fellow at The Heritage Foundation.

In a recent post on the Harvard Law School Forum on Corporate Governance, titled “Rule 14a-8: Perhaps There’s Another Way,” Sarah Wilson, Founder and CEO of Minerva Analytics, tackles the hot topic of Rule 14a-8 rescission. At bottom, she argues for implementing a version of the UK Takeover Panel to regulate procedural requirements for proposal submission while leaving decisions about content scope to shareholders. Along the way, she argues that The Heritage Foundation, including by way of its American Investor Initiative, “is having second thoughts” about prior positions Heritage has taken on the issue, and that Heritage “seems distinctly unhappy with the SEC’s direction of travel” and is thus left in “the strange position of defending the very mechanism it spent years arguing had made shareholder meetings too political.” These characterizations of Heritage warrant some clarification.

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Investor Perspectives on SEC Disclosure Reform

Posted by Linda Pappas, Mike Kesner, and Lane Ringlee, Pay Governance LLC, on
Saturday, October 31, 2026
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Linda Pappas, Mike Kesner, and Lane Ringlee are Partners at Pay Governance LLC. This post is based on their Pay Governance memorandum.

KEY TAKEAWAYS

  • Broad opposition to disclosure reductions. Across our survey of institutional investors, 81% opposed the reductions in disclosures proposed or contemplated.
  • No size threshold for more limited disclosures. While the SEC proposal reduces disclosure for companies with public float below $2 billion, 79% of investors indicated that reduced disclosure is not appropriate for a company of any size.
  • Strong support for tabular disclosure. Investors strongly oppose the elimination of quantitative tables from disclosure requirements.
  • Narrative disclosure remains relevant. Over two-thirds of investors surveyed support retention of the Compensation Discussion & Analysis (CD&A).
  • Current disclosure length and complexity are not viewed as a significant concern by many investors. Investors have learned to extract the information they need and oppose changes that would eliminate information important to their voting decisions.

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