SEC Adopts Final Rules Extending Section 16(a) to Directors and Officers of FPIs

On February 27, 2026, the SEC adopted final amendments to rules and regulations relating to Section 16(a) of the Exchange Act, and Forms 3, 4 and 5 to implement the Holding Foreign Insiders Accountable Act (the “HFIA Act”), which was enacted on December 18, 2025. The SEC’s final rules make conforming changes to the existing rules and forms to reflect the HFIA Act:

• Rule 3a12-3(b) under the Exchange Act has been amended to conform to the HFIA Act: the prior exemption for foreign private issuers (“FPIs”) from Section 16 has been removed and replaced with exemptions from Section 16(b) and Section 16(c) only;
• Rule 16a-2 under the Exchange Act has been amended to exclude 10% beneficial owners of FPIs’ equity securities from Section 16(a) reporting requirements;
• The General Instructions to Form 3 have been amended to include directors and officers of FPIs and exclude beneficial owners who own more than 10% of an FPI’s equity securities from the requirement to file the form; and
• Forms 3, 4 and 5 have been amended to include an optional field for a foreign trading symbol, a postal code and a country code as part of the address of the reporting person.

The HFIA Act and the adopted amendments are intended to bring greater parity between foreign and domestic issuers in the U.S. markets by aligning insider reporting obligations.

Given the technical nature of Section 16(a) filings, directors and officers of FPIs with a class of equity securities registered under Section 12 of the Exchange Act (and any such issuers coordinating filings on their behalf) should be prepared to make the required initial Form 3 filings with the SEC by March 18, 2026, unless otherwise exempted (see below).

For more information, see Debevoise Update.

 

SEC Exempts FPIs from Certain Jurisdictions from Section 16(a) Reporting

On March 5, 2026, the SEC issued an order (the “Order”) exercising its authority to provide an exemption from reporting obligations under Section 16(a) of the Exchange Act for certain directors and officers of FPIs.

The exemptive relief is available (i) where an FPI is incorporated or organized in one of the “qualifying jurisdictions” and subject to the applicable “qualifying regulation” in that jurisdiction and (ii) where an FPI is incorporated or organized in one “qualifying jurisdiction” and subject to the “qualifying regulation” of another “qualifying jurisdiction.” Under the Order, the “qualifying jurisdictions” with respect to an FPI’s country of incorporation or organization are Canada, Chile, the European Economic Area, the Republic of Korea, Switzerland and the United Kingdom because these regimes are substantially similar to Section 16(a) as they require directors and officers (or analogous persons performing policy-making functions) to disclose publicly their beneficial ownership of equity and derivative securities of the FPI and changes to such beneficial ownership.

The exemption is also subject to the following conditions:

• any director or officer, as defined in Section 3(a)(7) of the Exchange Act and Rule 16a-1(f) under the Exchange Act, of an FPI seeking to rely on the exemption must report transactions in the issuer’s securities under the applicable “qualifying regulation”; and
• any report filed under the “qualifying regulation” must be made available in English to the general public within two business days of its public posting. If an English version of the report cannot be filed through the applicable regulator’s or listing venue’s online database, the report may instead be made publicly available on the issuer’s website.

The SEC stated that the first condition is intended to ensure that any director or officer who is not subject to the applicable foreign reporting regime will be required to file Section 16(a) reports. As a result, certain officers of FPIs, such as chief accounting officers, that are not subject to reporting obligations under a qualifying regulation may be required to make filings under Section 16(a), notwithstanding that other officers and directors of the same issuer are exempt.

For FPIs that do not fall within the Order, and for any directors or officers of otherwise exempt FPIs that do not satisfy the additional conditions of the exemption, the initial Form 3 filings are due by March 18, 2026, and Form 4 filings are generally due within two business days of a reportable transaction thereafter.

On February 12, 2026, Debevoise hosted a webinar on the topic of “Foreign Private Issuers and Section 16(a): What Issuers and Insiders Need to Know.” A link to the recording is at: https://event.on24.com/wcc/r/5228757/F627FDCC7EDC732A758014E1C52D360B.

For more information, see Debevoise Update.

 

Ninth Circuit Decision on Risk Factors Not Protected by PSLRA’s Safe Habor for Forward-Looking Statements

On February 4, 2026, the United States Court of Appeals for the Ninth Circuit reversed in part the district court decision, Construction Laborers Pension Trust v. Funko, Inc., holding that certain risk factor disclosures concerning problems that “could” occur were not “forward-looking statements” protected by the safe harbor provision of the Private Securities Litigation Reform Act.

The plaintiff-shareholders argued that certain of Funko, Inc.’s (“Funko”) risk disclosures stating that the company must “avoid accumulating excess inventory” and that the failure of their information systems to perform could disrupt their business was misleading and concealed that Funko had already failed to manage its inventory and that its business was already adversely affected.

