SEC Proposes Rescission of Investment Adviser Pay-to-Play Rule

Posted by Ki P. Hong, Charles M. Ricciardelli, and Tyler Rosen, Skadden, Arps, Slate, Meagher & Flom LLP, on
Wednesday, September 9, 2026
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Ki P. Hong, Charles M. Ricciardelli, and Tyler Rosen are Partners at Skadden, Arps, Slate, Meagher & Flom LLP. This post is based on their Skadden memorandum.

Executive Summary

  • What’s new: The SEC announced a proposal to rescind Rule 206(4)-5 under the Investment Advisers Act in its entirety, including its prohibition on certain political contributions and its restrictions on the use of certain placement agents to solicit state and local government investors.
  • Why it matters: The proposal is likely to be of particular interest to investment advisers, who have been subject to the rule’s “de facto” strict-liability standard, including an automatic two-year compensation ban even for small-dollar contributions that are often inadvertent foot-faults.
  • What to do next: Public comments may be submitted now and will be due 60 days after the proposal is published in the Federal Register.

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The Market for ESG Ratings

Posted by Ehsan Azarmsa (University of Illinois Chicago) and Joel Shapiro (University of Oxford), on
Wednesday, September 9, 2026
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Ehsan Azarmsa is an Assistant Professor at the University of Illinois Chicago (UIC) College of Business Administration and Joel Shapiro is a Professor at the University of Oxford Saïd Business School. This post is based on their recent article, forthcoming in the Journal of Finance.

ESG ratings have become an important input into investment decisions. With the advances of sustainable investment, a large industry has developed to collect, analyze, and sell information about firms’ environmental, social, and governance performance. At the same time, ESG ratings have attracted considerable criticism. Ratings from different providers often disagree, raising concerns among investors, regulators, and academics about their accuracy and usefulness.

One common response is to compare ESG ratings with credit ratings, but credit ratings ultimately assess one dimension: credit risk. ESG ratings cover a wide range of potentially unrelated categories. Environmental performance can include climate change, biodiversity loss, and pollution; social performance can include human capital, product liability, and stakeholder relations; and each of these categories contains further subcategories. An ESG rating provider therefore faces a basic choice about where to devote its resources. It can specialize in a narrower set of categories, or it can generalize and spread its effort across many of them.

In our paper, The Market for ESG Ratings (Journal of Finance, 2026) we study how competition among ESG rating providers affects this choice. Our main finding is that competition can lead rating providers to become generalists even when specialization would produce more information. This distortion is most likely to arise when investors care very strongly about ESG performance.

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Chancery Dismisses Claims Financial Advisor Steered Deal to a Favored Bidder—Envestnet

Posted by Gail Weinstein, Philip Richter, and Steve Epstein, Fried, Frank, Harris, Shriver & Jacobson LLP, on
Wednesday, September 9, 2026
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Gail Weinstein is a Senior Counsel, Philip Richter is a Partner and Co-Head of the M&A and Private Equity Practice, and Steven Epstein is the Managing Partner at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank memorandum by Ms. Weinstein, Mr. Richter, Mr. Epstein, Roy Tannenbaum, Adam Cohen, and Colum Weiden, all at Fried Frank, and is part of the Delaware Law Series; links to other posts in the series are available here.

In Berger v. Fox (“Envestnet”) (July 21, 2026), the Delaware Court of Chancery dismissed a suit challenging the $4.5 billion stockholder-approved take-private merger (the “Merger”) of Envestnet, Inc. (the “Company”) with affiliates of a private equity firm (the “Buyer”). The Plaintiffs claimed that the Company’s directors breached their fiduciary duties by (i) engaging a financial advisor (the “Financial Advisor”) that they knew was conflicted due to its extensive business relationships with the Buyer, and (ii) then permitting the Financial Advisor to steer the sale to the Buyer and away from two higher, unsolicited competing bids. They also claimed that the Financial Advisor aided and abetted the directors’ breaches. The Merger price was near the bottom of the Financial Advisor’s discounted cash flow valuation range for the Company and represented a 4.8% discount to the 52-week share price high.

