Regulatory Playbook

Trending Issues

DORA’s First Year of Major Incident Reporting: Six Key Takeaways From the ESAs’ 2025 Report
06.26.2026

On June 3, 2026, the European Supervisory Authorities (the EBA, EIOPA and ESMA, collectively, the ESAs) published their inaugural joint report on major ICT-related incidents under Article 22 of the Digital Operational Resilience Act (DORA). The report covers major incidents reported across the EU financial sector in 2025 by financial entities subject to DORA, including credit institutions, payment institutions, insurance undertakings, investment firms and other regulated entities. The report provides an anonymized and aggregated overview of 3,383 major incidents, offering the first comprehensive, cross-sectoral picture of how the industry is faring under DORA’s new operational resilience framework. For financial entities and their ICT third-party service providers (ICT Providers), the report carries several important messages about how the ESAs are approaching operational resilience—and where they expect continued improvement.

Back Door Man: New York City UBT Audit Play Is Subterfuge for Carried Interest Tax
06.24.2026

Howlin’ Wolf’s blues classic, “Back Door Man,” tells the story of a paramour who sneaks out the back of his married girlfriend’s home to avoid being caught by her cuckolded husband. Recent news reports suggest that New York City is acting no better than this clandestine philanderer in its audits of private funds operating from NYC offices. Specifically, it is being reported that the City is using a back door to getting more income subject to the NYC unincorporated business tax (UBT) by challenging the allocation of private fund operating expenses to management companies. The theory is subtle, but the dollars may not be. For fund managers, this is not just a fight over bookkeeping. It is a fight over the line between taxable services income and non-taxable investment profits.

Virginia Non-Compete Restrictions Take Effect July 1
06.23.2026

Virginia has further expanded its restrictions on post-employment non-compete agreements. In addition to the existing categorical ban on the use of non-competes with “low-wage employees,” the new legislation, which was signed into law by Governor Abigail Spanberger on April 13, 2026, creates a new condition on entering into non-compete agreements with all other employees.

Department of Commerce Opens First Proposal Round Under American AI Exports Program
06.18.2026

On April 1, 2026, the Department of Commerce (Commerce) announced the first Call for Proposals under the American AI Exports Program. The Program is intended to support the export of full-stack AI technology packages to allied and partner countries, by inviting industry-led consortia to submit proposals for export packages for designation under the AI Exports Program. Designated packages may receive priority government advocacy for export promotion and export licensing review, and referrals to various U.S. Government agencies including the Export-Import Bank of the United States (EXIM), which launched its ExportAI initiative on May 21, 2026.

SBA Proposes Major Overhaul of 8(a) Program’s Social Disadvantage Standard
06.17.2026

On June 11, 2026, the Small Business Administration (SBA) issued a proposed rule that would significantly change how individuals establish social disadvantage for purposes of the 8(a) Business Development Program. The 8(a) Program creates contracting preferences for small businesses owned and controlled by “socially and economically disadvantaged” individuals. The Small Business Act defines socially disadvantaged individuals as “those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities.” For decades, SBA regulations provided for two alternative tests under which an individual could establish social disadvantage. First, members of certain designated groups—including Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans and Subcontinent Asian Americans—were entitled to a rebuttable presumption of being socially disadvantaged. Second, individuals who were not members of one of the designated groups were permitted to submit personal statements supported by facts and evidence showing that he or she experienced social disadvantage.

For Associations, the New Era of Administrative Law Brings Opportunities and Risks
06.16.2026

Rulemaking in the second Trump administration is proceeding in a drastically different landscape than in the first. Decision after Supreme Court decision has changed long-settled administrative law in fundamental ways. For associations, these changes mean more chances to challenge rules that burden members, but also more risk to rules that create a stable platform for their members’ operations. Associations would be well advised to learn about the decisions and how they’re being applied in courts around the country, and then to arm themselves for the potential fights to come in this new era of administrative law.

DOL Proposes ERISA Safe Harbor for Selection of 401(k) Investment Options
06.12.2026

The U.S. Department of Labor (DOL) recently issued proposed regulations establishing a new prudence safe harbor for fiduciaries selecting designated investment alternatives for participant-directed retirement plans. The proposed rules, issued pursuant to Executive Order 14330, reflect the DOL’s view that litigation risk has discouraged fiduciaries from considering certain investment strategies and seeks to provide greater clarity regarding the fiduciary process required under ERISA.

China’s State Council Issues Landmark Outbound Investment Regulations
06.11.2026

Against a backdrop of significant geopolitical and economic shifts, China’s outbound direct investment has maintained steady growth. ODI reached US$174.4 billion, representing a 7.1% year-on-year increase.

