Public Companies Quarterly Update (Q2 2025)

Welcome to Saul Ewing's Public Companies Quarterly Update series. Our intent is to, on a quarterly basis, highlight important legal developments of which we think public companies should be aware. This edition is related to developments during the second quarter of 2025.

What You Need to Know: 

• The Securities and Exchange Commission ("SEC") and the Department of Justice ("DOJ") continue to prioritize insider trading actions involving corporate officers and directors and others with access to sensitive information about a company.
• Despite the SEC's withdrawal from defending challenges to its 2024 climate change disclosure rule, a group of eighteen states and the District of Columbia have intervened as respondents and the U.S. Court of Appeals for the Eighth Circuit has directed the SEC to submit a status report advising whether it intends to review or reconsider the rule and whether the SEC would adhere to the rule if the petitions for review are denied.
• The SEC issued a concept release to solicit public comments on the definition of foreign private issuer ("FPI") and whether all eligible FPIs should continue to receive current regulatory accommodations or if amendments to the rules are in order in light of evolving market realities and issuer profiles.
• Special‑purpose acquisition companies ("SPACs") are on the rebound, with SPAC issuers having raised approximately $11.2 billion in offering proceeds as of June 2025, however, there have also been a number of developments since the unprecedent surge of SPACs in 2021 that distinguish 2025 SPACs from their predecessors and may lead to a more lasting SPAC market going forward.
• On July 18, 2025, the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the "GENIUS Act") was signed into law, marking the first U.S. federal legislation to regulate payment stablecoins.
• Texas has enacted legislation, effective September 1, 2025, creating a voluntary, opt-in regime that will permit eligible companies to adopt shareholder proposal thresholds far more stringent than the current federal standard under SEC Rule 14a-8.

Insider Trading is Still a Thing! 

Considering several recent enforcement activities, this is a good time for public company legal departments to remind their officers and directors of the obligation to avoid trading on material nonpublic information ("MNPI"). The SEC and the DOJ continue to prioritize insider trading actions involving corporate officers and directors and others with access to sensitive information about a company. Recent cases include the following:

• In June, Terren Peizer, the former CEO and former Chairman of the Board of Ontrak, Inc. was sentenced to 42 months in prison followed by 36 months of supervised release, fined $5.25 million and ordered to forfeit $12.7 million in ill-gotten gains. Mr. Peizer had been criminally indicted for insider trading based on entering into two 10b5-1 plans authorizing stock sales at times that Mr. Peizer was in possessions of negative MNPI about the loss of a major contract by the company.
• In May, the DOJ indicted Ross Haghighat, a former director of a NASDAQ-listed company, and four individuals who were family or friends of Mr. Haghighat, on charges of insider trading. The indictment alleges that Mr. Haghighat traded in his company's securities and tipped the others to trade in the company's securities at a time that Mr. Haghighat was in possession of MNPI regarding a pending acquisition of his company by another company.
• In March, the SEC filed charges against two foreign nationals, Eamma Safi and Jzhi Ge, for insider trading based on allegations of forming an intricate scheme to obtain MNPI of publicly traded companies and then trade in advance of market making announcements of those companies. 

These three cases articulate three important principles that public companies should include in their insider trading policies, consider best practices, and remind executives and directors about regularly. 

• 10b5-1 plans MUST be set up at a time that the individual does not have any MNPI about the company. The company should also enforce a "cooling off" period between the initiation of the 10b5-1 plan and the first trades to be made under the plan.
• All company officers, directors and employees who are informed about a corporate transaction that constitutes MNPI should be reminded not to trade (or tip others who might trade) while in possession of such MNPI. This warning should be made when the MNPI is first shared with the individual. The company cannot prevent bad actors from making illegal trades, but it can be sure that every individual receiving MNPI is well-informed of their obligations.
• Companies need to hold MNPI closely and all officers, directors and individuals should be reminded that would-be criminals are always developing and utilizing new techniques to obtain MNPI. All company personnel should be wary of inquiries and mindful of the company's information system security mechanisms.

We suggest general counsels remind their leadership teams regularly that trading (or tipping others who trade) while in possession of MNPI is prohibited and could lead to severe civil and criminal consequences, as well as possible termination from the company. These policies should also be reinforced with all company personnel who may obtain MNPI about the company from time to time. 