The court explained that risk disclosures in an SEC filing can give rise to liability under the Exchange Act when they warn that risks “could occur when, in fact, those risks had already materialized.” When a company makes a statement about a risk that could hurt the business in the future, the implication is that the circumstances posing the risk have not yet occurred. When plaintiff-shareholders plausibly allege that the risks had already materialized, such statements may mislead investors to believe that the present state of affairs is different from what is actually occurring when plaintiff-shareholders plausibly allege that the risks had already materialized.

The decision is a useful reminder that issuers must continue to scrutinize their risk factors to ensure they do not frame risks as hypothetical when they have already occurred.

 

SEC Releases Material Updates to Its Enforcement Manual

On February 24, 2026, the SEC’s Division of Enforcement (the “Division”) released the first material updates to its Enforcement Manual (the “Manual”) since 2017.

The updates reflect the priorities of the current administration, including requiring enforcement staff to make certain “probative” evidence available in the Wells process and reflecting the SEC’s policy of simultaneously considering settlement proposals and waiver requests.

Dual Approval Requirement for Wells Notices

Whereas previously any senior officer could authorize a Wells notice, the Manual now requires the approval of a senior officer (Associate Director or Unit Chief), as well as the approval of the Office of the Director. Depending on the process the Front Office implements for staff to request permission to issue a Wells notice, it is possible that this requirement may result in the most senior leadership of the Division being read into a case sooner and more deeply than in the past.

Transparency and Access to the Investigative File

Once a Wells notice is issued, the Manual also instructs that “[a]s part of the Wells process, staff should inform the recipient of the Wells notice of the salient, probative evidence that the staff has gathered or received, which the staff may have or should have reason to believe may not be known to the recipient (subject to confidentiality or other constraints for sharing information).” Whereas the Manual previously gave the staff discretion to share information, it now instructs them that they “should make reasonable efforts to allow the recipient of the Wells notice to review relevant portions of the investigative file that are not privileged” and are not subject to confidentiality restrictions.

This is a landmark change to the Wells process that addresses the most serious criticism of the Wells process—i.e., that Wells notice recipients must argue their case without knowledge of the staff’s key evidence.

Guidance on Effective Wells Submissions

The Manual introduces a substantive framework setting out what constitutes an effective Wells submission. The eight specific criteria for an effective Wells submission are:

• accurately reflecting the evidence and precedent;
• focusing on disputed issues;
• acknowledging and engaging with evidence and precedent supporting the staff’s position while highlighting exculpatory material and adverse precedent;
• addressing the legal elements required to establish violations and explaining why the evidence falls short of satisfying those elements;
• raising litigation risks or policy or programmatic concerns that would arise if the staff recommended the charges or sought the relief identified in the Wells notice;
• providing documentary or investigative record-based support for key factual or legal arguments;
• where applicable, addressing the Seaboard cooperation factors; and
• in complex or technical matters, potentially including an expert report

Mandatory Rejection of Wells Submissions Containing Settlement Offers

Under the Manual, the staff “will” reject a Wells submission that contains or discusses a settlement offer, and settlement offers may not be combined with or included in Wells submissions and instead must be made in a separate document. The Manual adds that rejected Wells submissions generally will not be provided to the SEC, but the basis for rejection will be communicated to the SEC.

Post-Wells Notice Meetings—Timing and Senior Leadership Attendance

The Manual introduces two new, concrete requirements regarding post-Wells notice meetings. First, the post-Wells notice meeting should be scheduled within a reasonable time after the recipient makes a Wells submission and in any event no later than four weeks after receipt of the Wells submission. Second, the meeting will include a member of senior leadership at the Associate Director level or above.

Contingent Settlements Are Back

The Manual reflects the SEC’s September 2025 decision to restore its practice of permitting a party to request that the SEC simultaneously consider a settlement offer and any related request to waive automatic disqualifications or collateral consequences resulting from the settlement. The Manual now requires the staff to present for the SEC’s simultaneous consideration both the offer of settlement and the waiver request, along with recommendations from the relevant Division or Divisions. If the SEC accepts the settlement offer but rejects the waiver request, Enforcement and the relevant Division staff will promptly notify the prospective defendant or respondent and will typically request that they decide within five business days whether to move forward with the portion of the settlement offer accepted by the SEC.

This change is favorable to settling parties, as it allows them to have certainty about which automatic disqualifications would apply in the event of a settlement so they can make a decision about how to proceed.

During Fact-Finding: An Enhanced Focus on Preservation, Privilege and Disclosure of Search Protocol

The Manual instructs that document preservation notices should expressly address data that may be located in messaging apps, such as WhatsApp, iMessages or Signal, and/or on personal devices. Although the current SEC has not continued to bring off-channel enforcement actions, this requirement confirms that the staff will be focused on the preservation and collection of relevant evidence, even if it is located outside an entity’s approved communication channels.

