On Tuesday, Mark Uyeda, Acting Chairman of the Securities and Exchange Commission (the “SEC”), issued a statement signaling potential updates to the SEC’s position in the ongoing legal challenges to its climate disclosure rule. As previously reported, the SEC stayed its climate disclosure rule last year pending the outcome of the related consolidated litigation before the Eighth Circuit Court of Appeals.
Disclosure
SEC Lawsuit Against Elon Musk: Late is Late . . . Whether You Report on Schedule 13G or 13D
In an interesting development in the week leading up to the 2025 inauguration of President Donald Trump, the U.S. Securities and Exchange Commission (“SEC”) announced a legal action against Elon Musk. In its complaint filed with the U.S. District Court for the District of Columbia (the “Court”) on January 14, 2025 (the “Complaint”), the SEC alleges Musk failed to timely file a Schedule 13D after acquiring over five percent of the outstanding shares of common stock (the “Shares”) of Twitter, Inc. (the “Company” or “Twitter”). The late filing resulted in a violation of Section 13(d)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 13d-1(a) thereunder, both of which impose strict liability for such reporting failures. The SEC is seeking permanent injunctive relief, disgorgement of any ill-gotten gains, prejudgment interest, and civil penalties.
California Solicits Input On—and Issues Enforcement Update For—Future Climate Reporting
Request for Comments. On December 16, 2024, the California Air Resources Board (“CARB”) issued a request for public feedback and information regarding certain implementing regulations for Senate Bill (“SB”) 253 (the Climate Corporate Data Accountability Act) and SB 261 (the Climate-Related Financial Risk Act). As a reminder, SB 253 requires U.S. companies doing business in California with annual revenues over $1 billion to begin reporting Scope 1 and 2 greenhouse gas (“GHG”) emissions in 2026 and Scope 3 GHG emissions in 2027. SB 261 requires U.S. companies doing business in California with annual revenues over $500 million to biennially report on climate-related risks and their steps to mitigate such risks, with the first report due on or before January 1, 2026. Both SB 253 and SB 261 make CARB responsible for the laws’ enforcement and for adopting certain implementing regulations.
Preparing for California’s Climate Reporting Legislation – Takeaways from Recent Amendments and Early AB 1305 Reporting Trends
Last year, California adopted a trio of laws requiring certain public and private companies to provide climate-related disclosures. As a quick refresher:
- Climate Corporate Data Accountability Act (Senate Bill 253). For U.S. companies doing business in California with annual revenues over $1 billion, Senate Bill (“SB”) 253 requires them to report their greenhouse gas (“GHG”) emissions annually beginning in 2026 (for Scope 1 and 2 GHG emissions) and 2027 (for Scope 3 emissions).
- Greenhouse Gases: Climate-related Financial Risk (Senate Bill 261). For U.S. companies doing business in California with annual revenues over $500 million, SB 261 effectively requires them to begin biennial reporting in 2025 regarding their “climate-related financial risks” and adopted measures to reduce or adapt to them.
- Voluntary Carbon Market Disclosures (Assembly Bill 1305). For companies that make certain environmental claims, adopt particular environmental goals, or purchase, use, market, or sell voluntary carbon offsets in California, Assembly Bill (“AB”) 1305 requires annual website disclosure providing support for those claims, goals, or offsets.
Early Insights from the Insider Trading Policies Filed by S&P 500 Companies under the SEC’s New Exhibit Requirement
I. Introduction
For fiscal years beginning on or after April 1, 2023, domestic public companies are required to disclose whether they have adopted insider trading policies and procedures governing the purchase, sale, and/or other dispositions of their securities by their directors, officers and employees, or the companies themselves, and if so to file those policies and procedures as an exhibit to their annual reports on Form 10-K.[1] While calendar year companies must comply with these requirements in their Form 10-K for, or proxy statement following, the fiscal year ending December 31, 2024, 49 S&P 500 companies had addressed these requirements in filings as of June 30, 2024.[2]
Important Reminder to 13F Filers – New Vote Reporting Disclosures Required on Form N-PX (due August 31, 2024)
As a quick reminder, all institutional investment managers filing 13F reports under the Exchange Act (“13F Filers") are subject to a new requirement this year to file a Form N-PX by August 31, 2024. Form N-PX includes disclosures regarding certain executive compensation-related proposals described below.
Preparing for CDP’s New Sustainability Reporting Platform
Earlier this month, CDP (formerly known as the Carbon Disclosure Project) announced the launch of a new environmental disclosure platform. CDP is a non-profit that scores and assesses participating companies and cities, states, and regions on climate, deforestation, and water security topics. According to CDP, over 23,000 companies (representing two-thirds of global market capitalization) disclosed through CDP in 2023.
Division of Corporation Finance Issues Interpretive Guidance on the SEC’s Cybersecurity Incident Reporting Requirements
As discussed in our previous client alert, on December 18, 2023, new rules went into effect requiring companies to report material cybersecurity incidents on Form 8-K within four business days of the company’s determination that the cybersecurity incident is material. In the last several weeks the staff of the Division of Corporation Finance (the “Staff") of the Securities and Exchange Commission (the “SEC") has provided guidance regarding incident reporting in the form of a May 21 statement and a June 20 announcement from the Division of Corporation Finance Director Erik Gerding and, most recently, more formal Compliance and Disclosure Interpretations (“C&DIs") on June 24.
Eighth Circuit Establishes Briefing Schedule for SEC Climate Disclosure Rules Litigation
On May 20, 2024, the U.S. Court of Appeals for the Eighth Circuit issued an order establishing the briefing schedule for the consolidated litigation challenging the Securities and Exchange Commission’s (“SEC") final climate disclosure rules.
Reminder For Resource Extraction Issuers: Form SD Due September 2024
As previously reported on our Securities Regulation and Corporate Governance Monitor on December 16, 2020 (available here), the Securities and Exchange Commission (the “SEC") adopted the final rule (available here) requiring additional disclosures by public companies that engage in the commercial development of oil, natural gas or minerals. Under the final rule, domestic or foreign “resource extraction issuers" are required to annually disclose information about certain payments made to foreign governments or the U.S. federal government on Form SD.