On September 26, the Securities and Exchange Commission’s Division of Corporation Finance continued its ongoing efforts to update and revise the Staff guidance in the form of Corporation Finance Interpretations, or CFIs.  The updates address various topics, ranging from Securities Act and Exchange Act rules to interactive data; all changes were technical “clean-up” revisions to remove or update dated guidance, rather than new substantive guidance.

Securities Act Forms
Current Public Information: Question 131.06Updated to correct references to sections of Exchange Act Rule 15c2-11.
Limitation on Amount Sold: Question 133.02Updated references to OTC Bulletin Board to current market names, Global OTC, OTC Link LLC, or OTC Link NQB.
Manner of Sale: Question 134.02Updated references from Exchange Act Rule 11Ac1-4 to Regulation NMS Rule 604.
Notice of Proposed Sale: Question 136.05Removed requirement that Form 144 be submitted to “principal exchange on which the securities are listed.”
Requirements as to Proper Form: Question 198.08 Delayed or Continuous Offering and Sale of Securities: Question 212.22 Consents Required in Special Cases: Question 233.07 Computation of Fees: Question 240.14: Requirements as to Proper Form: Question 598.02        Withdrawn; dated guidance no longer relevant.
Securities Act Forms
F-Series Forms Generally: Revised Question 102.02 Form F-9: Question 108.01 Form F-9: Revised Question 108.02 Form F-10:  Revised Question 109.07Updated to remove references to Form F-9 and/or withdraw Form F-9-specific guidance.
General Instructions I.B.1 to I.B.6 — Transaction Requirements: Questions 216.15-216.18Withdrawn; dated guidance no longer relevant.
Exchange Act Rules
Manipulative and Deceptive Devices and Contrivances: Rule 10b5-1: Question 120.26 Requirements Under Section 10D: Rule 10D-1 Listing standards relating to recovery of erroneously awarded compensation: Question 121H.01 Rule 12b-25: Questions 135.12 and 135.13Withdrawn; dated guidance no longer relevant.
Exchange Act Forms
Form 10-K: Question 104.18 Form 10-K: Question 104.19 Form 40-F: Question 112.02 Form 40-F: Question 112.04 Form 20-F: Question 110.09Withdrawn; dated guidance no longer relevant.  
Interactive Data
Inline XBRL: Question 101.08 Inline XBRL: Question 101.09 Exchange Act Forms: Question 105.07 Regulation S-K: Question 146.14 Regulation S-T: Question 130.03 Regulation S-T: Question 130.09 Rule 406T: Question 131.01Withdrawn; dated guidance no longer relevant.  

Find the complete list of updated CFIs here.

On September 14, 2026, the staff of the US Securities and Exchange Commission’s (“SEC” or “Commission”) Division of Examinations (the “Division”) issued a Risk Alert (the “Risk Alert”) setting out their examination observations of SEC-registered investment advisers’ (“RIAs”) annual compliance reviews, as required by Rule 206(4)-7 (the “Compliance Rule”) under the Investment Advisers Act of 1940 (the “Advisers Act”). The Compliance Rule requires RIAs to, among other things, adopt and implement written compliance policies and procedures (the “Compliance Program”), and review the Compliance Program annually for effectiveness as further described below. The staff’s observations address the timeliness and completeness of those reviews, the consistency of the reviews with the RIAs’ written procedures, whether the reviews evaluated if the RIA’s current Compliance Programs continue to align with firm business practices and risks, proper retention of any documentation used in the reviews for books and records purposes, and the resolution of compliance matters identified during the reviews. The Risk Alert provides a useful indication of the particular areas examiners are likely to probe and underlines the SEC’s stated 2026 exam priority of focusing on the effectiveness of RIAs’ Compliance Programs.

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On September 22, 2026, the Commodity Futures Trading Commission (“CFTC”), through its Division of Market Oversight (“DMO”), issued a staff advisory (the “Staff Advisory”) addressing the listing and trading of event contracts that settle based on whether an individual will say or “mention” certain words, attend or appear at an event, or otherwise interact with another person.  These contracts are referred to collectively as “mention markets.”  Although the Staff Advisory is informational only and does not create new obligations or supersede existing rules, it signals DMO’s view that mention markets are presumed to be readily susceptible to manipulation.

