Gibson Dunn

Law360 [PDF] spoke with partner David Salant about a recent victory for client Olvin Castillo Chaver, who was arrested on February 13, 2026, during a traffic stop after police found a yellow pill they asserted was cocaine. A team led by Salant won an immigration habeas decision where local police officers’ misconduct towards Chaver was found to be so unlawful that his later custodian, U.S. Immigration and Customs Enforcement (ICE), had to immediately release him.

Salant said that U.S. District Judge Katherine Polk Failla had concerns about the yellow pill — likely medication left behind by an elderly woman to whom Chaver offered rides to buy groceries — which gave him an opening to persuade her to order Chaver’s release. Even though ICE had a valid legal basis to detain his client again by way of a formal removal order, vindicating Chaver’s constitutional rights took precedence over the possibility he could be immediately rearrested — and, it would also allow him a chance to establish credible fears for his safety and fight his removal.

“That was the game plan, was to try to knock out the legal basis for the arrest, leaving only an illegal basis, and therefore he needed to be released,” David said.

The team prevailed by persuading Judge Failla that everything that came after Chaver’s arrest was invalid under the Fourth Amendment, which requires officers to have reasonable suspicion to stop individuals and probable cause to arrest them.

Join our lawyers for a recorded webcast examining the rapidly revolving Most Favored Nation (“MFN”) and drug pricing landscape and its implications for life sciences companies and global dealmaking.

Recent legal and policy developments surrounding MFN pricing, including the contemplated Medicare and Medicaid MFN “demonstration programs”, have introduced significant uncertainty for companies in the pharmaceutical and biotechnology sectors. As policymakers continue to explore mechanisms designed to lower prescription drug costs and establish international reference pricing, companies must consider how these developments may affect global regulatory strategy, asset valuations, commercialization strategies, licensing structures, collaboration agreements, and M&A transactions.

Discussion topics include:

The current status of MFN pricing initiatives and related drug pricing reforms, and what may be on the horizon;
How evolving pricing frameworks may impact global regulatory and commercialization strategy and licensing and collaboration agreements;
Considerations for diligence, valuation, risk allocation, and deal structuring in life sciences M&A transactions;
Practical strategies for navigating uncertainty in an increasingly complex pricing environment.

MCLE CREDIT INFORMATION:

This program has been approved for credit in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 1 credit hour, of which 1 credit hour may be applied toward the areas of professional practice requirement. This course is approved for transitional/non-transitional credit.

Attorneys seeking New York credit must obtain an Affirmation Form prior to watching the archived version of this webcast. Please contact CLE@gibsondunn.com to request the MCLE form.

Gibson, Dunn & Crutcher LLP certifies that this activity has been approved for MCLE credit by the State Bar of California in the amount of 1 hour in the General Category.

California attorneys may claim “self-study” credit for viewing the archived version of this webcast. No certificate of attendance is required for California “self-study” credit.

PANELISTS:

Ryan A. Murr is widely recognized as one of the nation’s leading corporate lawyers in the life sciences industry. Over his career, he has led more than 300 transactions totaling over $65 billion in aggregate value, spanning mergers and acquisitions, capital markets, and royalty-finance transactions, making his practice among the most active in the United States. Ryan has more than 25 years of experience representing public and private life sciences companies and investors in connection with securities offerings and business combination transactions. Ryan serves as principal outside counsel for publicly traded companies and private venture-backed companies, advising management teams and boards of directors on corporate law matters, SEC reporting, corporate governance, and M&A transactions.

Branden C. Berns is a partner in the San Francisco office of Gibson Dunn where he practices in the firm’s Transactional Department. He represents leading life sciences companies and investors on a broad range of complex corporate transactions, including mergers and acquisitions, asset sales, spin-offs, joint ventures, PIPEs, as well as a variety of financing transactions, including initial public offerings, secondary equity offerings and venture and growth equity financings. Branden also serves as principal outside counsel for numerous publicly-traded life sciences companies and advises management and boards of directors on corporate law matters, SEC reporting and corporate governance.

Margaux Hall is a partner in the Washington, D.C. office of Gibson Dunn and a member of the firm’s FDA and Health Care practice. Margaux is a leading lawyer in drug pricing, coverage, reimbursement, market access, and value-based arrangements. She brings to clients a keen understanding of the transformative legal, policy, and changes affecting pricing and access to drugs, vaccines and devices, including in government enforcement and litigation matters.

Karen A. Spindler is a corporate partner in the San Francisco office of Gibson Dunn where her practice focuses on advising life sciences companies and investors on a variety of intellectual property transactions. Karen represents the full spectrum of companies in the life sciences sector, including companies operating in the areas of pharmaceuticals, biologics, diagnostics, and medical devices. Karen has considerable experience structuring complex strategic collaboration and partnering transactions, including co-development, co-commercialization and joint venture arrangements, and advising on manufacturing and supply agreements, services arrangements, and academic licenses.

Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.

The 2026 edition of the Managing IP Handbook recognized Gibson Dunn among the top firms for Patent Disputes, and the leading firms for IP Transactions, Federal Circuit, and Trademark Disputes, in the United States. Additionally, the guide recognized the firm’s California, New York, and Texas practices for their Patent Disputes work and its Washington, D.C. practice for its work in Trademark Disputes.

Based on recommendations from clients and peers, the guide also recognized 15 Gibson Dunn lawyers. Howard Hogan was named a Copyright Star and a Trademark Star. Wayne Barsky, Brian Buroker, Kate Dominguez, Benjamin Hershkowitz, Charlotte Jacobsen, Josh Krevitt, Jane Love, Mark Reiter, Brian Rosenthal, Daniel Thomasch, and Robert Trenchard were all recognized as Patent Stars. In addition, Daniel Angel was named a Transactions Star, Christine Ranney was named a Notable Practitioner and Jennifer Rho was recognized as a Rising Star.

New CFIUS Risk Matrix identifies categories of transactions that pose elevated national security risks and provides sample mitigation measures that the Committee has imposed across a variety of sectors.

