Yearly Archives: 2026

Are Hints Disclosures? Delaware Supreme Court Revives M&A Fraud Claim Despite Buyer’s Red Flags

Posted by Frank J. Favia Jr., Jonathan A. Dhanawade, and Andrew J. Stanger, Mayer Brown LLP, on

Thursday, July 30, 2026

Contract representations & warranties, Delaware law, Due diligence, fraud, Material adverse effect, Mergers & acquisitions
More from: Andrew J. Stanger, Frank J. Favia Jr., Jonathan A. Dhanawade, Mayer Brown

Jonathan A. Dhanawade and Frank J. Favia Jr. are Partners and Andrew J. Stanger is Knowledge Counsel at Mayer Brown LLP. This post is based on their Mayer Brown memorandum and is part of the Delaware Law Series; links to other posts in the series are available here.

The Delaware Supreme Court’s recent opinion in Paragon Metals v. Smith[1] is a pointed reminder for M&A dealmakers: hints, partial disclosures, or due diligence “red flags” may not neutralize false contractual representations when the seller is actively concealing the truth. The case involved a CEO’s strategy to conceal damaging information about the target company while still attempting to avoid a fraud claim by providing enough hints about the situation to arguably put the buyer on inquiry notice about the issues. In reversing a trial court opinion, the Delaware Supreme Court held that the buyer could justifiably rely on the CEO’s representations despite imperfect due diligence because the CEO concealed critical customer-loss information and responded untruthfully when pressed. For M&A practitioners, the opinion sharpens several recurring issues, including when flawed due diligence becomes willful blindness, what standard of proof applies to Delaware fraud claims, how broadly a forward-looking “no material adverse effect” representation may reach, and what anti-reliance language can—and cannot—do.

2026 Proxy Season Review

Posted by Shannon Saffari, Anteris Advisors, on

Wednesday, July 29, 2026

Executive Compensation, Proxy season, Proxy voting, Shareholder activism, shareholder engagement, Stewardship and institutional investors
More from: Shannon Saffari, Anteris Advisors

Shannon Saffari is a Partner at Anteris Advisors. This post is based on her Anteris Advisors memorandum.

A less predictable, more complex path to the annual meeting

The path to the annual meeting grew less predictable and more complex in 2026, not because of a single landmark change, but because of compounding shifts. Legal challenges, regulatory intervention, political scrutiny and market driven adaptation are decentralizing stewardship decision-making and reshaping how proxy votes are decided. The result is a voting environment that is less transparent, less predictable, and more procedurally complex. The effect of these developments has shifted more of the burden onto issuers and steadily increased the risk borne by the board. Therefore, ongoing and proactive shareholder engagement has become a necessity for issuers. The 2026 vote outcomes brought those implications to bear across activism, compensation, and shareholder proposals.

SEC Issues Guidance on Disclosure Obligations for Activist Fund Structures Under Schedules 13D and 14A

Posted by J.T. Ho, Lillian Tsu, and Julie Rong, Cleary Gottlieb Steen & Hamilton LLP, on

Wednesday, July 29, 2026

Disclosure and Reporting, investment funds, Proxy Rules, SEC and Securities Laws, SEC Guidance, Shareholder activism
More from: Adam Fleisher, J.T. Ho, Julie Rong, Lillian Tsu, Cleary Gottlieb

J.T. Ho and Lillian Tsu are Partners and Julie Rong is an Associate at Cleary Gottlieb Steen & Hamilton LLP. This post is based on a Cleary Gottlieb memorandum by Mr. Ho, Ms. Tsu, Ms. Rong, and Adam Fleisher.

On July 9, the Staff of the Securities and Exchange Commission (the SEC) issued three new Corporation Finance Interpretations (CFIs) addressing disclosure obligations under Schedules 13D and 14A.

The guidance targets a specific but increasingly common activism structure: special-purpose vehicles that raise capital from investors to buy a single issuer’s securities and conduct an activism or proxy campaign. Activists who form these vehicles must now name the underlying investors in their 13D and contested proxy filings.

CFI 110.09: Investors in Company-Specific Activist Special Purpose Vehicles Must be Named in Schedule 13D

Under the guidance provided by CFI 110.09, an entity (such as a special purpose vehicle) formed specifically to raise funds to acquire the securities of a specific issuer and engage in an activism campaign at that issuer must disclose the identities of its investors under Item 3 of Schedule 13D (Source and Amount of Funds or Other Consideration). Item 3 requires reporting persons to name all parties to any transaction through which they obtained funds “for the purpose of acquiring, holding, trading or voting the securities” of the issuer. Because investors in a purpose-built vehicle contribute capital for exactly that purpose, filers must identify them in the Schedule 13D filing.

Comment Letter on the Proposed Semiannual Reporting Rule

Posted by Nell Minow, ValueEdge Advisors, on

Tuesday, July 28, 2026

Comment letters, Form 10-Q, Form 10-S, Quarterly Reporting, SEC, Semiannual Reporting
More from: Nell Minow, ValueEdge Advisors

Nell Minow is the Vice Chair at ValueEdge Advisors. This post is based on her SEC comment letter.

