A New Era (and a Homecoming) Begins: Paul Atkins Confirmed as New SEC Chairman

Paul Atkins, President Donald Trump’s nominee to be the 34th chairman of the SEC, was confirmed on April 9, 2025 by a vote of 52-44. Atkins previously served as a commissioner of the SEC from 2002 until 2008 under the George W. Bush administration.

Atkins testified before the Senate Committee on Banking, Housing and Urban Affairs on March 27, 2025. A few key themes emerged in his testimony that signaled some of his likely policy priorities and directions for future initiatives at the agency: (1) easing regulatory burdens on capital formation, particularly for public and small company securities offerings; (2) establishing a clear regulatory framework for digital assets and financial technology; and (3) the possible future of accounting regulation and the PCAOB.

Reducing Regulatory Burdens. Atkins’s most sustained commentary during his hearing involved his concerns over capital formation and the dwindling number of U.S. public companies. Pointing to a 30% decrease in the number of public companies over the past 30 years, Atkins described public markets as “dysfunctional,” in part due to unnecessary regulatory burdens in connection with public securities offerings. Atkins cited the regulatory changes following the 2016 JOBS Act as a successful example of easing the regulatory burdens in connection with public offerings but noted that implementation of the JOBS Act was incomplete in his view.

Echoing concerns from the Trump Administration, Atkins also criticized “[u]nclear, overly politicized, complicated, and burdensome regulations” under the prior administration as “stifling capital formation” and leaving investors “flooded” with counterproductive disclosure information. When asked his view on environmental, social and governance (“ESG”) disclosure requirements, Atkins testified that he wants to “get politics out of the financial markets.” Atkins is certain to continue the recent retreat from ESG disclosure requirements by the SEC, which omitted ESG from its Division of Examination’s Priorities for 2024 and recently voted to end its defense of rules mandating climate-related disclosure. More broadly, he is likely to take a conservative approach to the SEC’s statutory jurisdiction and to focus on classical issues of market efficiency and retail protection.

Atkins repeatedly emphasized, however, that he believes in the enforcement of established securities law requirements. When asked if he would pursue a “deregulatory” approach, Atkins voiced his belief in the effectiveness of carefully tailored regulation and in enforcement against entities that violate established law.

Digital Assets and Financial Technology. The Trump administration has frequently criticized the SEC’s aggressive “regulation by enforcement” of cryptocurrency and digital asset issuers and intermediaries under former Chair Gary Gensler. As expected, Atkins’s testimony signaled that he will continue the crypto-friendly approach taken by Acting Chairman Uyeda and Commissioner Peirce as head of the cryptocurrency task force, although he did not detail any specific substantive policies. Atkins, who has served as co-chair of the Chamber of Digital Commerce’s Token Alliance since 2017, testified that establishing a “firm regulatory foundation,” driven by a “rational, coherent, and principled approach,” would be a “top priority.” Although it remains to be seen how actively the SEC will employ current authority to establish new regulation for crypto assets in light of clear congressional momentum to adopt comprehensive market structure legislation that could overtake such actions, Atkins is expected to pursue the development of clear rules for digital assets.

PCAOB and the Fate of the CAT. Several Democratic senators questioned Atkins on his views of Project 2025. When asked if he favored abolishing the PCAOB, Atkins responded, “That’s up to you all—it’s part of a statute.” When further pressed, he stated that the PCAOB’s role, whether performed by the PCAOB or “folded back into the SEC,” is “vital.”

Further, when asked about his views on the Consolidated Audit Trail (“CAT”), which Project 2025 recommends terminating and which the SEC recently announced will no longer collect certain categories of customer identifying information, Atkins expressed concern over the “ballooned” cost of the CAT and stated that the program needs to be reviewed but without committing to any particular changes.

Additional Topics. When asked about private fund investor protections, Atkins emphasized that private fund investors “have the means” to investigate financial products on their own, likely signaling a significant pullback on the prior administration’s focus on private fund conflicts of interest and disclosures.

Atkins also addressed questions about SEC independence and interactions with the Department of Government Efficiency, asserting that he expected to be in charge of the Commission’s agenda but that, “If there are people who can help with creating efficiencies in the agency or otherwise, I would definitely work with them.”

Implications for Examination and Enforcement. Consistent with the main themes he articulated during his confirmation hearing, we expect Atkins to oversee a regulatory, examination, and enforcement agenda that focuses on lessening regulatory burdens on issuers, establishing a predictable environment for digital assets and cryptocurrency, and possibly reining in the PCAOB and Financial Industry Regulatory Authority. The SEC is also likely to shift its regulatory focus away from sophisticated investor products and toward classic frauds and the protection of retail investors.