On July 29, 2026, the U.S. Department of the Treasury, in its capacity as Chair of the Committee on Foreign Investment in the United States (CFIUS or the Committee) announced the creation of a revamped CFIUS website and issued a CFIUS Risk Matrix (included below), identifying eight categories of transactions that pose elevated national security risks and providing sample mitigation measures that the Committee has imposed across a variety of sectors. Although the contents of the matrix are not novel to CFIUS practitioners, the document’s issuance reflects efforts by the Trump Administration to increase transparency in the CFIUS process, while also foreshadowing potential enforcement efforts and mitigation steps.

What the matrix says:

The matrix describes eight transaction profiles that raise elevated national security risks. Consistent with CFIUS’s standard risk-based analysis, as outlined in 31 C.F.R. § 800.102, the matrix evaluates each profile across three factors, namely:

Threat: Intent and capabilities of a foreign person to take action to impair the national security of the United States;
Vulnerability: Extent to which the nature, location, or relationships of the U.S. business presents susceptibility to impairment of national security; and
Consequences: Potential effects on national security that could reasonably result from the exploitation of the vulnerabilities by the threat actor.

For each transaction profile, the matrix describes how the Committee assesses the risk calculus, explains the purpose of mitigation efforts, and provides an illustrative set of mitigation measures that may be implemented to address the relevant threat, vulnerability, and consequences of the national security risk.

The bigger picture:

The release of the matrix should be considered through the lens of other Trump Administration initiatives, most notably the America First Investment Policy, described in detail in our previous client alert. That policy aims to protect key sectors and encourage investment from allied countries, while screening for non-passive investment from certain “foreign adversaries,” including, in particular, China. As part of an effort to encourage investment from allied countries and minimize the regulatory burden associated with transactions that pose minimal national security risk, Assistant Secretary for Investment Security Chris Pilkerton recently expressed a desire to “increase our focus on customer service” by “demystify[ing] the process and increas[ing] transparency and predictability for filers.”

The matrix, coupled with the Committee’s recently introduced pre-filing consultation website function, provides additional insight into the Committee’s risk assessment process and aligns with CFIUS’s goal of increasing engagement with industry even before a filing is imminent. The matrix’s discussion of common mitigation measures and their purposes similarly reflects the Committee’s efforts to be more strategic in mitigation agreements and to avoid what had been a growing number of potentially complex and open-ended agreements.

There is, however, also a warning inherent in the release of the matrix. The matrix takes a broad view of potential national security risks across commercial sectors. The Committee has signaled—and has increasingly shown—a willingness to exercise its review authority through non-notified outreach. Parties to higher-risk transactions, especially ones with profiles similar to those in the matrix, should exercise heightened caution when evaluating whether to forgo engagement with the Committee, including decisions regarding voluntary filings.

What this all means for prospective filers:

Continue to focus on the core national security risk framework: threat, vulnerability, consequence.
Be mindful of the risk examples shared in the matrix; look for parallels to your own transaction.
Consider proactive engagement with CFIUS, especially for transactions that may raise significant risks, but maintain appropriate caution when sharing information with the Committee.

Ultimately, the matrix offers a valuable window into how the Committee frames national security risk, but it is not a substitute for case-by-case analysis. Each review remains inherently fact-specific, turning on the particular national security threats, vulnerabilities, and consequences raised by a given transaction. Parties should treat the matrix as a starting point for identifying potential concerns—not a checklist for clearing them—and undertake a nuanced, transaction-specific assessment, in consultation with counsel, in deciding when and how to engage with the Committee.

COMMITTEE ON FOREIGN INVESTMENT IN THE UNITED STATES (CFIUS) RISK MATRIX*

Category of Risk	Threat A function of the intent and capability of a foreign person to take action to impair the national security of the United States	Vulnerability The extent to which the nature of the U.S. business presents susceptibility to impairment of national security	Consequence The potential effects on national security that could reasonably result from the exploitation of the vulnerabilities by the threat actor	Purpose of Mitigation CFIUS must determine that mitigation resolves the national security concerns posed by the transaction	Sample Mitigation Measures Terms must be reasonably calculated to be effective, allow for verifiable compliance, and enable effective monitoring of compliance and enforcement
Critical Infrastructure	Show intent and capability to impair or disrupt U.S. critical infrastructure systems or assets, or take actions that could result in such impairment or disruption	U.S. business owns, operates, or services critical infrastructure systems or assets	Potential impairment to or disruption of U.S. critical infrastructure systems or assets	Safeguard integrity and security of U.S. critical infrastructure systems and assets	CFIUS-specific governance structures, restrictions, and oversight mechanisms to limit foreign influence over the U.S. business; Controls to ensure operational continuity of infrastructure systems and assets; Implementation of specific plans and policies subject to CFIUS approval, including those governing cyber, data, and technology security controls; Periodic source code reviews and testing; Restrictions on integration, communications and information sharing; Segregation of protected technology, information, data, systems, etc.; Restrictions on physical and logical access to data and systems, and prohibition of business ties with foreign actors of concern; Requirements to maintain existing design, development, and production processes; Restrictions on access to properties; Third-party vendor risk management and vetting; Continued supply of covered products and/or services for specified period and notification requirements prior to altering supply; Third-party monitorships and audits; and Compliance certifications, reporting, and CFIUS access and inspection rights.
Cybersecurity	Show intent and capability to introduce and/or exploit potential cyber vulnerabilities, or take actions that could result in such introduction or exploitation	U.S. business provides cybersecurity for sensitive businesses or assets or lacks robust safeguards to counter cyber vulnerabilities	Potential introduction and/or exploitation of cyber vulnerabilities by foreign threat actors	Detect and prevent unauthorized access, introduction, or exploitation of cyber vulnerabilities
Information Security	Show intent and capability to access and/or exploit sensitive operational or technical data, or take actions that could result in such access or exploitation	U.S. business collects and maintains sensitive operational or technical data	Potential access to and exploitation of sensitive operational or technical data by foreign threat actors	Prevent unauthorized access to, and ensure the security of, sensitive operational or technical data
Personal Data Security	Show intent and capability to access and/or exploit sensitive personal data, or take actions that could result in such access or exploitation	U.S. business collects or maintains sensitive personal data	Potential access to and exploitation of sensitive personal data	Prevent unauthorized access to, and ensure the security of, sensitive personal data
Product Integrity	Show intent and capability to modify, alter, or degrade product quality and/or production processes, or take actions that could result in such modification, alteration, or degradation	U.S. business provides products needed for critical national security missions	Potential degradation of or inability to use products needed for national security	Ensure products maintain required quality, performance, and production processes
Proximity Concerns	Show intent and capability to exploit physical proximity to sensitive facilities, or take actions that could result in such exploitation	U.S. business or real estate is located near a USG installation, facility, or property	Potential exploitation of physical proximity to sensitive facilities by foreign threat actors	Address risk associated with co-location of properties in or near sensitive USG facilities
Supply Assurance	Show intent and capability to limit or alter existing and/or future supply of products or services to USG or other sensitive buyers, or take actions that could result in such limitation or alteration	U.S. business provides products or services needed for critical national security missions	Potential degradation or loss of access to products or services needed for national security	Ensure continued supply of products or services to USG, including future supply of products/services or their orderly replacement
Technology Transfer	Show intent and capability to allow unauthorized transfer or use of sensitive technology and/or know-how, or take actions that could result in such transfer	U.S. business owns and/or develops sensitive technology and/or know-how, including with dual-use or military applications	Potential transfer or use of sensitive technology and/or know-how to foreign threat actors	Prevent unauthorized transfer or use, whether intentional or unintentional, of sensitive technology or know-how