White House Executive Order Signals Federal Focus on Frontier AI Cybersecurity
06.10.2026

On June 2, 2026, the White House issued an executive order (EO) titled Promoting Advanced Artificial Intelligence Innovation and Security, establishing a federal policy framework that prioritizes AI-driven cybersecurity while preserving an innovation-first, voluntary regulatory model. The EO was reportedly edited to respond to industry concerns and is framed as a pro-innovation measure. The EO expressly states that it does not create a mandatory licensing, preclearance or permitting requirement for the development, release or distribution of AI models. At the same time, it strengthens cybersecurity across federal and critical infrastructure systems using AI-enabled tools, seeks to protect intellectual property and technology from adversarial exploitation, and directs closer coordination with the private sector on AI security risks and mitigation strategies. Notably, the federal government is increasingly treating advanced AI capabilities as a cybersecurity and national security issue, particularly where frontier models may be capable of discovering, validating or exploiting software vulnerabilities at scale.

Walking and Falling at the Same Time: New U.S. Tax Court Decision Elevates Need for Cryptocurrency Tax Bill
06.09.2026

On June 4, 2026, the Tax Court released its memorandum decision in Paschall v. Comm’r. The decision is a classic example of reaching the right result for all the wrong reasons. The decision required the taxpayers to treat Cardano tokens that a digital wallet provider, eToro, transferred to them for renting already-held tokens in proof-of-stake transactions as immediately taxable income. The issue was no more complicated than finding that the taxpayers received rent in exchange for leasing their digital assets. The decision, however, mistakenly treats the taxpayers as though they acted as blockchain validators and then stretches the application of income recognition principles to find that the compensation that they received should be taxable upon receipt. The mistakes made by the court are highlighted by proposed legislation scheduled for consideration by the House Ways and Means Committee on June 9, 2026 (“Digital PARITY Act”). That bill would allow validators to defer tax on tokens awarded in validation transactions beginning in 2026. The definition of validators in the proposed legislation would not include taxpayers who lend tokens to actual validators. Both developments, and their interaction, are examined below.

House Homeland Security Hearing Highlights Growing Cybersecurity and Critical Infrastructure Risks of AI
06.09.2026

On June 4, 2026, the House Homeland Security Subcommittee on Cybersecurity and Infrastructure Protection held a hearing on “The AI Security Landscape: How Frontier Models, Agentic AI, and AI Coding Tools Are Reshaping Cybersecurity and Critical Infrastructure Resilience.” The hearing focused on how advanced AI systems are changing both sides of the cybersecurity equation: giving defenders new tools to identify, prioritize and remediate vulnerabilities, while also giving adversaries the ability to scale vulnerability discovery, exploitation, reconnaissance and malware development.

2026 ICC Arbitration Rules: The Demise of the Terms of Reference and Other Notable Updates
06.03.2026

The 2026 ICC Arbitration Rules (2026 Rules) mark a significant procedural reset for ICC arbitration. The central theme is efficiency, reducing front-end formalities and expanding faster track provisions for disputes that can be resolved on a compressed timetable. The most symbolic change is the end of mandatory Terms of Reference (ToR), long viewed as a defining feature of ICC arbitration. The broader package is ambitious beyond the revisions addressed to the ToR. The Rules also codify procedures for early determination, expand expedited procedures, enhance the availability of emergency relief and strengthen arbitrator disclosure obligations. Together, these changes modernize ICC practice intending to reduce costs while preserving flexibility for complex cases.

Prediction Markets and Insider Trading: Compliance Considerations
06.01.2026

Prediction markets are online platforms that allow users to buy and sell event contracts whose payoffs depend on whether specified real-world events occur. The categories of events are virtually limitless. They include geopolitical developments; regulatory approvals, outcomes or announcements; significant weather events; sporting event-related matters; election results; product launches; earnings-related milestones; and other corporate activity. According to a study by Dune Analytics and Keyrock, prediction markets have grown significantly since 2024. The study notes that “... monthly notional volume has grown from under $100 million to over $13 billion, a 130× increase that places prediction markets among the fastest-scaling financial companies globally.” The study further noted that “Over the same period, total transactions surged from roughly 240,000 to more than 43 million (180×), while monthly active users expanded from approximately 4,000 to over 612,000 (150×).” Some industry analysts reportedly estimate that prediction market trading volume could reach $1 trillion by 2030.

EPA Proposes Major Changes to PFAS Drinking Water Rule
05.29.2026

The U.S. Environmental Protection Agency (EPA) has proposed major amendments to the 2024 National Primary Drinking Water Regulations (NPDWR) for per- and polyfluoroalkyl substances (PFAS) in the form of two proposed rules published on May 20, 2026. The proposals would extend compliance deadlines while preserving enforceable limits for two PFAS compounds, PFOA and PFOS, and rescind drinking water standards for four additional PFAS compounds.