For more information, see Debevoise Update.

SEC Clarifies Disclosure Requirements for Crypto Asset Offerings and Registrations

On April 10, 2025, the Division released guidance clarifying the application of existing disclosure requirements under the federal securities laws to offerings and registrations of securities in the crypto asset market. The Division’s statement is meant to provide guidance for companies while the SEC develops a formal regulatory framework for crypto assets, but a statement by Commissioner Peirce made clear that the Division’s guidance does not address whether a crypto asset is or is not a security.

Disclosure Guidance. The Division’s statement provides guidance about certain disclosure items, including the description of business, risk factors, description of securities and information about management, as well as exhibit requirements, but does not address all relevant disclosure items. A company should consider the applicability of the Division’s guidance to its own facts and circumstances when preparing relevant disclosures.

• Description of Business. Item 101 of Regulation S-K requires a company to provide a description of its business. The Division observed crypto asset companies that are developing or acquiring a network or application disclose, among other things: (1) the objectives of the network or application and how the technology of the network or application functions and accomplishes its objectives, including its architecture, software, cryptographic key management and functionality; (2) the process for validating transactions, the consensus mechanism, the block size, the transaction speed and the transaction (or “gas”) fees and reward mechanism, if any; (3) a description of any products and services that will be offered through the network or application; and (4) a description of the network or application’s governance system, as applicable.

• Risk Factors. Item 105 of Regulation S-K requires a discussion of the material factors that make an investment in the company or offering speculative or risky. For example, a company should disclose risks related to its planned business operations, such as risks relating to technology and cybersecurity, as well as reliance on another network or application, if material. The company should disclose material risks relating to the security, such as risks relating to the security’s form, price volatility, the rights of holders, valuation and liquidity, supply and custody. The company should also disclose legal and regulatory risks, such as whether the company’s activities may require it to register with (or be regulated by) certain agencies or regulatory authorities. In addition, the company should address risks relating to an associated network or application, if material.

• Description of Securities. Item 202 of Regulation S-K requires a materially complete description of the company’s securities. In the context of securities in the crypto asset market, companies have provided a description of, among other things: (1) the rights of holders, including if the holders have voting rights; (2) the characteristics of the securities, such as term, maturity, restrictions on transferability, how they can be accessed and whether they can be loaned or pledged; (3) the technical specifications of the securities, including the associated network or application, the technical requirements for holding, accessing and transferring the securities and where the definitive record of ownership is maintained; and (4) the supply of securities, including rules governing the total supply of the securities. The Division notes that if a company’s business involves crypto assets that themselves are not securities, similar disclosures may be relevant for the description of the company’s business.

• Information About Management. Item 401 of Regulation S-K requires disclosure about the company’s directors and executive officers, including persons who perform policy-making functions or similar functions as directors. The Division has observed companies in the crypto asset market include disclosure about third parties who are performing such functions that satisfy the disclosure requirements. For example, certain trusts, such as spot crypto exchange-traded products, have a sponsor with directors and executive officers who perform functions like directors or executive officers of the trust, and therefore, disclosure was provided with respect to the directors or executive officers of the sponsor.

• Exhibits. Item 601 of Regulation S-K requires a company to file as an exhibit any instrument that defines the rights of security holders. The Division has observed companies filing as exhibits the code of smart contracts and/or the network or application when the rights of holders are memorialized in such contracts or otherwise programmed directly into the code of the network or application. These exhibits were then updated in response to subsequent changes in the code.

For more information, see Debevoise Update.

The SEC and DOJ Signal Continued Focus on AI Washing Under Trump Administration

On April 9, 2025, the SEC and the U.S. Attorney’s Office for the Southern District of New York filed parallel actions against Albert Saniger, the former CEO of Nate, alleging that he made materially false and misleading statements to investors about the company’s AI capabilities. This matter is particularly noteworthy as the cases are the first AI-washing enforcement actions brought by the SEC and DOJ under the new Trump administration. These actions demonstrate that the SEC and DOJ intend to continue pursuing both civil and criminal charges against individuals for alleged misstatements or omissions concerning the use of AI—including in the context of private market fundraising.

DOJ’s indictment and the SEC’s civil complaint allege that Saniger raised over $42 million from private market investors by falsely claiming that Nate’s mobile shopping software used AI to complete users’ purchases across a variety of retail platforms. According to the government’s filings, Saniger solicited investments by touting Nate’s purported reliance on AI—including “machine learning” and “neural networks”—to autonomously process transactions, when in fact he knew that virtually all of the purchases were being completed manually by contract workers based in the Philippines, Romania and elsewhere. The majority of the alleged misrepresentations about Nate’s technology platform were made in presentations, marketing materials and emails to venture capital firms for the purpose of raising private capital.