* CFIUS staff share this document for informational purposes only. Nothing in this document constitutes legal, professional, or investment advice. The simplified risk categories and sample mitigation measures shown in this document are illustrative, non-exclusive, and non-exhaustive in nature and should not be construed as a final position, policy, commitment, or recommendation. This document does not impose any obligations on, or limit any rights of, any of CFIUS, the U.S. Department of the Treasury, or the U.S. Government. CFIUS makes no representation as to its judgment regarding the sufficiency of the sample measures in this document to mitigate any national security risk arising from any individual transaction and may, in its sole discretion based on CFIUS’s individualized assessment of the national security risk arising from a transaction, propose mitigation terms that are materially different from those in this document, or forego proposing mitigation terms and refer a transaction to the President with a recommendation to prohibit.

The following Gibson Dunn lawyers prepared this update: Chris Mullen, William Huesken, and Stephenie Gosnell Handler.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these issues. For additional information about how we may assist you, please contact the Gibson Dunn lawyer with whom you usually work, the authors, or the following leaders and members of the firm’s International Trade Advisory & Enforcement practice group:

United States:
Adam M. Smith – Co-Chair, Washington, D.C. (+1 202.887.3547, asmith@gibsondunn.com)
Ronald Kirk – Co-Chair, Dallas (+1 214.698.3295, rkirk@gibsondunn.com)
Stephenie Gosnell Handler – Washington, D.C. (+1 202.955.8510, shandler@gibsondunn.com)
Donald Harrison – Washington, D.C. (+1 202.955.8560, dharrison@gibsondunn.com)
Christopher T. Timura – Washington, D.C. (+1 202.887.3690, ctimura@gibsondunn.com)
Matthew S. Axelrod – Washington, D.C. (+1 202.955.8517, maxelrod@gibsondunn.com)
David P. Burns – Washington, D.C. (+1 202.887.3786, dburns@gibsondunn.com)
Nicola T. Hanna – Los Angeles (+1 213.229.7269, nhanna@gibsondunn.com)
Courtney M. Brown – Washington, D.C. (+1 202.955.8685, cmbrown@gibsondunn.com)
Samantha Sewall – Washington, D.C. (+1 202.887.3509, ssewall@gibsondunn.com)
Roxana Akbari – Orange County (+1 949.475.4650, rakbari@gibsondunn.com)
Karsten Ball – Washington, D.C. (+1 202.777.9341, kball@gibsondunn.com)
Sarah Burns – Washington, D.C. (+1 202.777.9320, sburns@gibsondunn.com)
Hugh N. Danilack – Washington, D.C. (+1 202.777.9536, hdanilack@gibsondunn.com)
Justin duRivage – Palo Alto (+1 650.849.5323, jdurivage@gibsondunn.com)
Dorkas Laura Medina – Washington, D.C. (+1 202.777.9444, dmedina@gibsondunn.com)
Chris R. Mullen – Washington, D.C. (+1 202.955.8250, cmullen@gibsondunn.com)
Sarah L. Pongrace – New York (+1 212.351.3972, spongrace@gibsondunn.com)
Anna Searcey – Washington, D.C. (+1 202.887.3655, asearcey@gibsondunn.com)
Erika Suh Holmberg – Washington, D.C. (+1 202.777.9539, eholmberg@gibsondunn.com)
Audi K. Syarief – Washington, D.C. (+1 202.955.8266, asyarief@gibsondunn.com)
Scott R. Toussaint – Washington, D.C. (+1 202.887.3588, stoussaint@gibsondunn.com)
Shuo (Josh) Zhang – Washington, D.C. (+1 202.955.8270, szhang@gibsondunn.com)

Asia:
Kelly Austin – Denver/Hong Kong (+1 303.298.5980, kaustin@gibsondunn.com)
David A. Wolber – Hong Kong (+852 2214 3764, dwolber@gibsondunn.com)
Fang Xue – Singapore (+65 6507 3692, fxue@gibsondunn.com)
Qi Yue – Beijing (+86 10 6502 8534, qyue@gibsondunn.com)
Dharak Bhavsar – Hong Kong (+852 2214 3755, dbhavsar@gibsondunn.com)
Soo-Min Chae – Singapore (+65 6507 3632, schae@gibsondunn.com)
Hui Fang – Hong Kong (+852 2214 3805, hfang@gibsondunn.com)
Arnold Pun – Hong Kong (+852 2214 3838, apun@gibsondunn.com)