SEC Withdraws Defense of Climate Disclosure Rule Amid Political and Legal Challenges

Previously, on March 6, 2024, the SEC adopted a landmark climate disclosure rule requiring companies to disclose certain material climate-related risks and information in their public filings and financial statements, including the impact of severe weather events and other natural conditions. 

The final rule, long anticipated and significantly revised from earlier proposals, aimed to enhance and standardize climate-related disclosures for investors by requiring companies to disclose, among other things:

• climate-related risks that have had or are reasonably likely to have a material impact on business strategy, results of operations, or financial condition;
• governance and oversight of climate-related risks;
• relevant risk management processes;
• information related to severe weather events and natural conditions in audited financial statements; and
• Scope 1 and Scope 2 greenhouse gas emissions for certain accelerated and large accelerated filers.

Notably, the final rule omitted the proposed requirement to disclose Scope 3 emissions following significant pushback from industry participants.

The rule was immediately subject to a number of petitions filed across multiple courts of appeals seeking judicial review. The petitions were consolidated before the U.S. Court of Appeals for the Eighth Circuit (the "Eighth Circuit") in State of Iowa v. Securities and Exchange Commission, 24-cv-1522 (8th Cir. Mar. 27, 2025) and, on April 4, 2024, the SEC voluntarily issued an order staying implementation of the rule pending completion of the litigation.

However, in a significant reversal of course, a little over a year later, on March 27, 2025, the SEC voted to withdraw its defense of the rule entirely. The decision was made under the leadership of then Acting Chairman Mark T. Uyeda, who characterized the rule as "costly and unnecessarily intrusive," and reiterated prior skepticism regarding the SEC's statutory authority to adopt such a rule, as well as concerns over its cost-benefit justification. The sudden reversal in position seems to reflect a broader shift in the SEC's overall posture towards environmental, social and governance-related regulation under the second Trump administration.

Despite the SEC's withdrawal, a group of eighteen states and the District of Columbia filed a motion to intervene as respondents (the "Intervenors"), followed by a motion to hold the case in abeyance pending the SEC's determination of whether it would amend or rescind the rule. The Eighth Circuit granted the Intervenors motion and as part of its order directed the SEC to submit a status report advising whether it intended to review or reconsider the rule and whether the SEC would adhere to the rule if the petitions for review are denied.

A Summary of the SEC's Foreign Private Issuer Concept Release

On June 4, 2025, the SEC issued a concept release (the "Concept Release") to solicit public comments on the definition of foreign private issuer ("FPI"). If the release is followed by proposed rule changes, those changes may result in the loss of FPI status for some issuers.

The FPI Framework 

In the Concept Release, the SEC notes that the current framework for FPIs was established in 1935 and the current FPI population differs significantly from the type of issuer that the SEC originally sought to accommodate when setting up the framework. 

Historically, the FPI population largely consisted of issuers incorporated, and with their principal executive offices located, in Canada and the U.K., whose securities were mainly traded in foreign markets and whose robust home-country legal and regulatory systems were viewed as comparable to U.S. standards. By contrast, as of 2023, the top five jurisdictions in which FPIs were incorporated included the Cayman Islands, Israel, Canada, the British Virgin Islands and the U.K., and the top five locations of their principal executive offices included mainland China, Israel, Canada, the U.K. and the Hong Kong Special Administrative Region, and many FPI jurisdictions often lack disclosure and governance frameworks comparable to those of the U.S., the U.K., or Canada.

In the Concept Release, the SEC raised concerns about (i) investor protection risks posed by limited home-country regulation, (ii) competitive disparities for U.S. domestic issuers and FPIs from more highly regulated jurisdictions, and (iii) the fact that many FPIs now list and trade almost exclusively in U.S. markets, raising questions about whether they should continue to be treated as foreign.

The Current FPI Definition

Under current rules (Rule 405 of the Securities Act of 1933, as amended, and Rule 3b-4 of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), an issuer qualifies as an FPI if it is incorporated outside the U.S. and meets either:

• the "shareholder test" (i.e., 50 percent or less of its outstanding voting securities are held by U.S. residents); or
• the "business contacts" test (i.e., more than 50 percent of its outstanding voting securities are held by U.S. residents and it has none of the following contacts with the U.S. (i) a majority of its executive officers or directors are U.S. citizens or residents, (ii) more than 50 percent of its assets are located in the U.S., or (iii) its business is administered principally in the U.S.).