Saniger allegedly went to great lengths to conceal his fraud. Specifically, Nate conducted product demonstrations for investors that made it falsely appear that the software was automatically completing purchases, when in fact, at Saniger’s direction, Nate employees and others manually processed the orders. Saniger also directed employees to prioritize manually processing transactions initiated by investors to avoid suspicion. Moreover, Saniger allegedly instructed Nate engineers to conceal the status of the company’s AI development from other employees.

DOJ’s indictment contains two counts, the first alleging securities fraud under Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and the second alleging wire fraud under 18 U.S.C. Sections 1342 and 1343. The SEC’s complaint also alleges violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and separately alleges violations of Section 17(a) of the Securities Act of 1933, as amended.

In a press release announcing DOJ’s case against Saniger, acting U.S. Attorney for the Southern District of New York Matthew Podolsky suggested that DOJ’s continued focus on AI washing is part of a broader effort by the Trump administration to promote the development and advancement of legitimate AI ventures.

The case against Saniger and acting U.S. Attorney Podolsky’s associated comments suggest that the Trump administration views AI washing as a potentially serious threat to its broader policy goals of promoting the development of innovative AI technology companies and protecting retail investors. This case also makes clear that the SEC and DOJ will continue bringing enforcement actions against private company executives under the federal securities laws.

In this regulatory environment, companies should closely scrutinize all public- and investor-facing materials to ensure that any representations about the use of technology, automation or AI are accurate and substantiated. These considerations apply with equal force to startups and smaller private companies seeking to raise capital outside of the public markets.

For more information, see Debevoise Update.

Surplus Notes as a Source of Capital for P&C Insurers

Property and casualty insurers faced heavy losses in 2024, as the severity and frequency of natural catastrophe events continued to rise. The United States experienced 32 events causing economic losses of over $1 billion, 21 of which resulted in over $1 billion in insured losses. Total losses amounted to approximately $190 billion, of which $108 billion were insured. In January 2025, the Los Angeles-area wildfires alone resulted in insured losses between $25 billion and $40 billion.

Given these circumstances, insurers may need additional financing to strengthen regulatory capital, support operations or pursue strategic opportunities. Surplus notes offer a viable option for raising capital without increasing liabilities on statutory financial statements.

Key Features of Surplus Notes:

• Regulatory Approval. Issuance and payment of surplus notes require state insurance regulatory approval. Payments are approved only if the surplus is deemed sufficient.

• Covenants and Defaults. Surplus notes typically have few, if any, covenants; and the failure to obtain regulatory approval for the payment of interest or principal is not typically a default or event of default.

• Maturity and Optional Redemption. Maturities range from five to 60 years, with optional redemption features common, including tax event optional redemptions at par.

• Offering Document/Marketing. Typically issued in Rule 144A/Regulation S offerings or private placements, often involving a formal marketing process.

• Regulatory Capital. From a regulatory capital perspective, surplus notes are treated as surplus, or equity, and are included as part of the insurance company’s total adjusted capital under risk-based capital calculations for statutory accounting purposes.

• Ratings. AM Best typically rates surplus notes two notches below the issuer credit rating of the operating company for higher rated issuers and more than two levels below for lower rated issuers. Moody’s may, depending upon the issuer, notch surplus notes only one notch below the issuer’s senior debt rating.

• Tax. While treated as equity from a regulatory capital perspective, surplus notes may be treated as debt for tax purposes (despite the requirement of regulatory approval for payments), if they possess a sufficiently debt-like character under case law and IRS guidance.

Ultimately, the most appropriate means of raising additional capital will depend on a range of factors, including the then-current composition of the company’s capital structure, the intended use of proceeds and regulatory and rating agency considerations. Although navigating the technical accounting and regulatory aspects of surplus notes can be complex, surplus notes can be an effective way to raise capital while maintaining the tax efficiency and cost of capital advantages of fixed-income debt instruments.

For more information, see Debevoise Update.

FCA Publishes Update on PISCES

On April 10, 2025, the UK FCA published an update (the “PISCES Update”) on the proposed regulations for PISCES, a new trading venue for private company shares, which the FCA set out in Consultation Paper CP24/29 (the “Proposal”) published on December 17, 2024. The PISCES Update generally would result in less onerous disclosure obligations on companies that would have their shares traded on a PISCES platform, based on feedback that the FCA should more fully align PISCES with private market practice.