Europe:
Attila Borsos – Brussels (+32 2 554 72 10, aborsos@gibsondunn.com)
Patrick Doris – London (+44 207 071 4276, pdoris@gibsondunn.com)
Michelle M. Kirschner – London (+44 20 7071 4212, mkirschner@gibsondunn.com)
Penny Madden KC – London (+44 20 7071 4226, pmadden@gibsondunn.com)
Irene Polieri – London (+44 20 7071 4199, ipolieri@gibsondunn.com)
Benno Schwarz – Munich (+49 89 189 33 110, bschwarz@gibsondunn.com)
Nikita Malevanny – Munich (+49 89 189 33 224, nmalevanny@gibsondunn.com)
Melina Kronester – Munich (+49 89 189 33 225, mkronester@gibsondunn.com)
Vanessa Ludwig – Frankfurt (+49 69 247 411 531, vludwig@gibsondunn.com)

Gibson Dunn advised Investcorp, a leading global alternative investment firm, on its investment in Berger Financial Group, Inc., a leading full-service wealth management platform providing comprehensive financial advisory services to individual investors and retirement savers across the United States.

The Gibson Dunn corporate team was led by partners Sean Griffiths and Christopher Lang and included associates Haley Moritz, Kristen Lee, Aliya Zuberi, and Emily Harvey. Partner Edward Wei and associates Eytan de Gunzburg and Duncan Hamilton advised on tax aspects, and partner Michael Collins advised on benefits. Partner Meghan Hungate and associate Carli Zimelman advised on IP aspects. Partner Marian Fowler advised on investment funds aspects. Associates Stanton Burke and Kyle Clendenon advised on data privacy aspects.

Gibson Dunn advised global investment firm EQT on its minority growth investment in Dwelly, an AI operating system for UK lettings agencies. EQT acted as lead investor in the round.

The firm’s London corporate team was led by partners Wim De Vlieger and Isabel Berger with support from of counsel Gisele Zouein and associates Alex Eldredge and Willem van Hootegem. Partners Ben Fryer and Jennifer Sabin and associate Alex Genov advised on tax matters. Partner Lore Leitner and associate Libby Pica advised on IP/IT matters. Partner Michelle Kirschner, of counsel Martin Coombes, and associate Saad Khan advised on financial regulation matters. Associate Georgia Derbyshire advised on employment matters.

Gibson Dunn advised founder and majority shareholder Bonnik Hansen on the sale of TRIXIE Heimtierbedarf GmbH & Co. KG to Central Garden & Pet Company.

TRIXIE was founded in 1974 in Tarp, Germany, and today is one of the leading European providers of pet supplies and pet snacks, supplying over 30,000 specialty retailers across numerous international markets.

Central Garden & Pet Company (NASDAQ: CENT) (NASDAQ: CENTA) is a leading consumer goods company in the pet and garden industries. Headquartered in Walnut Creek, California, the company employs over 6,000 people, primarily across North America.

The Gibson Dunn Frankfurt M&A team was led by partner Dr. Dirk Oberbracht and included associates Andreas Rief, Fabiana Obermeier, Simon Stöhlker, and Vladimir Konchakov. Munich partner Kai Gesing and associates Yannick Oberacker and Christoph Jacob advised on antitrust and IP/IT issues, of counsel Dr. Peter Gumnior (Frankfurt) advised on labor law aspects, and Frankfurt partner Dr. Lars Petersen and associate Simon Ruhland advised on regulatory aspects.

Gibson Dunn advised Bosch, Schaeffler Technologies, ZF Friedrichshafen, and AUMOVIO on the sale of their joint venture SupplyOn to Bain Capital. Bain Capital Tech Opportunities, the firm’s investment unit focused on high-growth technology companies, prevailed in a competitive auction process.

SupplyOn is one of the leading providers of cloud-based supply chain collaboration: its platform connects more than 140,000 companies worldwide across the automotive, aerospace, railway, and other manufacturing industries. Founded in 2000, the company is headquartered in Hallbergmoos near Munich and maintains locations in the United States and China.

The Gibson Dunn Munich M&A team was led by partner Sonja Ruttmann and included partner Dr. Ferdinand Fromholzer, of counsel Silke Beiter, and associates David Lübkemeier, Tim Windfelder, Johannes Reul, and Georg Bilek. Munich partner Kai Gesing and associates Yannick Oberacker and Christoph Jacob advised on antitrust and IP/IT issues, Frankfurt partner Dr. Lars Petersen and associates Victor Thonke and Simon Ruhland advised on regulatory and international trade issues, partner Sebastian Schoon (Frankfurt) advised on financing issues, and of counsel Dr. Peter Gumnior (Frankfurt) advised on labor law aspects.

Gibson Dunn announced today that William (Bill) Savitt, Sarah Eddy, Randall Jackson, Ryan McLeod, Anitha Reddy, and Bradley (Brad) Wilson—one of the most accomplished trial, corporate governance, and M&A litigation teams in the country—are joining Gibson Dunn’s New York office. Their arrival solidifies Gibson Dunn’s status as the nation’s premier firm for bet-the-company disputes and trials and cements its position as the firm clients turn to at every stage, from structuring blockbuster deals to defending them when challenged in the courts of Delaware and around the country.

“This is a rare and powerful combination. It brings together the nation’s foremost corporate governance, M&A, and high-stakes trial litigation team with the deepest trial, appellate, and regulatory platform in the legal profession. There is no other pairing in the market that offers clients more talent, deeper experience, or a better track record,” said Barbara Becker, Chair and Managing Partner of Gibson Dunn. “This team could have gone anywhere in the world. Gibson Dunn was the only firm they considered.”

Bill, who most recently served as Co-Chair of Wachtell Lipton’s Executive Committee and Co-Chair of its Litigation Department, is widely regarded as one of the nation’s leading corporate litigators and trial specialists. He joins as Co-Chair of Gibson Dunn’s Litigation Practice Group.

“We’ve been huge fans of Bill and his team for years, and bringing our forces together is a dream scenario. This partnership creates a litigation powerhouse without equal,” said Orin Snyder, Co-Chair of the firm’s Trials Practice Group.