Most event contracts currently listed on designated contract markets (“DCMs”) settle on externally verifiable outcomes such as economic data releases or election results.  By contrast, mention markets turn on the specific conduct of a named person.  DMO identifies several features that create heightened manipulation risks, including the relative ease with which the settlement condition can be caused, prevented, or influenced for personal gain; the possession of material nonpublic information by individuals close to the outcome; and settlement based on conduct in informal or private settings lacking independent verification and substantial public scrutiny.  DMO identifies four factors as particularly relevant to whether a mention market contract satisfies Core Principle 3 under the Commodity Exchange Act and may be listed on a DCM:

  • Independent obligations constraining the controlling individual.  Whether the person whose conduct determines settlement is subject to legal, professional, fiduciary, or organizational obligations that meaningfully deter manipulation.
  • Susceptibility to external pressure.  Whether the outcome can be manipulated through social engineering, inducements, or public pressure campaigns directed at the controlling individual or someone who can influence that person.
  • Independent verification and substantial public scrutiny.  Whether actions that determine settlement are subject to transparent, independent verification and contemporaneous public scrutiny, including an assessment of the materiality of the relevant words or actions in context.
  • Robustness of prophylactic trading rules, surveillance, and controls.  Whether the DCM has implemented measures such as restricted lists, position limits, heightened surveillance around event windows, and monitoring for unusual trading patterns that are reasonably designed to detect and deter manipulation and the misappropriation of nonpublic information.

The Staff Advisory does not categorically prohibit mention markets, and DMO acknowledges that, in limited circumstances, a well-designed contract coupled with robust DCM controls may rebut the presumption that mention markets are readily susceptible to manipulation. DCMs are strongly encouraged to engage with DMO staff early in the design process and to provide thorough, well-supported filings with the CFTC that detail the prophylactic measures in place.  The Staff Advisory is the latest in a series of CFTC actions shaping the prediction market, as discussed in our prior post from June 2026 regarding proposed rulemaking on event contracts and prediction markets.  Read the full Staff Advisory here.

The Securities and Exchange Commission (“SEC”) announced an open meeting to be held on September 30, 2026.  The SEC will consider several matters relating to investment advisers, closed-end funds and business development companies and accredited investors.

The SEC will first consider whether to propose amendments to the rule under the Investment Advisers Act of 1940 that provides an exemption from the statutory prohibition on registered investment advisers receiving compensation based on a share of capital gains in, or capital appreciation of, an advisory client’s account.  The proposed amendments would also include enhanced disclosure requirements relating to performance-based compensation arrangements.

The SEC will also consider whether to propose amendments to the Investment Company Act of 1940 rule that permits regulated closed-end funds to make repurchase offers to shareholders at net asset value at periodic intervals.  The proposed amendments are also expected to expand the ability of regulated closed-end funds and business development companies to issue multiple share classes.

Finally, the SEC will consider whether to designate certain certifications, designations or credentials as qualifying for accredited investor status.

The meeting will be held on September 30 at 10:00 a.m. ET and will be open to the public and webcast on the SEC’s website.  The SEC’s agenda is available here.

On September 21, the Treasury Department and the IRS issued Notice 2026-61, further delaying the full implementation of the withholding rules on dividend equivalent payments. The Notice extends the phase-in of regulations under Section 871(m) of the Code and related provisions until 2029.

We examine the guidance in the Notice and its implications in this Legal Update.

On September 17, 2026, the Securities and Exchange Commission (the “SEC”) issued an order (Release No. 34-106402; File No. 4-927) granting five-year, temporary exemptive relief allowing (1) qualifying tokenized securities venues that provide innovative automated market makers (“AMMs”) and liquidity pools (together referred to as “AMM Liquidity Pools”) to facilitate trading of National Market System (“NMS”) stocks onchain an exemption from the definition of “exchange” under Section 3(a)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and (2) qualifying liquidity providers in an AMM Liquidity Pool that supply liquidity in the form of tokenized NMS stocks an exemption from the definition of “dealer” under Section 3(a)(5) of the Exchange Act.

These exemptions, discussed in detail below, are effective from September 17, 2026 through September 17, 2031, subject to modification as the SEC may determine necessary or appropriate in the public interest and to protect investors.