I write in strong opposition to the proposal to reduce reporting to file semiannual reports on the new Form 10-S in lieu of quarterly reports on Form 10-Q. I note that this was prepared entirely by me, without the aid of AI or any LLMs.

I agree with many of the thoughtful comments from investors, like the excellent comment from Marcie Frost, CEO of CalPERS, especially this:

If the Commission’s objective is to lengthen corporate decision-making horizons, then the more effective and well-targeted lever, as we have urged in prior comment letters, is to discourage the voluntary issuance of forward quarterly earnings guidance, not to dilute the historical financial reporting on which investors depend.

The Delaware Supreme Court Issues a 3-2 Split Decision Allowing Post-Demand Evidence to Be Admissible in Section 220 Actions

Posted by Lauren Rosenello and Tanisha Brown, Skadden, Arps, Slate, Meagher & Flom LLP, on

Tuesday, July 28, 2026

delaware, Delaware Corporate Law, Delaware law, Delaware Supreme Court, Section 220 Books and Records, Shareholder litigation, Stockholder Inspection Rights
More from: Lauren Rosenello, Tanisha Brown, Skadden

Lauren Rosenello is a Counsel and Tanisha Brown is an Associate at Skadden, Arps, Slate, Meagher & Flom LLP. This post is based on their Skadden memorandum, and is part of the Delaware Law Series; links to other posts in the series are available here.

There have been several notable split decisions over the years in the Delaware Supreme Court, but it is a rara avis to see the justices split 3-2 over an issue involving access to books and records.

On March 25, 2026, a divided Delaware Supreme Court majority held that in exceptional circumstances, the Court of Chancery may consider post-demand evidence in the Section 220 context when analyzing whether a stockholder had a credible basis to suspect wrongdoing.

Justice Gary F. Traynor authored the majority’s opinion, ruling, among other things, that “nothing in [8 Del. C.] Section 220’s text prohibits the consideration of post-demand evidence,” and that a blanket prohibition could result in inefficiencies such as a repetitive process of updated demands and complaints.[1]

Chief Justice Collins J. Seitz, Jr. and Justice Karen L. Valihura dissented, arguing that, from a policy standpoint, a bright-line rule barring post-demand evidence would “discourage a premature race to the courthouse to attempt to gain a foothold for later merits-based litigation” and also would respect the intended summary nature of Section 220 proceedings.

What You are Likely to Hear in the Boardroom: External Forces Reshaping Executive Compensation

Posted by Steve DeMaria and Lane Ringlee, Pay Governance LLC, on

Monday, July 27, 2026

Compensation committees, Executive Compensation, Proxy voting, Say on pay, SEC Disclosure, shareholder engagement
More from: Lane Ringlee, Steve DeMaria, Pay Governance

Steve DeMaria is a Consultant and Lane Ringlee is a Partner at Pay Governance LLC. This post is based on their Pay Governance memorandum.

Key Takeaways

The external environment surrounding executive compensation is changing rapidly. Economic uncertainty, evolving SEC priorities, shareholder activism, and shifts in proxy voting practices are creating new considerations for compensation committees as they prepare for the 2026–2027 proxy season. In Part 1 of this two-part Viewpoint series, we examine:

External Environment and Regulatory Landscape
1. Economic Uncertainty, Supply Constraints, and … Stock Market Highs?
2. Upcoming Shifts in Disclosure Requirements
3. Fallout from Excluding Shareholder Proposals

Investor Landscape and Proxy Voting Dynamics
4. Changing Say-on-Pay Voting Climate
5. Emergence of AI-Based Proxy Voting

Part 2 will review key trends in compensation strategy.

Narrow Supreme Court Ruling Allows SEC to Obtain Disgorgement, But Leaves Questions Unresolved

Posted by Caitlyn Campbell, John Nowak, and Paul Helms, McDermott Will & Schulte, on

Monday, July 27, 2026

Disgorgement, Financial Enforcement, SEC enforcement, Securities fraud, Securities regulation, U.S. Supreme Court
More from: Caitlyn Campbell, Gabriel Gross, John Nowak, Paul Helms, McDermott Will & Schulte

Caitlyn Campbell, John Nowak, and Paul Helms are Partners at McDermott Will & Schulte. This post is based on a McDermott memorandum by Ms. Campbell, Mr. Nowak, and Mr. Helms, and Gabriel Gross.

Overview

On June 4, 2026, the Supreme Court in Sripetch v. SEC unanimously held that the US Securities and Exchange Commission (SEC) need not prove that investors suffered a pecuniary loss before obtaining disgorgement. In doing so, the Court resolved a circuit split between the US Court of Appeals for the First Circuit and the Court of Appeals for the Ninth Circuit (both of which permitted disgorgement absent proof of investor losses) and the Second Circuit (which required such a showing). The Supreme Court’s decision, however, was notably narrow and left unresolved several significant questions concerning the scope and constitutional status of the SEC’s disgorgement authority, creating investigation and litigation opportunities for defendants.