The team represents boards and companies in their most consequential matters and has built a distinguished track record in landmark cases in Delaware, against the SEC, in high-profile trials in federal and state courts, and in other high-stakes disputes. The team’s credentials include Supreme Court of the United States and appellate clerkships, senior roles in the U.S. Attorney’s Office for the Southern District of New York, and top Chambers rankings across their practices. Having practiced together for many years, they join Gibson Dunn as an established, cohesive team that integrates seamlessly into the firm’s platform.

“I have known and admired Gibson Dunn’s litigators for many years, on the same side and across the table. The practice is unmatched in its depth, capabilities, and geographic reach,” Bill said. “By combining our group’s expertise with the sheer scale of Gibson Dunn, there is no firm in the market that can match our ability to represent clients in their most high-stakes disputes.”

About the Team

William (Bill) Savitt – Bill clerked for Judge Pierre Leval on the U.S. Court of Appeals for the Second Circuit and Justice Ruth Bader Ginsburg on the Supreme Court of the United States. He has been at the center of many of the most consequential corporate law cases and decisions of the last two decades, from the seminal IBP matter through the defense of SB 21 on behalf of the Governor and State of Delaware. He has argued dozens of appeals in the Delaware Supreme Court and the federal circuits and has acted as lead trial counsel in high-stakes disputes in courts around the country. Bill also regularly advises CEOs and boards on Delaware law and strategic transactions and in crisis situations.

Sarah Eddy – Sarah spent a decade at the U.S. Attorney’s Office for the Southern District of New York, where she tried cases, led complex investigations, and argued appeals, capping her tenure as Chief of Appeals. She clerked for Judge Jed Rakoff (U.S. District Court for the Southern District of New York), Judge John Walker (U.S. Court of Appeals for the Second Circuit), and Justice John Paul Stevens (Supreme Court of the United States). In private practice, she has taken a leading role in corporate and securities work, including trials in California, Delaware, and Texas, and regularly guides companies and boards through internal investigations and regulatory matters.

Randall Jackson – Among the most experienced trial lawyers in the country, Randall clerked for Judge Nina Gershon (U.S. District Court for the Eastern District of New York) and Judge Ann Claire Williams (U.S. Court of Appeals for the Seventh Circuit), served nine years as an Assistant U.S. Attorney in the Southern District of New York, and has been lead or co-lead in more than twenty federal trials. In private practice, he has secured widely publicized acquittals and civil-defense victories in federal court, led complex state-court litigation, including merger litigation in the Delaware Court of Chancery, and counseled companies and boards through regulatory matters.

Ryan McLeod – Among the most experienced fiduciary-duty litigators and advisors in the country, Ryan handles some of the most significant and delicate merger-related disputes, including the recent high-profile deal controversy involving Paramount, Netflix, and Warner Bros. Discovery. He clerked for Chancellor William B. Chandler III of the Delaware Court of Chancery and has extensive experience litigating in both that court and the Delaware Supreme Court, including some of the most hotly contested deal enforcement and corporate governance suits of the past two decades.

Anitha Reddy – Anitha is one of the nation’s leading corporate litigators, called on by clients for their most difficult securities, fiduciary, and governance matters. After clerkships with Judge John Gleeson (U.S. District Court for the Eastern District of New York), Judge Pierre Leval, and Justice Ruth Bader Ginsburg, she has built a practice of unusual breadth, combining precedent-setting wins in the Delaware Court of Chancery and Supreme Court of the United States with confidential committee and board counseling.

Brad Wilson – Brad has an extraordinary range as a complex commercial litigator who covers merger disputes, securities class actions and derivative suits, and proxy contests and other fights for corporate control. He clerked for Judge Maryanne Trump Barry (U.S. Court of Appeals for the Third Circuit) and has spent his career devising solutions to the stickiest commercial problems and representing clients in state and federal courts across the country.

This update provides an overview of key class action-related developments from the second quarter of 2026 (April through June).

Table of Contents

Part I discusses decisions from the Sixth and Fourth Circuits rejecting class certification on commonality and predominance grounds and discussing the distinctions between these closely linked requirements.
Part II analyzes a recent Seventh Circuit decision reinforcing the numerosity requirement.
Part III details decisions from the Sixth and Seventh Circuits clarifying the limits on CAFA jurisdiction.
And Part IV explores an array of decisions from several circuits involving the enforceability of arbitration agreements.

I. The Sixth Circuit (Sitting En Banc) and the Fourth Circuit Reject Class
Certification on Commonality and Predominance Grounds

This past quarter, two federal appellate decisions provided helpful illustrations of the closely linked commonality and predominance requirements of Rules 23(a) and (b)(3).

1. The Sixth Circuit’s decision in Clippinger v. State Farm Automobile Insurance Co., 173 F.4th 817 (6th Cir. 2026) (en banc), is the latest in a series of decisions from that court, including Speerly v. GM, LLC, 143 F.4th 306 (6th Cir. 2025) (en banc) (covered in a prior update here), and Generation Changers Church v. Church Mutual Insurance Co., 168 F.4th 354 (6th Cir. 2026) (covered here), emphasizing the rigorous analysis that Rule 23 demands before any class may be certified.

As explained in previous updates, in Clippinger a divided Sixth Circuit panel had affirmed certification of a class of roughly 90,000 Tennessee insureds challenging the insurer’s use of a “typical negotiation” adjustment—which adjusts the advertised prices of comparable used vehicles to account for the fact that buyers usually negotiate below sticker price—when estimating the “actual cash value” of totaled vehicles. That decision created a 5–1 split with the Third, Fourth, Fifth, Seventh, and Ninth Circuits, each of which had held that such “total loss” classes founder on Rule 23(b)(3)’s predominance requirement. The Sixth Circuit granted rehearing en banc, vacated the panel opinion, and has now reversed the certification order outright, restoring a nationwide circuit consensus. 173 F.4th at 823, 833-34.

