Securities Regulation Daily Wrap Up, STRATEGIC PERSPECTIVES—Securities Regulation Daily’s top 10 developments for July 2025, (Aug 1, 2025)

By Jay Fishman, J.D.

In case you missed the in-depth coverage in the July issues of Securities Regulation Daily, we have provided a recap of the most notable stories.

What we continue to see under Trump-appointed SEC Chair Paul Atkins is a paring down of securities regulations that were prominent under Gary Gensler. In a court decision, for example, the D.C. Circuit held that proxy advisor recommendations requested by clients are not deemed “solicitations” under Exchange Act Section 14. In another instance, the SEC’s Corporate Finance Division released a statement guiding crypto asset issuers on the disclosures they should make in prospectuses, business descriptions and plans of distribution. What’s notable here is the Division’s emphasizing that this is a guidance statement, not a mandatory rule, and that the investor-disseminated documents need only highlight the most significant points rather than disclosing all the details. Separately, there appears to be a new reluctance by the U.S. Congress to let the states step up their efforts to fight securities fraud, which prompted the North American Securities Administrators Association (NASAA) to write a letter to Congress. In that letter, NASAA explained that its members have taken over 330 enforcement actions against wrongdoers that involve securities offerings, trading platforms, investment advisory services, Ponzi schemes and crypto mining, cautioning Congress that failing to preserve state authority to fight fraud would have “net-negative, significant consequences for Americans throughout the United States.”

However, there have been some surprises: scrapped from the just-passed “Big Beautiful Bill” was a provision that would have granted a 10-year moratorium on states or local authorities adopting or enforcing any artificial intelligence (AI) regulations. NASAA was overjoyed at this news. Separately, CFTC Commissioner Kristin Johnson told her audience at the George Washington University Regulatory Studies Center that while AI can be beneficial in the financial sector, there is deep concern that AI may be used to facilitate fraud, and she called for the Commission to consider introducing “heightened penalties for those who intentionally use AI technologies to engage in fraud, market manipulation, or the “evasion of our regulations.” And even with relaxation of blockchain regulation under Chair Atkins, SEC Commissioner Hester Peirce emphasized in a statement that “while blockchain-based tokenization is new, the process of issuing an instrument representing a security is not,” that “the same legal requirements apply to on- and off-chain versions of these instruments” and distributors of tokenized securities must consider their disclosure obligations. Cryptocurrency has also negatively popped up in Congress. The lead Democrat on the House Financial Services Committee, Maxine Waters, warned that various crypto bills now up for House vote will likely lead to a financial crisis, among other serious issues. She wrote in an MSNBC op ed that “If these bills become law, America will eventually face its first crypto financial crisis.”

Maybe not as newsworthy as cryptocurrency or AI among securities regulators and practitioners—but no less important in today’s world—is cybersecurity, considering the many hackings and malware viruses that have compromised customer data. Digital Directors Network (DDN), a company focused on AI, digital assets, cybersecurity, and systemic risk governance, submitted a petition for rulemaking requesting the SEC to re-propose a cybersecurity rule the agency previously withdrew from consideration. The rule would require public companies to disclose whether one of its board of directors is a cybersecurity expert.

And Environmental, Social, and Governance (ESG) also crept up in July, with Missouri’s Attorney General Andrew Bailey putting investment advisory firms on notice that Missouri “will not tolerate ideological coercion disguised as investment guidance.” Missouri was the first state to include anti-ESG text in its broker-dealer and investment adviser unethical practice rules. Bailey reprimanded proxy advisers for sneaking “far-left DEI and ESG agendas into corporate boardrooms under the guise of impartial investment advice.” Separately, two non-profit organizations, the Alliance for Fair Board Recruitment and the American Alliance for Equal Rights petitioned the SEC for rules prohibiting proxy advisory firms from promoting ESG and DEI recommendations that induce their security holder-clients to vote for those recommendations on corporate ballots. The organizations claim these tactics do not foster company growth and, therefore, do not protect investors, such protection being one of the three pillars of the SEC’s mission.

1. PROXIES

Voting advice is not proxy solicitation

Proxy advisory firms will not have to file their recommendations with the SEC, thanks to an opinion of the D.C. Circuit that affirms vacatur of a portion of a 2020 SEC rule. Under the ordinary dictionary definition, a proxy advisor does not “solicit” anything by providing a requested recommendation, even if the recommendation ultimately influences voting. Furthermore, nothing in Exchange Act Section 14 suggests an intent to reach entities that merely advise others how to vote. See our full coverage.