Disclosure Requirements

The FCA intends to generally reduce the scope of information that PISCES-traded companies would be required to disclose. The most significant changes include the following:

• Litigation: Companies will not need to disclose information about current, pending or likely litigation or investigations as part of the standardized “core information” required to be disclosed in advance of a PISCES trading event.

• Sustainability: Companies will not be required to disclose information about material sustainability characteristics, including information about material climate‑related risks and opportunities, as part of the “core information.”

• Major shareholders: PISCES operators will have discretion to set a threshold of up to 25% for identifying major shareholders in a PISCES-traded company, as opposed to a 10% threshold as set out in the Proposal. The PISCES Update also notes that the final rules may address situations when a major shareholder cannot be identified.

• Material contracts: Companies will be required to only disclose “an overview” of their material contracts, rather than their “details.” In addition, contracts “in the ordinary course of business” will be excluded from the disclosure requirement.

• Financial information: Companies will only be required to disclose an auditor’s report where financial statements have been audited and where an auditor’s report is available, as opposed to the broad requirement for the disclosure of financial statements and any related audit as set out in the Proposal. To the extent management accounts are disclosed in lieu of financial statements, they must make clear that they have not been prepared on the same basis as disclosed financial statements.

• Forward-looking information: The requirement for companies to disclose forecasts of financial information, as set forth in the Proposal, will not be included in the final rules.

• Insider transactions: Directors’ trading intentions will only need to be correct at the start of a trading period, while major shareholders’ trading intentions will not be required to be disclosed. In addition, the final rules will not require post-trade disclosures on directors’ transactions and major shareholders’ positions.

• Significant changes: The Proposal’s requirement to disclose any “significant change” will be narrowed to only changes relating to the financial position of the company. In addition, the Proposal’s requirement to disclose information regarding acquisitions, disposals and significant related party transactions will not be included in the final rules.

The PISCES Update confirms that the FCA does not intend to mandate a “sweeper” model for additional company disclosures, as it set out as an alternative approach in the Proposal.

The FCA also intends to remove the general requirement in the final form rules for disclosures to be “easily analysable, concise and comprehensive.”

Legitimate Omissions

The FCA proposes that it will be optional for PISCES operators to implement a requirement for companies to omit “core disclosure” information, so long as the company provides a summary explanation in its disclosures as to why such information was omitted. Under the Proposal, PISCES operators would have been required to implement the “legitimate omissions” framework.

Application of MAR 5

The FCA proposes that the final PISCES rules will not apply certain modified Market Abuse Regulation (“MAR”) provisions, such as the ability for a PISCES operator to temporarily constrain trading if there is a significant share price movement (MAR 5.3A.5R(1)), and the prohibition on a PISCES operator’s ability to remove or suspend from trading any financial instrument in respect of which there has been a breach of its rules, where such a step would be likely to cause significant damage to investors’ interests or the orderly functioning of the PISCES platform (MAR 5.6A.1R). Instead, the FCA will empower PISCES operators to create and monitor their own systems in a manner that takes into account the interests of investors and market integrity and provides for fair and orderly trading. The FCA also proposes to retain the provision requiring a PISCES operator’s fee structure to be transparent, fair and non-discriminatory (MAR 5.3A.11R(1)).

Comment

The PISCES Update reflects further refinement of the proposed PISCES framework and the ongoing efforts of the FCA to strike the appropriate balance between offering an attractive trading venue for shares in companies wishing to stay private and providing investors with sufficient protections. In particular, the PISCES Update eliminates or reduces many of the potentially burdensome disclosure obligations that PISCES-traded companies would have been required to disclose under the Proposal, which is more aligned to current market practice for private companies.

The full final form rules for PISCES are expected to be published in June 2025, after which the PISCES sandbox will be open for applications.

For more information, see Debevoise Update.

SEC Updates C&DIs on Form 10-K Cover Page Check Boxes

On April 11, 2025, the Division issued updates to its C&DIs on Exchange Act Forms. The Division added six C&DIs related to compliance with the check box requirements on the cover page of Form 10-K:

C&DI	Status	Summary of Change
Form 10-K
104.20	Added	A listed issuer must determine if a change to its financial statements is a correction of an error by referring to generally accepted accounting principles. If the financial statements are revised to correct an error, the issuer must mark the check box on the annual report, regardless of whether the restatement is required or not.
104.21	Added	When a “Big R” restatement is reported, the issuer must mark the check box indicating a recovery analysis was required, even if no recovery of compensation is needed. The issuer should also explain why the recovery policy resulted in no recovery.
104.22 104.23	Added	Confirmed the circumstances under which an issuer need not mark the check boxes on the annual report for the current year, even if such report includes the prior year’s restated financial statements. Clarified when an issuer must include Item 402(w)(2) disclosure in its current year proxy or information statement or subsequent annual report, following a “Big R” restatement.
104.24	Added	If a restatement is initially reported in a form without a check box requirement, the issuer must mark the check box in the next annual report where the restated period is presented.
104.25	Added	Clarified that restatements to interim financials only will not require an issuer to check the box in the next annual report, but the issuer must include or incorporate by reference Item 402(w) disclosures in the annual report.