The en banc court explained that the plaintiff’s proposed “common” question—whether advertised used-car prices generally exceed actual sales prices—could not sustain a class. Although that question could yield a single answer, it was not central to class members’ breach-of-contract claims: because each policy promised to pay each insured only the actual cash value of her vehicle, no class member could recover unless the court assessed the actual cash value of that class member’s car. Id. at 828-32. Those member-by-member valuation disputes would predominate over any common issues. Id. at 832-34. The court also rejected the plaintiff’s proposed workaround of limiting the defendant to a modified version of its original valuation, explaining that doing so would violate the Rules Enabling Act by stripping the defendant of its substantive right to present vehicle-specific evidence that it paid actual cash value. Id. at 834-37.

Clippinger emphasizes not only that supposedly common questions must drive the resolution of the claims, but also that a defendant’s rights to raise individualized issues are just as important for purposes of assessing Rule 23(b)(3) predominance. Together with Speerly and Generation Changers, Clippinger also confirms that courts must evaluate certification with an eye toward how a classwide trial would actually unfold—and that certification cannot be obtained or defended through shortcuts that trade away the parties’ substantive rights.

(Gibson Dunn represents the insurer in Clippinger.)

2. The Fourth Circuit further underscored the commonality requirement, vacating a class-certification order for insufficient analysis in Overby v. Anheuser-Busch, LLC, 178 F.4th 175 (4th Cir. 2026).

In Overby, the district court certified a class of hourly brewery workers seeking pay under Virginia law for allegedly uncompensated pre- and post-shift tasks, relying on the common questions of whether Anheuser-Busch “compensate[d] class members for time spent on” those tasks and whether the “failure to provide such compensation violates Virginia law.” Id. at 180. The Fourth Circuit vacated the order. Applying Stafford v. Bojangles’ Restaurants, Inc., 123 F.4th 671 (4th Cir. 2024) (covered in a prior update), the court of appeals explained that “[o]ne can always frame a question in such an abstract manner as to elicit a common response,” but that framing can “obscure more significant subquestions not susceptible to easy class-wide resolution.” 178 F.4th at 182.

As the Fourth Circuit explained, the district court improperly presupposed answers to threshold inquiries requiring individualized resolution, including: whether each class member performed the challenged tasks at all (employees hired after February 2022 were never subject to the since-discontinued COVID-19 protocols), whether they performed the tasks on brewery premises (many donned protective gear at home), and which legal standard governed (Virginia overhauled its overtime statute mid-class period). Id. at 183-84. The district court’s sweeping class definition—which “effectively encompasses all hourly employees”—compounded these errors by presuming that every hourly employee had a viable claim. Id. at 184-85.

Overby underscores that courts must stress-test high-level framings of both the common questions and the class definitions for issues requiring individualized resolution. For defendants, that means probing what a proposed common question quietly assumes and what members a class definition sweeps in. Id. at 185-86.

II. The Seventh Circuit Confirms That Speculation Cannot Satisfy
Rule 23’s Numerosity Requirement

Rule 23(a)(1) requires a plaintiff seeking class certification to prove that the proposed class is “so numerous that joinder of all members is impracticable.” Numerosity is often uncontested, largely because many putative classes number in the thousands. But even if there is no genuine dispute over the proposed class size, a plaintiff still must meet its evidentiary burden to establish numerosity. A recent Seventh Circuit decision confirms that numerosity can prove to be a genuine bar to certification.

In Hossfeld v. Allstate Insurance Co., 179 F.4th 1046 (7th Cir. 2026), the plaintiff sued Allstate under the Telephone Consumer Protection Act after a telemarketing company placed twelve calls to his phone number even though he had allegedly asked Allstate not to call him. Id. at 1050-52. The plaintiff moved to certify a class of other call recipients, identifying 33 numbers (including his own) on Allstate’s internal do-not-call list that had been called as part of the same telemarketing campaign. Id. at 1052. He asserted that there must be additional class members because Allstate and its vendors supposedly failed to coordinate their do-not-call lists, but he provided no supporting evidence for that assertion. The district court denied class certification for lack of numerosity. The Seventh Circuit affirmed, holding that a plaintiff “must produce more than speculation as to the size of the class,” and that the key inquiry under Rule 23(a)(1) “is not the number of class members alone but the practicability of joinder.” Id. at 1060. The plaintiff’s 33-member class was insufficiently numerous, and he made no argument that joinder of the identified members would be impracticable.

Hossfeld demonstrates that a plaintiff cannot satisfy Rule 23(a)(1) by identifying a large group of people supposedly affected by the defendant’s conduct and asking the court to presume that a sufficient number of them are similarly situated.

III. Three Recent Decisions Refine the Contours of CAFA Jurisdiction

The Class Action Fairness Act of 2005 (CAFA) remains one of the most important tools for defendants to move class and “mass” actions out of state court and into federal court. CAFA relaxes traditional diversity requirements and grants federal jurisdiction over qualifying class actions with minimal diversity and more than $5 million at stake. But there are exceptions to CAFA’s reach, and three recent appellate decisions sharpen the lines around removability.

1. The Seventh Circuit this past quarter confirmed that courts can sua sponte raise the “local event or occurrence” exception to CAFA jurisdiction. That exception excludes from “mass action” treatment any case where the claims “arise from an event or occurrence in the State in which the action was filed, and that allegedly resulted in injuries in that State or in States contiguous to that State.” 28 U.S.C. § 1332(d)(11)(B)(ii)(I).

In Craig v. City of Richmond, Indiana, 179 F.4th 535 (7th Cir. 2026), 150 plaintiffs sued over an industrial fire that burned for over a week, and the defendants removed the case to federal court as a “mass action” under CAFA. Id. at 537. The Seventh Circuit held that CAFA’s “local event or occurrence” exception is jurisdictional, meaning the court can raise it sua sponte at any time, and plaintiffs are not bound by the usual 30-day deadline to seek remand. Id. at 539-40. The court also read the “event or occurrence” concept broadly, treating the fire as a single triggering event even though the plaintiffs alleged years of underlying misconduct by multiple defendants whose conduct “contribute[d] to the same injury-causing event.” Id. at 540-44. The decision shows that defendants weighing removal of a localized mass tort cannot assume that pointing to multiple actors or a long causal chain will keep the case in federal court, see id. at 543-44, and cannot count on the plaintiffs’ failure to seek remand to preserve federal jurisdiction, see id. at 540.