Issuers meeting the definition of FPI receive significant regulatory accommodations, including, without limitation, Exchange Act reporting timeline flexibility, accounting standards flexibility, exemptions from or additional flexibility under U.S. federal securities laws, rules and regulations, certain non-GAAP financial measure flexibility, and blackout trading accommodations.

Requests for Comment

Among other things, the Concept Release is seeking input as to whether all currently eligible FPIs should continue to receive accommodations, whether the FPI definition should be changed, and whether:

• the existing FPI eligibility criteria should be updated;
• an annual foreign trading volume test should be added to assess the foreign and the U.S. trading volume of an issuer;
• a major foreign exchange listing requirement should be added;
• a requirement should be added that FPIs be incorporated or headquartered in a jurisdiction that the SEC determines has a robust regulatory and oversight framework or require that the FPI be subject to securities regulations and oversight without modification or exemptions in their home country;
• a system similar to the current limited mutual recognition system with Canada should be applied; and
• an FPI should have to certify that it is either incorporated or has principal executive offices in, and subject to the oversight of, a signatory authority to the International Organization of Securities Commissions (IOSCO) Multilateral Memorandum of Understanding Concerning Consultation, Cooperation, and the Exchange of Information.

Next Steps

The Concept Release signals potential amendments to the FPI definition and related accommodations, particularly in light of evolving market realities and issuer profiles. Issuers, investors, and stakeholders are encouraged to review the Concept Release, related Fact Sheet, and comments carefully and consider submitting their own comments prior to the September 8, 2025, deadline.

The Fall and Resurgence of SPACs

It looks like special‑purpose acquisition companies ("SPACs") are making a rebound, with Bloomberg reporting that SPAC issuers have raised approximately $11.2 billion in offering proceeds as of June 2025, compared to approximately $1.8 billion as of the same period in 2024, and SEC Chairman Paul Atkins recently confirming that the SEC will reexamine the "rather controversial" SPAC rules issued in 2024 (the "SPAC Rules") and issue new proposals related to initial public offerings ("IPOs") and potentially SPACs as well.

A SPAC is a shell company which consummates an IPO, generally at $10 per unit, and holds the proceeds in trust for purposes of consummating a business‑combination transaction with a target company (a "de‑SPAC") within 18 to 24 months of the IPO. Upon closing of the de-SPAC transaction, the target company remains as the surviving company and begins trading under a new ticker symbol. The SPAC structure can compress the traditional IPO timetable, affords sponsors an opportunity to negotiate valuation privately, and, subject to the disclosure requirements established by the SPAC Rules, business combination targets to include financial projections in public disclosures made in connection with the de-SPAC transaction. These attributes are among those that contributed to an unprecedented surge in SPACs in 2021, which, according to Nasdaq, resulted in 613 SPAC listings, raising a total of $145 billion in proceeds.

Yet that boom also exposed a number of issues, for example, in July 2021 the SEC charged a SPAC, its sponsor, its business combination target, and the target's founder and former CEO, with making misleading claims about the readiness of the target's technology and violating the antifraud provisions of the federal securities laws. This and similar enforcement actions over cursory diligence, optimistic forecasts and misaligned incentives, ultimately contributed to the SEC's adoption of the SPAC Rules in 2024.

However, there have been a number of developments in the SPAC market that can be said to distinguish the 2025 SPACs from their predecessors, notably, sponsors have refined their screening criteria and seem to be courting target companies that increasingly resemble those more suited for a traditional IPO. In addition, the narrowing of the conventional IPO window has made SPACs an increasingly appealing alternative for those companies that might otherwise pursue a traditional IPO. Further, Atkin's stated willingness of the SEC to recalibrate the SPAC Rules has been interpreted by some as a positive sign that the current SEC will be more open to taking a flexible approach to SPACs.