2. BLOCKCHAIN

SEC’s Division of Corporate Finance provides advice for issuers of crypto asset ETPs

The SEC’s Division of Corporate Finance released a statement July 1, providing its views regarding disclosures for offerings and registration of crypto asset exchange-traded products (ETPs), to help clarify securities law requirements when it comes to crypto assets. The statement addresses disclosures including prospectus summaries, risk factors, information about the asset, the network or platform, calculation of net asset value, custody, and management, noting that “[e]ach issuer should consider its own facts and circumstances when preparing its disclosures.” See our full coverage.

3. AI NEWS

NASAA praises removal of AI enforcement moratorium from H.R. 1

NASAA issued a statement celebrating the Senate’s near-unanimous removal of an AI-related provision from H.R. 1, the One Big Beautiful Bill Act. The provision would have effectively prohibited enforcement of most state laws and regulations on artificial intelligence. NASAA said the Senate has sent a clear message that states should not have to choose between receiving funding for broadband and enforcing AI laws and rules. See our full coverage.

4. CFTC NEWS AND SPEECHES

Commissioner’s speech explores the use of AI in compliance

CFTC Commissioner Kristin N. Johnson offered remarks before the George Washington University Regulatory Studies Center and spoke to how advances in artificial intelligence (AI) might “increase inclusion and customer experiences and democratize access to financial services, improve the accuracy and efficiency of financial services, and potentially reduce transaction costs as well as the costs of compliance.” See our full coverage.

5. BLOCKCHAIN

Tokenized securities are securities, Peirce cautions

SEC Commissioner Hester Peirce issued a statement emphasizing that the legal requirements for securities extend to tokenized securities. Peirce, who heads the agency’s Crypto Task Force, said that blockchain technology is powerful but cannot magically transform the nature of an underlying asset. “Tokenized securities are still securities,” and issuers, distributors and market participants must heed the securities laws, Peirce stressed. See our full coverage.

6. PUBLIC COMPANY REPORTING DISCLOSURE

Cybersecurity firms ask SEC to adopt board-level expertise rule

Digital Directors Network (DDN), a company focused on AI, digital assets, cybersecurity, and systemic risk governance, submitted a petition for rulemaking on behalf of a number of cyber risk firms and related interest groups, asking the Commission to include in future rulemaking a requirement that public companies disclose whether they have a cybersecurity expert on their boards of directors. As a result, the firm wants the agency to reinstate a provision that was dropped from a final regulation on public company cybersecurity disclosures. The group of firms behind the petition also includes Tenable Holdings, Inc., Allegis Cyber Capital, X-Analytics, Cyber Future Foundation, National Technology Security Coalition, HiddenLayer, Pan Asian American Business Council, AI Guardian, and the Information Systems Security Association. See our full coverage.

7. NASAA NEWS AND SPEECHES

Congress urged to consider the crucial role of state securities regulators

NASAA urges members of Congress to consider the “critical role” that state securities regulators play in fighting fraud, market manipulation, and similar abuses in capital markets when they consider any market structure legislation. See our full coverage.

8. BLOCKCHAIN

House Financial Services minority leader Waters urges opposition to crypto bills

Pending crypto bills will “open the floodgates to massive fraud and financial ruin for millions of American families,” said U.S. House Financial Services Committee Ranking Member Maxine Waters (D-Cal) in a July 14 op ed. According to Waters, the CLARITY and GENIUS bills up for House vote this week “replicate the same mess that led to past financial crises,” and create national security risks. See our full coverage.

9. ESG NEWS

Missouri AG chases “hidden ESG and DEI agendas”

The Missouri Attorney General has announced investigations and parallel lawsuits against Glass Lewis and Institutional Shareholder Services (ISS), two foreign-owned advisory firms to “ensure their compliance with lawful demands for information related to their promotion of radical environmental, social, and governance (ESG) and diversity, equity, and inclusion (DEI) agendas.” See our full coverage.

10. ESG NEWS

Equal rights/fair board recruitment agencies petition SEC for anti-ESG/DEI rulemaking

Two non-profit membership associations, the Alliance for Fair Board Recruitment and the American Alliance for Equal Rights, petitioned the SEC for rules prohibiting proxy advisory firms from inducing security holders to vote for the advisers’ race-, ethnicity, and sex-based recommendations. The associations claim these recommendations violate federal securities laws—specifically the Investment Advisers Act of 1940—and also breach an adviser’s fiduciary duty of care and loyalty to its clients under Section 80b-6(4). The associations additionally point to Exchange Act Section 14(a) which states that proxy advisory firms may not seek to induce votes while making proxy voting recommendations based on the race, ethnicity, or sex of director nominees. The associations declare these rules are “necessary or appropriate in the public interest or for the protection of investors.” See our full coverage.

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