2. The Seventh Circuit also clarified, based on a recent Supreme Court decision, that amended complaints can destroy or restore CAFA jurisdiction.

In Zurbriggen v. Twin Hill Acquisition, Inc., 178 F.4th 1081 (7th Cir. 2026), airline employees brought a putative class action over allegedly defective uniforms but later amended their complaint to drop the class allegations so they could proceed to bellwether trials. Id. at 1084-86. Applying Royal Canin U.S.A., Inc. v. Wullschleger, 604 U.S. 22 (2025), the Seventh Circuit reasoned that because a plaintiff is “master of the complaint,” each amended pleading effectively remakes the suit—including its jurisdictional basis. Zurbriggen, 178 F.4th at 1087. Dropping the class allegations may therefore have stripped the court of CAFA jurisdiction because the action was no longer “filed under” Rule 23. Id. But the plaintiffs then filed a further amended complaint that reinvoked CAFA and re-pleaded its requirements, which the court held re-established federal jurisdiction. Id. at 1088.

While the procedural posture is somewhat unusual, Zurbriggen suggests that CAFA jurisdiction is not “locked in” at the time of filing and that defendants must reassess jurisdiction following amended pleadings. The decision also signals broader tension (which the court of appeals flagged but did not resolve) over whether older case law holding that post-filing developments do not defeat CAFA jurisdiction survives Royal Canin, particularly in the removal context. See id. at 1088 & n.3.

3. The Sixth Circuit held that CAFA’s 30-day removal deadline is not subject to equitable tolling.

Ewalt v. GateHouse Media Ohio Holdings II, Inc., 176 F.4th 880 (6th Cir. 2026), involved a case that “ping-pong[ed]” between state and federal court. Id. at 882. After the district court erroneously remanded a CAFA case to state court following denial of class certification—which, under the correct rule, does not defeat CAFA jurisdiction, id. at 884-85—the defendant tried to re-remove months later once the plaintiffs had renewed their certification bid, id. at 882-83. The district court, trying not to punish the defendant for the court’s error, equitably tolled the removal deadline. Id. at 885. The Sixth Circuit reversed, relying on the Supreme Court’s recent holding in Enbridge Energy, LP v. Nessel, 146 S. Ct. 1074 (2026), that § 1446(b)(1)’s 30-day removal clock cannot be equitably tolled. Ewalt, 176 F.4th at 885.

The decision shows that a defendant that wants to preserve federal jurisdiction must act within the statutory window and affirmatively contest an erroneous remand when it happens, rather than waiting for a later opening, because courts have no authority to reopen the removal window after the fact. See id. at 885-86.

Taken together, this trio of decisions underscores that CAFA jurisdiction is procedurally exacting. Clients facing potential class or mass actions should involve counsel early to preserve every jurisdictional argument before a deadline—or an amendment—forecloses it.

IV. A Flurry of Arbitration-Agreement Enforcement Cases

This last quarter also saw a variety of decisions illustrating difficulties that defendants may face in seeking to enforce agreements to arbitrate, particularly where there is some question about which people or entities may validly invoke the agreement.

In Olson v. FCA US, LLC, 176 F.4th 612 (9th Cir. 2026), the Ninth Circuit rejected a vehicle manufacturer’s bid to enforce an arbitration agreement in a lease between the plaintiff and a dealership. Id. at 615. The plaintiff, who later became a named plaintiff in a putative class action alleging a headrest defect, had signed a lease defining “you” and “your” as the lessee and “we,” “our,” and “us” as the dealership. The lease delegated questions about the scope of the arbitration provision to the arbitrator, and the manufacturer argued that the delegation clause required the arbitrator, not the district court, to decide whether the dispute was arbitrable. Id. at 616. The district court disagreed, and the Ninth Circuit affirmed, treating what the manufacturer had framed as a question of the scope of the agreement instead as a question of whether a valid arbitration agreement existed between the manufacturer and the plaintiff at all. Id. at 616-17.

Schlacks v. Chheda, 174 F.4th 1061 (8th Cir. 2026), reflects the same pattern of courts’ construing purported scope questions as formation questions. There, a limited partnership agreement contained an arbitration provision with a delegation clause committing questions of arbitrability to the arbitrator. The signatory sought to compel arbitration against two non-signatories who had entered into a separate agreement with the signatory’s principal. The Eighth Circuit declined: “[R]egardless of whether these questions are within the scope of the delegation provision, the court cannot enforce that provision unless a valid contract exists between the parties.” Id. at 1067.

And in Jackson v. Protas, Spivok & Collins LLC, 176 F.4th 317 (4th Cir. 2026), the Fourth Circuit held that a debt-collection law firm retained by a signatory could not enforce the arbitration agreement between its client and the plaintiff borrower. Id. at 319. The dispute turned largely on the meaning of a single word—”servicing”—in the promissory note’s arbitration provision, which the court construed to mean the collection of payments and maintenance of the payment schedule, id. at 321, not litigation activity by outside counsel. The court emphasized that the agreement did not extend to the signatories’ agents or representatives, and that “in the absence of broader language, the law firm is a stranger to the agreement.” Id. at 323.

Olson, Schlacks, and Jackson illustrate that delegation clauses may not carry threshold disputes to the arbitrator when a non-signatory is involved. Courts may first ask whether a valid agreement exists between the litigants. Businesses that anticipate that their affiliates, manufacturers, vendors, agents, or outside professionals may wish to invoke an arbitration clause might consider saying so expressly—for example, by extending the clause to identified categories of third parties—rather than relying on general delegation language or equitable doctrines after the fact.

The following Gibson Dunn lawyers contributed to this update: Jessica Pearigen Barnes, Zachary Montgomery, Anna Shepard, Albert Tian, Matt Aidan Getz, Wesley Sze, Lauren Blas, Bradley Hamburger, Kahn Scolnick, and Christopher Chorba.