SEC Updates C&DIs on Exchange Act Rules 10b5-1 and 12h-3

On April 11, 2025, the Division added a C&DI related to Rule 12h-3 of the Exchange Act. Additionally, on April 25, 2025, the Division updated certain C&DIs related to Rule 10b5-1.

C&DI	Status	Summary of Change
Rule 10b5-1
120.01 120.14 120.24 220.02	Updated	Changed the reference from Rule 10b5-1(c) to Rule 10b5-1(c)(1).
120.02	Withdrawn	Withdrew a C&DI related to the modification of Form 144.
120.03 – 120.11	Updated	Specified that the relevant affirmative defense is available only if all other applicable conditions of Rule 10b5-1(c)(1)(ii) are satisfied.
120.12	Updated	Clarified the availability of a defense under Rules 10b5-1(c)(1)(i)(A)(2) and (B)(1) if the written trading plan does not specify the dates when the non-discretionary limit order will be in force.
120.15	Updated	Clarified how a market order transaction would affect the availability of the written trading plan defense for the limit order sales under the written trading plan described in Question 120.11.
120.16	Updated	Clarified how an increase of a non-discretionary limit order would be analyzed for purposes of Rule 10b5-1(c)(1).
120.18	Updated	Clarified when termination of a plan or cancellation of one or more plan transactions affects the availability of the Rule 10b5-1(c) defense for prior plan transactions.
120.19	Withdrawn	Withdrew a C&DI related to the availability of a Rule 10b5-1(c) defense for future plan transactions in the event that one or more plan transactions are cancelled.
120.21	Updated	Indicated the circumstances under which a Rule 10b5-1(c) defense would be available for payroll deduction purchases made under a 401(k) plan pursuant to an employer stock fund.
120.22	Updated	Explained when a Rule 10b5-1(c)(1) defense would be available for fund-switching transactions that result in purchases or sales of employer stock under the 401(k) plan described in Question 120.21.
120.23	Updated	Clarified when fund-switching transactions under the 401(k) plan described in Question 120.21 could be considered “corresponding or hedging transactions” with respect to payroll deduction purchases under the 401(k) plan.
120.32	Added	Clarified that when the counterparty to a self-directed “brokerage window” transaction is an open market participant, the instruction for such transaction must satisfy all conditions of Rule 10b5-1(c)(1).
120.33	Added	Clarified the meaning of “necessary to satisfy tax withholding obligations” for purposes of Rule 10b5-1(c)(1)(ii)(D)(3).
220.01	Withdrawn	Withdrew an interpretive response regarding manipulative and deceptive devices and contrivances.
Rule 12h-3
253.03	Added	Clarified the circumstances under which the SEC would not object to the filing of Form 15 by a de-SPAC target company to suspend its reporting obligations in reliance on Rule 12h-3.

Selected Recent Securities Law Legislation Proposals

A summary of selected recent securities-law related legislation proposed in April 2025 follows.

Proposed Legislation
Name of Bill	Description of Bill	Latest Action
H.R.2689	To amend the Exchange Act to transfer authorities and duties of registered national securities associations to the Securities and Exchange Commission.	House – 04/07/2025 Referred to the House Committee on Financial Services.
S.1356	To amend the Exchange Act to require national securities exchanges to identify issuers that are consolidated variable interest entities, and for other purposes.	Senate – 04/08/2025 Read twice and referred to the Committee on Banking, Housing and Urban Affairs.
S.1357	To amend the Exchange Act to address the issuance of securities by Chinese entities, and for other purposes.	Senate – 04/08/2025 Read twice and referred to the Committee on Banking, Housing and Urban Affairs.
S.1358	To require the SEC to require reporting of sourcing and due diligence activities of companies involving supply chains of products that are imported into the United States that are directly linked to products utilizing forced labor from Xinjiang, China, and for other purposes.	Senate – 04/08/2025 Read twice and referred to the Committee on Banking, Housing and Urban Affairs.
S.1405	To impose requirements on digital exchanges, and for other purposes.	Senate – 04/10/2025 Read twice and referred to the Committee on Banking, Housing and Urban Affairs.

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