Thus far some of the year's most conspicuous de-SPAC transactions have been related to cryptocurrency. For example, on April 23, 2025, Cantor Equity Partners announced that it entered into a definitive agreement to merge with Twenty One Capital, a bitcoin‑treasury vehicle backed by Tether Investments, S.A. de C.V., (the investment arm of USDT (or United States Dollar Tether)), iFinex Inc. (the operator of crypto exchange Bitfinex), and SoftBank Group Corp., in a combination that valued the enterprise at $3.6 billion on a pro-forma basis at the time of signing, and which, at closing, will create one of the world's largest stable coin issuers. More recently, on June 23, 2025, ProCap BTC, LLC ("ProCap BTC"), a bitcoin-native financial services firm, announced that it entered into a definitive agreement to merge with Columbus Circle Capital Corp. I. The combined company will operate as ProCap Financial, Inc. ("ProCap Financial") and at closing will have up to $1 billion in bitcoin on its balance sheet. In connection with the proposed transaction ProCap BTC issued $516.5 million in preferred equity and ProCap Financial secured commitments for $235 million in senior secured convertible debt, representing the largest initial capitalization for a bitcoin treasury company to date.

Overall, the current resurgence of SPACs does not appear to be replicating the exuberance of earlier market cycles, rather it seems that the confluence of accumulated lessons, a more demanding investor base and tentatively more regulatory flexibility has produced a narrower, more disciplined market. Whether the present window stays open remains to be seen, but the mechanism has clearly regained relevance and, if used thoughtfully, SPACs can once again serve as a bridge between private innovation and public capital.

U.S. Stablecoin Regulation: The GENIUS Act

On July 18, 2025, President Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the "GENIUS Act") into law, marking the first U.S. federal legislation to regulate payment stablecoins—a type of cryptocurrency backed by reliable assets such as fiat currencies or commodities.

This bipartisan measure was first introduced in the Senate on February 4, 2025, and quickly developed bipartisan support, passing on June 17, 2025, with a 68–30 vote. The House of Representatives followed suit on July 17, 2025, passing the bill by a 308–122 vote. The GENIUS Act, aims to establish a framework for consumer protection, financial stability, and the "continued global dominance of the U.S. dollar as the world's reserve currency."

Issuance and Reserve Requirements

The GENIUS Act defines "payment stablecoins" as digital assets used for payments or settlements, redeemable at par for U.S. dollars. Issuers must maintain a 1:1 reserve ratio, backed by liquid assets such as U.S. dollars or short-term Treasury securities. Reserves must be segregated from operational funds and are prohibited from being used for other purposes, such as leverage for borrowing. Issuers are also required to provide monthly public disclosures of reserve compositions. The GENIUS Act prohibits any person from issuing a payment stablecoin in the U.S. unless they are a "permitted payment stablecoin issuer" which is defined as a U.S.-formed entity authorized to issue payment stablecoins under its regulatory framework.

Dual Regulatory Framework

The GENIUS Act establishes a dual regulatory system, allowing issuers to be supervised either by federal regulators, such as the Office of the Comptroller of the Currency (the "OCC"), or state regulators whose frameworks are certified as "substantially similar" to federal standards. This approach aims to balance innovation with oversight. 

The GENIUS Act delineates three primary categories of permitted payment stablecoin issuers, entities formed in the U.S. that are (i) subsidiaries of insured depository institutions, including insured credit unions, and have been approved by their primary federal banking regulator to issue payment stablecoins, (ii) either (a) nonbank entities approved by the OCC to issue payment stablecoins, or (b) uninsured national banks or federal branches chartered by the OCC and approved to issue payment stablecoins, and (iii) chartered under state law and approved by the relevant state regulator to issue payment stablecoins.

Consumer Protection and Marketing Restrictions

Permitted payment stablecoin issuers are prohibited from making misleading claims that their stablecoins are backed by the U.S. government, are federally insured, or are legal tender. The GENIUS Act also mandates that stablecoin holders' claims take precedence over other creditors in the event of an issuer's insolvency. Additionally, issuers are barred from paying interest or yield to holders, though third parties may offer such incentives.

Anti-Money Laundering and Sanctions Compliance

Permitted payment stablecoin issuers are explicitly subjected to the Bank Secrecy Act of 1970, as amended, requiring the implementation of anti-money laundering ("AML") programs, sanctions list verification, and customer identification procedures. This provision aims to enhance the Treasury Department's ability to combat illicit activities involving stablecoins. 

Implementation Timeline

The GENIUS Act's provisions will take effect on the earlier of 18 months after enactment or 120 days following the issuance of final regulations by the primary federal stablecoin regulators. This timeline allows for the development of necessary regulatory frameworks and compliance mechanisms. 