In practice, this requirement means that preservation notices to entities may direct them to preserve all relevant entity data, as well as any communications that are in the personal possession of their employees. Entities should ensure that they have the appropriate policies and procedures, including undertakings by employees, to enable them to preserve these records.

For more information, see Debevoise In Depth.

 

Delaware Supreme Court Upholds Constitutionality of Statutory Safe Harbor

On February 27, 2026, the Delaware Supreme Court issued a decision in Rutledge v. Clearway Energy Group, et al., upholding the constitutionality of Sections 1 and 3 of Senate Bill 21 (“SB 21”), which amended Delaware General Corporate Law Section 144 (“Section 144”) to create statutory safe harbors for interested director and officer and controlling stockholder transactions. The decision helps quell the upheaval in Delaware over the past several years regarding the standard of review for conflict transactions and improves clarity for transaction planning going forward.

A stockholder plaintiff challenged SB 21’s constitutionality, arguing that SB 21 (i) improperly divested the Court of Chancery of its equitable jurisdiction by removing the court’s ability to award equitable relief and damages when the safe harbor is met; and (ii) stripped him of his property right in his breach of fiduciary duty claim that had vested prior to the amendments.

The Court rejected arguments that SB 21 divested the Court of Chancery of its equitable jurisdiction, noting that breach of fiduciary claims (including the plaintiff’s) remain within the undisputed jurisdiction of the Court of Chancery, albeit subject to a different review framework. The Court likened the amended Section 144 to other exercises of permissible legislative power, such as Section 102(b)(7) of the DGCL, which allows corporate charters to exculpate directors and officers from personal liability for breaches of the duty of care, as well as other DGCL provisions, such as Section 253, which authorizes a streamlined process for short-form mergers. The Court also upheld SB 21’s retroactivity provisions, explaining that while laws can apply retroactively “only where the General Assembly has made its intent plain and unambiguous,” the General Assembly here had done so and that nothing about the provision offended due process because SB 21 was reasonably related to a permissible legislative objective. The Court rejected the plaintiff’s argument that SB 21 extinguished his right of action, explaining that his fiduciary duty arguments could still be made, albeit reviewed under a different standard.

While not strictly at issue in this case, the Court also explained how SB 21 “redirects the . . . judicial development of the concept of ‘control’ by defining the term ‘controlling stockholder.’” While the amended Section 144’s statutory controller definition was welcomed by many as providing much-needed clarity, some have argued that Section 144(e)’s definition of “controller” applied only to transactions that satisfied the safe harbor, leaving the common law concept of transaction-specific control otherwise intact. The Court’s language here—while not definitive—did not suggest any such limitation and suggests that it might view the statutory definition of controller as comprehensively displacing prior case law.

For more information, see Debevoise Debrief.

 

SEC Policy Developments: FAQs on Names Rule and Proposed Amendments to Form N-PORT

On February 18, 2026, the SEC and its staff announced two significant policy developments affecting registered funds, their boards and sponsors of registered funds. First, the staff of the SEC’s Division of Investment Management (“IM”) released new FAQ responses related to the SEC’s recent adoption of amendments to Rule 35d-1 under the Investment Company Act of 1940 (“1940 Act”) (“Names Rule”). Second, the SEC announced that it is proposing amendments to Form N-PORT reporting requirements (the “Proposed Rule”).

Names Rule FAQs. Section 35(d) of the 1940 Act (as does Section 59 of the 1940 Act for business development companies) makes it unlawful for any registered investment company to adopt as part of its name or title any word or words that the SEC finds are materially deceptive or misleading. The Names Rule requires a fund whose name suggests a focus in a particular type of investment, or in investments in a particular industry or geographic focus, to adopt a policy to invest at least 80% of the value of its assets in the type of investment, or in investments in the industry, country or geographic region, suggested by its name (an “80% investment policy”). In 2025, SEC adopted amendments to the Names Rule that expanded the 80% investment policy requirement to include any fund name with terms suggesting that the fund focuses on investments that have, or investments whose issuers have, particular characteristics. This led to some confusion among fund sponsors as to whether their funds were within the scope of the amended rule and, if so, what actions must be taken to bring themselves into compliance with the Names Rule.

The SEC’s latest FAQ responses provide interpretive clarity on the scope and application of the amended Names Rule.

In one FAQ response, the IM staff clarified its view that while “growth” and “value” generally indicate that the fund focuses its investments in securities that exhibit growth or value characteristics (and therefore would require a fund to adopt an 80% investment policy under the Names Rule), there are certain limited cases where the terms “growth” or “value” can be paired with other terms in ways that “change the overall context and communicate something different about the overall characteristics of a fund’s portfolio” such that an 80% investment policy is not needed. The staff noted that the use of a modifying term along with “growth” or “value,” or the use of the term “income” paired with “growth,” were examples of such limited cases.