New Day, New Rules: Five Key Aspects of Amended DGCL Section 144 and Section 220

Posted by Edward Micheletti, Jenness Parker, and Lauren Rosenello, Skadden, Arps, Slate, Meagher & Flom LLP, on

Sunday, July 26, 2026

Books and records, Conflicted Transactions, delaware, Delaware Corporate Law, Delaware General Corporation Law, Delaware law, Section 144, Section 220
More from: Edward Micheletti, Jenness Parker, Lauren Rosenello, Skadden

Edward Micheletti and Jenness Parker are Partners and Lauren Rosenello is a Counsel at Skadden, Arps, Slate, Meagher & Flom LLP. This post is based on their Skadden memorandum and is part of the Delaware Law Series; links to other posts in the series are available here.

In spring 2025, there was significant debate over Delaware’s Senate Bill 21 (SB21), which offered new Delaware amendments addressing controller and board conflicts, as well as access to books and records. These amendments, codified in amended Section 144 and Section 220, were enacted to provide greater predictability but also to limit excessive litigation.

Amended Section 144 established statutory safe harbors for conflicted transactions involving the board or controlling stockholders.
Amended Section 220 was designed to curtail broad stockholder inspection rights.

In general, these provisions were heralded by the corporate bar as a stabilizing measure for corporate practitioners, offering greater clarity and certainty for books and records demands and transactions involving conflicts, and helping to avoid incessant and unnecessary litigation costs in every transaction.

Delaware Chancery Clarifies Implied Covenant Limits

Posted by Gail Weinstein, Philip Richter, and Steven Epstein, Fried, Frank, Harris, Shriver & Jacobson LLP, on

Saturday, July 25, 2026

breach of contract, commercial contracts, contract interpretation, Contract Law, contractual gap-filling, delaware, Delaware law, Delaware litigation, implied covenant of good faith and fair dealing, third-party consent
More from: Adam Cohen, Gail Weinstein, Liza Andrews, Philip Richter, Roy Tannenbaum, Steven Epstein, Fried Frank

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 Liza Andrews, and is part of the Delaware Law Series; links to other posts in the series are available here.

Key Points

The decision clarifies that a party’s using a contractual gap to “intentionally harm” the counterparty may constitute a breach of the implied covenant. The court rejected ASM’s argument that the parties had intentionally left a contractual gap with respect to the efforts ASM had to use to obtain the consents, in order to allocate the risk to the Vendor of the landlords not giving the consent for any reason. The court stated that, at the pleading stage, it was reasonably conceivable that, without a standard of efforts set forth in the agreement, ASM could have been neutral with the landlords, but, based on the implied covenant, could not use the contractual gap to “intentionally harm” the Vendor.
The decision underscores the need for careful drafting of third party consent conditions. Parties should consider whether to specify in their agreement a standard of efforts for obtaining such consents and may wish to specify the extent to which the other party can participate in the process of seeking to obtain them. Where a standard of efforts is not set forth, the party responsible for seeking a consent should keep in mind that, depending on the specific facts and circumstances, advocating for the third party not to give the consent may be considered to be intentionally harming the counterparty and thus a breach of the implied covenant.

Comment Letter on the SEC’s Proposal to Replace Quarterly Reporting with Semiannual Reporting

Posted by Carine Smith Ihenacho and Snorre Gjerde, Norges Bank Investment Management, on

Friday, July 24, 2026

Comment letters, disclosure requirements, Financial reporting, Form 10-Q, Form 10-S, Periodic reporting, Public Company Disclosure, Quarterly Reporting, SEC, Semiannual Reporting
More from: Carine Smith Ihenacho, Snorre Gjerde, Norges Bank

Carine Smith Ihenacho is the Chief Governance and Compliance Officer and Snorre Gjerde is the Lead Investment Stewardship Manager at Norges Bank Investment Management. This post is based on their SEC comment letter.

We refer to the Securities and Exchange Commission (SEC)’s request for comment on the proposed amendments to allow companies to file semiannual reports on new Form 10-S in lieu of quarterly reports on Form 10-Q to meet their interim reporting obligations under the Securities Exchange Act of 1934. We appreciate the opportunity to contribute our perspective.

Norges Bank Investment Management (NBIM) is the investment management division of the Norwegian Central Bank that manages the Norwegian Government Pension Fund Global. We work to safeguard and build financial wealth for future generations. As of year-end 2025, we managed over 2 trillion USD in assets, with the United States representing our largest market at 53% of total investments. Within our equity portfolio, 822 billion USD was invested in shares of 1,306 U.S. public companies. We are a minority shareholder in U.S. public companies, with an average equity ownership of 1.18 percent.

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