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2026 Proxy Season: Trends in Investor Behavior & Noteworthy Developments

Posted by Zally Ahmadi, D.F. King, on
Tuesday, September 8, 2026
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Zally Ahmadi is a Managing Director, Governance Advisory at D.F. King. This post is based on her D.F. King memorandum.

This post is the second part of D.F. King’s 2026 Proxy Season debriefing report. See here the first part on Shareholder Proposals and here for the second part on Trending Proposal Topics.

In May 2026, the SEC proposed sweeping changes to the public company reporting framework that, if adopted, would significantly reduce disclosure and compliance obligations for a substantial portion of U.S. public companies. The proposal would simplify the current filer-status structure, increase the threshold for large accelerated filer status from $700 million to $2 billion of public float, and provide a broader group of companies with access to disclosure accommodations currently available only to smaller reporting companies and emerging growth companies. SEC Chair Paul Atkins stated that the objective of the proposal is to encourage companies to access and remain in the public markets by reducing regulatory burdens and creating greater certainty regarding reporting obligations.

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Measuring Board Fit — Evidence from Elliott’s Campaign at Norwegian Cruise Line

Posted by Mark R. DesJardine (Tuck School of Business) and Marc J. Mertens (Copenhagen Business School), on
Tuesday, September 8, 2026
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Mark R. DesJardine is a Professor and the Paul E. Raether T’73 Faculty Fellow at Dartmouth College’s Tuck School of Business, as well as a Senior Fellow at The Wharton School. Marc J. Mertens is an Assistant Professor at Copenhagen Business School. This post is based on their recent paper.

Boards are routinely assessed with tools that cannot answer the question that matters most: whether a given director’s accumulated professional experience fits the strategic needs of the specific company on whose board that director sits. This post describes a new method that uses contextualized word embeddings to measure such fit directly, and applies it to Elliott Investment Management’s 2026 campaign at Norwegian Cruise Line Holdings. The analysis finds that NCLH’s pre-campaign board was less aligned with its own strategic identity than the boards of its closest peers, that its directors were unusually similar to one another, and that the post-settlement board narrowed both gaps. With this method, directors and investors can build better boards.

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DOJ Withdraws 1987 ISS Business Review Letter, Thereby Signaling Continued Proxy-Advisor Scrutiny

Posted by Megan Gerking, Joe Folio, and Natalie George, Morrison & Foerster LLP, on
Tuesday, September 8, 2026
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Megan Gerking and Joe Folio are Partners and Natalie George is an Associate at Morrison & Foerster LLP. This post is based on a MoFo memorandum by Ms. Gerking, Mr. Folio, Ms. George, Diane R. Hazel, and Haydn Forrest, all at MoFo.

Amidst growing federal and state scrutiny of proxy advisory firms, the U.S. Department of Justice’s Antitrust Division (the “Division”) recently entered the fray. On August 5, 2026, the Division withdrew its 1987 business review letter (the “Letter”) to proxy advisory firm Institutional Shareholder Services Inc. (ISS), stating that the Letter no longer reflects ISS’s current business practices and citing concerns about concentration among proxy advisors.

The Division’s decision to withdraw the Letter is not an enforcement action or a finding that ISS violated the antitrust laws. In fact, the Division emphasized that proxy advising is not inherently problematic and that voting based on a proxy advisor’s recommendation does not by itself raise competition concerns. However, the Division’s decision signals that proxy advisors like ISS, and perhaps the broader asset management industry, may face increased scrutiny, especially during next year’s proxy season.

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SEC Issues New Guidance Clarifying Ability of Schedule 13G Filers to Engage with Other Investors and Issuers

Posted by Andrew Freedman, Kenneth S. Mantel, and Andrew J. Astore, Olshan Frome Wolosky LLP, on
Monday, September 7, 2026
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Andrew Freedman is a Co-Managing Partner, Kenneth S. Mantel is a Partner, and Andrew J. Astore is an Associate at Olshan Frome Wolosky LLP. This post is based on their Olshan memorandum.