IM staff also clarified that fund names including the term “merger” or “merger arbitrage” are not required to adopt an 80% policy. The IM staff noted that those terms suggest an investment technique or a portfolio-wide result to be achieved, rather than a specific investment focus.

Further, the FAQs state that for purposes of measuring a fund’s compliance with its 80% policy, a fund may count as qualifying assets the value of any cash and cash equivalents that cover unfunded commitments to invest in equity of underlying portfolio funds that are or will be included in the fund’s 80% basket and that the fund reasonably expects to be called in the future. A fund should include explanatory disclosure regarding its intention to utilize this approach in its registration statement.

Additionally, under the Names Rule, an 80% investment policy generally may be either fundamental (meaning it could only be changed upon shareholder approval) or non-fundamental (meaning it may be changed upon 60 days’ notice to shareholders), but certain categories of funds are specifically required to adopt a fundamental 80% investment policy. The FAQs explain that a fund would not be required to provide a 60-day notice to shareholders of non-material changes to an existing non-fundamental 80% investment policy if those changes are being made solely for the purpose of complying with the amended rule or to make the policy more stringent consistent with the fund’s current strategy made in light of the name’s treatment under the amended rule. Thus, changes that do not materially alter a fund’s investment focus should not require a 60 days’ notice.

Proposed Amendments to N-PORT. Form N-PORT is required to be filed by most funds registered under the 1940 Act and requires disclosure of their portfolio holdings and related information. The Proposed Rule is primarily intended to dial back some of the new requirements introduced by amendments to Form N-PORT adopted by the SEC on August 28, 2024 (the “August 2024 Amendments”) and comes in response to a presidential directive to review rules that were not yet effective.

Specifically, the Proposed Rule proposes to:

• provide an additional 15 days to file the monthly reports (providing funds up to 45 days to report after the end of the relevant month);
• reduce the publication of reports from monthly to quarterly (restoring the quarterly publication frequency that had been in place for two decades). Funds would be required to disclose portfolio holdings for the third month of each quarter with a 60-day delay; and
• modify the information reported on Form N-PORT by, among other things, narrowing the scope of information reported about portfolio level risk metrics and returns, removing “Names Rule” reporting items and requiring additional disclosure about net assets and shareholder flows separately for ETF share classes.

Together with the Proposed Rule, the SEC separately extended the compliance dates for those Form N-PORT reporting requirements related to the “Names Rule” required by the August 2024 Amendments. The new compliance dates are:

• Nov. 17, 2027, for fund groups with net assets of $10 billion or more; and
• May 18, 2028, for fund groups with less than $10 billion in net assets as of the end of their most recent fiscal year.

For more information, see Debevoise Update.

 

No-Action Relief on Preliminary Proxy Filings for Ontario Matters

On February 27, 2026, the SEC’s Division of Corporation Finance granted RB Global Inc.’s (“RB”) request for no-action relief from Exchange Act Rule 14a-6(a). The staff stated in the no-action letter that it will not object if RB files a definitive proxy statement for annual shareholder meetings without filing a preliminary proxy statement where the only proposals to be voted upon are items enumerated in Rule 14a-6(a) and the customary and routine matters required under the Ontario Business Corporations Act. The staff also stated that other issuers organized under Ontario law may rely on the letter with respect to similar proposals.

For more details, see the No-Action Letter.

 

Selected Recent Securities Law Legislation Proposals

Name of Bill	Description of Bill	Latest Action
H.R.7513	To require the global systemically important bank holding companies to provide annual reports to the Board of Governors of the Federal Reserve System, and for other purposes.	House – 02/11/2026 Referred to the House Committee on Financial Services.
S.3880	To amend the Investment Advisers Act to address the exemption of, and reporting by, certain private fund advisers, and for other purposes.	Senate – 02/12/2026 Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
S.3831	To amend the Exchange Act to require issuers with a multi-class stock structure to make certain disclosures in any proxy or consent solicitation material, and for other purposes.	Senate – 02/11/2026 Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
S.3935	To amend the Exchange Act to clarify the composition of the membership of the Municipal Securities Rulemaking Board, and for other purposes.	Senate – 02/26/2026 Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
S.3907	To amend the GENIUS Act to require foreign payment stablecoin issuers to undergo an annual audit similar to United States payment stablecoin issuers, and for other purposes.	Senate – 02/24/2026 Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
H.R.7732	To amend section 1960(a) of title 18, United States Code.	House – 02/26/2026 Referred to the House Committee on the Judiciary.

 

This publication is for general information purposes only. It is not intended to provide, nor is it to be used as, a substitute for legal advice. In some jurisdictions it may be considered attorney advertising.