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Masterclass | September 22, 2026
Learn more here.

Defined outcome products include a range of products designed to provide investors with some level of certainty (a “predictable” outcome if held for the specified period) usually based on a buffer, while providing equity market exposure.  In recent periods, defined outcome ETFs have experienced particularly notable growth.  While a defined outcome may be offered in any number of formats, attention has centered on the buffered ETF and autocallable ETF markets.  With an over 30% growth rate in the last few years, these products may compete with or be complementary to structured notes.  They rely entirely on a basket of derivatives to provide their promised return.

Join our training session at the SRP Americas 2026 conference. Our lawyers will provide an overview of:

  • The range of products being offered and their structures;
  • How these products achieve the intended returns;
  • Basics of taxation of a registered investment company;
  • The tax structuring issues for investors and how these differ when investing in a registered investment company versus a note;
  • SEC registration and disclosure issues for ETFs versus structured notes;
  • Indices designed for these ETFs; and
  • The role of index providers and hedge providers in these ETFs.

On September 17, 2026, the Securities and Exchange Commission (the “Commission” or the “SEC”) issued an exemptive order to be known as the “Innovation Exemption.” This Innovation Exemption grants temporary, conditional exemptive relief under Section 36(a)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for the onchain trading of tokenized National Market System (“NMS”) stock. It is set to expire on September 17, 2031, five years after publication.

The Innovation Exemption represents the Commission’s latest step in its ongoing effort to facilitate the integration of distributed ledger technology into the U.S. capital markets, granting operative exemptive relief that permits onchain trading of registered equity securities. While the exemption is temporary and subject to significant conditions (outlined below), it appears to signal a meaningful step forward in, as SEC Chairman Paul S. Atkins stated, “bring[ing] America’s capital markets into the digital age.”

The Innovation Exemption grants two forms of relief:

  • The TSV Exemption exempts certain trading venues, termed “Tokenized Securities Venues” or “TSVs,”  from the definition of “exchange” under Section 3(a)(1) of the Exchange Act, allowing TSVs to bring together buyers and sellers of Tokenized NMS stock through permissioned automated market makers and liquidity pools (“AMM Liquidity Pools”). A TSV is defined as an organization, association, or group of persons that brings together buyers and sellers of Tokenized NMS Stock by: (1) providing one or more AMM Liquidity Pools for permissioned participants to interact and agree to terms of a trade and (2) setting standards for persons to access trading on such AMM Liquidity Pools.
  • The Covered Firm Exemption exempts certain liquidity providers (referred to as “Covered Firms”) from the definition of “dealer” under Section 3(a)(5) of the Exchange Act when they supply liquidity in the form of Tokenized NMS stock using proprietary capital in an AMM Liquidity Pool.

Notably, the scope of the Innovation Exemption is limited by what qualifies as a tokenized security eligible for trading on a TSV. For purposes of the Innovation Exemption, “Tokenized NMS Stock” means an NMS stock that is (1) a security tokenized by, or on behalf of, the issuer of the underlying NMS stock, or (2) a security tokenized by a third party that is unaffiliated with the issuer of the underlying NMS stock. It does not include securities where a third party issues a crypto asset representing its own security that provides synthetic exposure to an underlying security, such as a tokenized linked security or a tokenized security-based swap. The exclusion of derivative tokenized securities is noteworthy given the recent proliferation of such tokens on offshore platforms, and suggests the Commission is drawing a clear line between tokenization of actual equity interests and the creation of derivative crypto assets that only reference an underlying security.

The exemptions are subject to a number of conditions designed to protect investors and maintain fair and orderly markets, including:

  • Tokenized NMS stock traded on a TSV is subject to limits on the number of symbols and volume traded;
  • A TSV must verify that the Tokenized NMS stock available for trading on the TSV provides holders the same rights and privileges as does traditional NMS stock of an equivalent class;
  • Before making available for trading Tokenized NMS stock that is tokenized by an unaffiliated third party, the TSV must provide written notice and an opportunity to object to the issuer of the underlying NMS stock; and
  • Smart contracts used by a TSV must be auditable, public, and deployed on a public, permissionless distributed ledger.