On September 2, 2026, the U.S. Securities and Exchange Commission (the “SEC”) issued new Corporation Finance Interpretations (“CFIs”) in Q&A format regarding how Schedule 13G filers can engage with other investors and issuers without jeopardizing their Schedule 13G eligibility. These CFIs address beneficial owners of more than five percent of an issuer’s equity securities that are required to file on Schedule 13D or 13G and who, among other things, do not hold the securities with the purpose or effect of changing or influencing the control of the issuer. The new guidance supplements earlier CFIs from February 2025 that broadly chilled engagement of both dissident investors and issuers with significant passive shareholders, thereby decreasing investor and issuer visibility into their views.

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Boeing Decision Appears to Narrow Potential Caremark Liability for Directors and Officers

Posted by Gail Weinstein, Philip Richter, and Steve Epstein, Fried, Frank, Harris, Shriver & Jacobson LLP, on
Sunday, September 6, 2026
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Gail Weinstein is a Senior Counsel, Philip Richter is a Partner and Co-Head of the M&A and Private Equity Practice, and Steven Epstein is the Managing Partner at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank memorandum by Ms. Weinstein, Mr. Richter, Mr. Epstein, Maxwell Yim, Adam Cohen, and Colum Weiden, all at Fried Frank, and is part of the Delaware Law Series; links to other posts in the series are available here.

In In re Boeing (Aug. 14, 2026), the Delaware Court of Chancery, at the pleading stage of litigation, dismissed Caremark claims brought against directors and officers of The Boeing Company (the “Company”) after alleged manufacturing process defects led to a dramatic, mid-flight mechanical failure of a Boeing airplane, which followed two earlier catastrophic accidents due to alleged manufacturing defects in Boeing airplanes. The allegations included years-long, ongoing violations by the Company of manufacturing safety laws and regulations.

In two separate incidents in 2018 and 2019, a Boeing MAX 737 airplane crashed in mid-flight—resulting in hundreds of lives lost; the Company paying billions of dollars in fines and settlements; and the Company committing to regulators, the U.S. Department of Justice and stockholders to revamp its safety systems and culture. The recent incident occurred in 2024—when a Boeing MAX-9 737 airplane reached 15,000 feet, the mid-cabin door plug flew off, leaving a gaping hole in the airplane. The airplane made a safe emergency landing, and eight people sustained minor injuries. The Plaintiffs sued, claiming that Company directors and officers breached their oversight duties under Caremark by having ignored in bad faith numerous “red flags” of the Company’s continued airplane manufacturing safety issues. The court dismissed the case, holding that the Defendants did not face a substantial likelihood of liability under Caremark, and therefore demand on the Company’s board of directors (the “Board”) to bring the derivative lawsuit was not excused.

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SEC Comment Letter Review Signals Investor Support for Preserving Executive Compensation and Governance Disclosure Requirements

Posted by Mike Kesner and Annie Chen, Pay Governance LLC, on
Saturday, September 5, 2026
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Mike Kesner is a Partner and Annie Chen is a Consultant at Pay Governance LLC. This post is based on their Pay Governance memorandum.

KEY TAKEAWAYS

1. Large institutional investors have not directly weighed in  The largest asset managers have not directly commented on the proposal; an association of these investors indicated support for reform, while suggesting many disclosures remain. 2. Broad rollbacks face resistance
The most consistent message was opposition to $2B NAF status, exemption of 80%+ of issuers, and a blanket five-year IPO on ramp.		 3. Investor respondents value transparency
Investor respondents continue to use CD&A, Say-on-Pay, perquisite disclosure, and auditor attestation for governance and voting decisions.		 4. Reform should focus on usability
Commenters supported better dashboards, standardization, XBRL tagging, improved visuals, clearer metrics, and comparability.

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2026 Proxy Season: Trending Proposal Topics

Posted by Zally Ahmadi, D.F. King, on
Friday, September 4, 2026
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Zally Ahmadi is a Managing Director, Governance Advisory at D.F. King. This post is based on her D.F. King memorandum.

This post is the second part of D.F. King’s 2026 Proxy Season debriefing report. See here the first part on Shareholder Proposals.

‘Anti-ESG’ Proposals

This year, the ‘anti-ESG’ movement remained a fixture in the shareholder proposal space, remaining in the upper half of our ‘top proposals’ lists. However, the number of proposals decreased meaningfully and average support levels for these proposals remain in the single digits.

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