SEC Proposes Sweeping Registered Offering and Public Company Reporting Reforms: Key Takeaways and Practical Considerations
05.28.2026

On May 19, 2026, the U.S. Securities and Exchange Commission (SEC) issued proposed rule and form amendments that, taken together, would significantly recalibrate how public companies access the public capital markets and comply with ongoing reporting obligations. The registered offering proposal is intended to facilitate capital formation in the public capital markets through expanded access to Form S-3, shelf offering eligibility, offering communication and other offering-related flexibilities for eligible issuers, and through the preemption of state securities or “blue sky” registration and qualification requirements for all registered offerings. The reporting proposal is intended to simplify the filer status framework and reduce compliance burdens by expanding scaled disclosure and other accommodations currently available to smaller reporting companies (SRCs) and emerging growth companies (EGCs) to most reporting companies. The SEC expressly recognized that the combined effect of the proposals could make registered offerings less costly for affected issuers and could further increase incentives for companies to go public or remain public.

GAO Holds Commerce’s Non-Enforcement of the AI Diffusion Rule Is a “Rule” Subject to the Congressional Review Act
05.28.2026

On May 12, 2026, the Government Accountability Office (GAO) issued a decision concluding that the Department of Commerce’s May 2025 press release announcing the non-enforcement of the Biden-era Artificial Intelligence Diffusion Rule (the “AI Diffusion Rule”) is itself a “rule” for purposes of the Congressional Review Act (CRA), and therefore the CRA requires federal agencies to submit new rules to both houses of Congress and the Comptroller General of the GAO before the rules can take effect. Congress has the ability to pass a joint resolution of disapproval that, if signed by the President (or enacted over a veto), nullifies the rule and bars the agency from issuing one in “substantially the same form” in the future.

SEC Continues to Pursue Whistleblower Agenda
05.28.2026

On the eve of Memorial Day Weekend, the Securities and Exchange Commission (SEC) announced charges against Foot Locker for violating the Commission’s Whistleblower Protection Rule (Exchange Act Rule 21F-17(a)). The settled enforcement action, which included a $148,000 civil monetary penalty, resulted from Foot Locker improperly requiring departing employees to waive their rights to collect whistleblower awards from the SEC. This matter is notable because the Commission authorized this enforcement action even in the absence of apparent fraud or investor harm, and notwithstanding the company’s remedial measures and cooperation.

QSBS Stacking and Potential Treasury Guidance: Why Good Planning Withstands Scrutiny
05.28.2026

Qualified Small Business Stock, or QSBS, remains one of the most valuable tax incentives available to founders, early employees and startup investors. Under Section 1202, eligible taxpayers may exclude a significant amount of gain from the sale of QSBS. Recent commentary, however, has focused on whether Treasury and the IRS may soon issue guidance addressing “stacking” through multiple trusts.

Indefiniteness Affirmed: Patent Claims and the Danger of “About”
05.22.2026

In a recent precedential opinion, the Federal Circuit affirmed a ruling that patent claims directed to poultry treatment methods were invalid as indefinite because the term “about” failed to inform skilled artisans of the claimed pH range with reasonable certainty. Enviro Tech Chem. Servs., Inc. v. Safe Foods Corp., No. 2024-2160 (Fed. Cir. May 4, 2026).

SEC Proposes Optional Semiannual Reporting for Public Companies: Key Takeaways and Practical Considerations
05.19.2026

On May 5, 2026, the U.S. Securities and Exchange Commission (the “SEC” or the “Commission”) issued a proposed rule and related form amendments that would permit public companies to elect to file semiannual interim reports on a new Form 10-S in lieu of quarterly reports on Form 10-Q. If adopted, the proposal would represent a significant shift in the U.S. periodic reporting framework—one that has required quarterly interim reporting for more than half a century. The election would be available to all reporting companies regardless of filer status, revenues, or market capitalization, and would be made via a checkbox on the company’s Form 10-K. The comment period ends 60 days after publication in the Federal Register.

Widening FOCI: DOD Issues Proposed Rule Expanding FOCI Review and Mitigation to Unclassified Prime and Subcontracts
05.15.2026

On May 7, 2026, the Department of Defense/War (DOD) issued a proposed rule, “Defense Federal Acquisition Regulation Supplement: Mitigating Risks Related to Foreign Ownership, Control, or Influence” (“Proposed Rule”), to implement Section 847 of the National Defense Authorization Act (NDAA) for FY 2020 (Section 847) to mitigate risks related to beneficial ownership or foreign ownership, control or influence (FOCI).

Venezuela Reopens to Foreign Investment: Legal Reforms and Emerging International Dispute Risks
05.15.2026

Venezuela’s investment climate has historically been shaped by policies emphasizing state control over strategic natural resources, including nationalizations and regulatory intervention in the hydrocarbons and mining industries. This approach was prominently reflected in the hydrocarbons sector through the 2006 Hydrocarbons Law, which required foreign investors to restructure holdings into state-controlled joint ventures and accept higher tax and royalty burdens. These measures reduced operational control and altered economic expectations, leading to a series of high-profile disputes, including Venezuela Holdings (Exxon) and others v. Venezuela and ConocoPhillips v. Venezuela. Similar measures in the mining sector altered ownership structures and regulatory conditions, giving rise to significant arbitration claims, including Rusoro Mining LTD v. Venezuela and Crystallex International v. Venezuela.