In addition to the conditions outlined above, market participants considering operating a TSV or providing liquidity as a Covered Firm should note the following operational requirements that must be satisfied before relying on the exemptions:

  • At least 30 calendar days before operating, a TSV must publish a copy of a notice prominently on its publicly available website that includes certain information, and within one business day of publication of the notice, the TSV must provide the Commission written notice that it intends to operate pursuant to the TSV Exemption.
  • A Covered Firm operating pursuant to the Covered Firm Exemption must provide written notice to the Commission of its role as a Covered Firm, and disclose on any public-facing website, if applicable, certain information.

We are closely monitoring developments related to the Innovation Exemption, including the public comment process, and will be publishing a client alert with our detailed analysis in the coming days.

Link to the Fact Sheet: https://www.sec.gov/files/34-106402-fact-sheet.pdf

Link to the Order: https://www.sec.gov/files/rules/exorders/2026/34-106402.pdf

On September 8, 2026, the staff (the “Staff”) of the Division of Corporation Finance of the Securities and Exchange Commission (the “SEC”) announced that the SEC is expanding its nonpublic draft registration statement review accommodations to issuers of asset-backed securities (“ABS Issuers”) that file on Forms SF-1 and SF-3. The new accommodations for ABS Issuers:

  • permit the submission of draft initial registration statements (including amendments thereto and comment letter responses) on Form SF-1 or Form SF-3 for nonpublic review for ABS Issuers that are filing such form for the first time or for the first time in a particular asset class, or do not have an effective registration statement (for Form SF-3 only); and
  • permit the submission of draft initial renewal or repeat registration statements (but not amendments thereto) on Form SF-1 or SF-3 for nonpublic review.

BACKGROUND

In 2012, the Jumpstart Our Business Startups Act (the “JOBS Act”) established the SEC’s confidential review process allowing emerging growth companies (“EGCs”) to submit draft registration statements for initial public offerings (“IPOs”) for confidential, nonpublic Staff review. The confidential process was intended to allow an EGC to defer the public disclosure of certain material or sensitive information until closer to the IPO’s marketing. If the EGC decided not to proceed with the IPO, this confidential information would not be publicly disclosed. Building on the success of the JOBS Act provisions, in 2017, the Staff extended to all issuers the ability to submit confidentially (i) draft registration statements under the Securities Act of 1933, as amended, (ii) IPOs under Section 12(b) of the Exchange Act of 1934, as amended (the “Exchange Act’), and (iii) most securities offerings made within the first 12 months of an issuer becoming an SEC-reporting company.

In March 2025, the Staff expanded availability of the confidential review process to the initial registration statements of any class of securities registered under the Exchange Act as well as to special purpose acquisition companies in connection with business combination transactions under certain circumstances.

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On September 3, 2026, the US Securities and Exchange Commission (“SEC” or the “Commission”) proposed the rescission of Rule 206(4)-5 under the Investment Advisers Act of 1940 (the “Advisers Act”), widely known as the “pay-to-play” rule. The SEC will solicit comments on the proposal for 60 days following publication in the Federal Register.

Rule 206(4)-5, adopted in 2010, generally makes it unlawful for an investment adviser to receive compensation for providing investment advisory services to a state or local government entity for two years after the adviser or any of its “covered associates” makes a political contribution to an official with direct or indirect authority to select investment advisers for that entity. The rule also reaches advisers to pooled investment vehicles in which a government entity invests, and applies to contributions to candidates for office as well as to sitting officeholders. The rule provides de minimis exceptions and an adviser may apply to the SEC for an order exempting it from the two-year ban, but the SEC contends in the proposal that the de minimis exceptions are too low, and that the exemptive process has proven too costly and time-consuming for market participants.

In the release proposing the rescission, the SEC takes the view that the rule’s burdens may not be justified by its benefits, and that existing antifraud provisions and other regulatory frameworks are sufficient to address pay-to-play practices. The SEC suggests that permitting investment advisers to address their pay-to-play risks in a principles-based manner consistent with other existing obligations under the Advisers Act would be appropriate. In other words, the SEC believes that other existing requirements of the Advisers Act and its associated rules operate to require investment advisers to address pay-to-play practices, but retain the flexibility to design tailored compliance policies and procedures and codes of ethics in accordance with their own business models and risk profiles, taking a more holistic approach.

Continue reading this Legal Update.