Implications for Issuers

With the enactment of the GENIUS Act, issuers engaged in digital asset activities should closely monitor and prepare for the forthcoming regulatory requirements. Key considerations will include:

• ensuring that any stablecoin-related activities adhere to the 1:1 reserve backing and monthly disclosure mandates;
• determining whether to operate under federal or "substantially similar" state regulatory frameworks;
• implementing policies and procedures to prevent misleading marketing and prioritize stablecoin holders claims in insolvency scenarios; and
• developing robust AML programs and ensuring compliance with sanctions regulations.

New Shareholder Proposal Regime Continues Texas's Challenge of Delaware's Dominance

As part of its continuing strategy to become a compelling alternative to Delaware for corporate domicile, Texas has enacted legislation altering shareholder's rights to propose business at shareholder meetings. Senate Bill 1057 ("SB 1057"), effective September 1, 2025, adds Section 21.373 to the Texas Business Organizations Code ("TBOC"). The new law creates a voluntary, opt-in regime permitting eligible companies to adopt shareholder proposal thresholds far more stringent than the federal standard under SEC Rule 14a-8. This legislation, coupled with initiatives like the new Texas Business Court, escalates the direct challenge to Delaware's long-standing position as the domicile of choice for most public companies in the United States.

The New Opt-In Framework Under TBOC Section 21.373

The SB 1057 regime is not automatic. An eligible "nationally listed corporation" must affirmatively opt in, which can be done by amending its certificate of formation or bylaws. Once elected, a shareholder must satisfy a three-part test in order to have their proposal included as business to be considered at a shareholder meeting:

• Ownership Threshold—the shareholder must either hold voting shares valued at $1 million or constituting three percent of total voting shares.
• Holding Period—the shareholder must have held such shares for at least six months continuously before and through the shareholder meeting.
• Solicitation Requirement—the shareholder must solicit holders of at least 67 percent of the voting power on the proposal.

These rules apply broadly to shareholder proposals, with narrow carve-outs for director nominations and ancillary procedural resolutions. In addition to significantly increasing the ownership thresholds above those established by Rule 14a-8, satisfying the solicitation requirement would impose substantial costs on a shareholder proponent.

Proponents' Rationale and Anticipated Investor Response

Proponents of SB 1057 justify the law as a measure to curb "proxy abuse" by activists with nominal stakes and to reduce associated costs and management distraction. The law intends to ensure proponents have a significant economic interest in the company.

However, some institutional investors and advocacy groups have criticized the law, arguing it disenfranchises most shareholders and risks insulating management from accountability. A board's decision to opt in will likely be viewed as a negative corporate governance action, potentially triggering adverse recommendations from proxy advisory firms like ISS and Glass Lewis against directors who serve on a company's board when it opts into the regime. Companies must weigh the benefit of fewer proposals against the risk of alienating their investor base and damaging their governance profile.

The Inevitable Challenge: Federal Preemption

The greatest uncertainty for SB 1057 is its vulnerability to a legal challenge based on federal preemption. The law's stringent requirements arguably conflict with the federal framework in SEC Rule 14a-8.

However, the Texas legislature designed the statute with the preemption issue in mind. Rule 14a-8(i)(1) allows a company to exclude a proposal if it is "not a proper subject for action by shareholders under the laws of the jurisdiction of the company's organization." Proponents will argue that SB 1057 validly defines these substantive shareholder rights for Texas companies. An opted-in company could therefore argue to the SEC that a proposal failing to meet the Texas thresholds is excludable from its proxy statement under Rule 14a-8(1) as it is not a "proper subject for action by shareholders under the laws of the jurisdiction of the company's organization."

Whether the law has threaded the needle to avoid invalidation as a result of federal preemption will likely be resolved in the courts. Litigation challenging SB 1057 is widely anticipated.

Closing Thoughts

There is much for public companies to keep up with on the compliance, regulatory and enforcement fronts as we move into the second half of the calendar year. This update is not intended as a substitute for individualized legal advice. We encourage you to reach out to any of the authors or your regular attorney contact at Saul Ewing if you have specific questions or would like to discuss how these updates, or any other recent developments, may apply to you, or would like help developing alerts or training programs for your personnel regarding these issues. Please subscribe here to receive our future updates, invitations to events, and other useful information from Saul Ewing.