Gibson Dunn attorneys are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work in the firm’s Class Actions, Litigation, or Appellate and Constitutional Law practice groups, or any of the following lawyers:

Theodore J. Boutrous, Jr. – Los Angeles (+1 213.229.7000, tboutrous@gibsondunn.com)

Christopher Chorba – Co-Chair, Class Actions Practice Group, Los Angeles (+1 213.229.7396, cchorba@gibsondunn.com)

Theane Evangelis – Co-Chair, Litigation Practice Group, Los Angeles (+1 213.229.7726, tevangelis@gibsondunn.com)

Lauren R. Goldman – Co-Chair, Technology Litigation Practice Group, New York (+1 212.351.2375, lgoldman@gibsondunn.com)

Kahn A. Scolnick – Co-Chair, Class Actions Practice Group, Los Angeles (+1 213.229.7656, kscolnick@gibsondunn.com)

Bradley J. Hamburger – Los Angeles (+1 213.229.7658, bhamburger@gibsondunn.com)

Michael Holecek – Los Angeles (+1 213.229.7018, mholecek@gibsondunn.com)

Lauren M. Blas – Los Angeles (+1 213.229.7503, lblas@gibsondunn.com)

Wesley Sze – Palo Alto (+1 650.849.5347, wsze@gibsondunn.com)

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On 22 July 2026 the Financial Conduct Authority (the FCA) published the findings of its latest review of financial crime systems and controls in the asset management and alternatives sector. The review is addressed to the sector as a whole, but its focus falls squarely on private markets. The FCA’s own data show that firms active in private markets, whether in private equity, private credit, infrastructure, real assets or secondaries, carry materially higher inherent financial crime risk than the rest of the sector. Those are the firms that attract the sharpest findings and the closest supervisory attention.

This note approaches the findings from a private markets perspective. It explains why the FCA treats private markets firms as the higher-risk cohort, where it found them falling short, and what managers of private capital should do in response. The review draws on engagement with 242 firms during 2025/26, 87% of which completed the FCA’s questionnaire, together with interviews of senior staff. The FCA has said it will use that data to decide where to direct its supervision.

Why this is aimed at private markets firms

None of this is new. The review delivers on a commitment the FCA gave in its February 2025 portfolio letter to the sector, in which it identified financial crime as an area for targeted work and said it would examine the effectiveness of firms’ systems and controls, with a supervisory focus on anti-money laundering controls in private markets funds. The letter stressed the identification of ultimate beneficial owners through proportionate, risk-based due diligence on investors. The July findings are the evidence behind that focus, and they bear out what the letter asserted: private markets is where both the inherent risk and the control weaknesses are concentrated.

The review is consistent with the FCA’s November 2025 multi-firm review of business-wide and customer risk assessment, and forms part of the financial crime workstream under the 2025–30 strategy. The common message is that risk assessments and controls must be built around the firm’s actual business. For a private markets manager that means built around complex ownership, cross-border fund flows and a high-risk investor base, not around a generic asset-manager template. Firms that set the portfolio letter aside as background reading now have a documented, data-backed gap to close, and they should assume the FCA will test their questionnaire answers against what it sees on a visit. Where those answers cannot be stood up, the firm has a candour problem on top of a control problem.

The inherent-risk profile of private markets

The FCA’s central point is that inherent financial crime risk varies widely across a sector of some 2,500 firms, and that private markets firms sit at the top of the range. Three features of private capital account for this.

Complex, multi-layered and cross-border ownership. Around a fifth of private markets firms reported that more than 30% of their customers use complex ownership structures. Among firms not active in private markets, 85% reported no such customers at all. Investor chains that run through feeder and parallel vehicles, aggregators, nominees, trusts, foundations and holding companies across several jurisdictions are ordinary in private markets, and they are the structures most often used to hide ultimate ownership, move illicit money and evade sanctions.

A high-risk investor base. Politically exposed persons appeared in the customer base of 32% of private markets firms, against 9% of the rest. That reflects an investor population that includes family offices, sovereign and quasi-sovereign money and high-net-worth individuals, for whom source of wealth and PEP status call for enhanced scrutiny.

International fund flows. Half of all firms reported that more than 60% of their investors are domiciled overseas, and private markets firms were the more likely to move money across borders, through capital calls, distributions, secondary transfers and co-investment flows that often touch several jurisdictions and third-party accounts.

A firm with this profile is expected to hold a framework built for it, as the MLRs and SYSC require. The striking part of the review is the gap between that risk and how firms have responded, shown most clearly by the 18% of private markets firms whose business-wide risk assessment did not specifically cover private-markets risk.

What the FCA measured, and against what

The FCA assessed controls against the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the MLRs), the Financial Crime Guide, the systems and controls provisions in SYSC, and JMLSG and FATF guidance. It looked at two questions: how well firms understand their inherent risk, and how well they identify, mitigate and manage it. The findings that matter most for private markets firms are set out below.

Where private markets firms fell short

The FCA grouped its findings under seven headings. Together they describe a sector in which most firms have the architecture of a financial crime framework, while a significant minority have gaps the FCA regards as serious.

Business-wide risk assessment (BWRA)

Just over a fifth of all firms had either not carried out a business-wide risk assessment or had one that was incomplete, and some had a BWRA that was inadequate because it failed to capture the inherent risk arising from the firm’s own activities. The private markets failure is pointed: 18% reported that their BWRA did not specifically cover private-markets risk. A current, formal BWRA is required by Regulations 18 and 18A of the MLRs and is the foundation for everything else, including the assessment of proliferation financing risk under Regulation 18A, which firms tend to overlook despite its obvious relevance to cross-border and sanctions-adjacent structures. The FCA expects the 2025 National Risk Assessment of money laundering and terrorist financing and the 2021 National Risk Assessment of proliferation financing to be reflected in a firm’s own work. The good practice it saw was straightforward: firms that ran and documented a regular review cycle, even where the platform was stable.

Investor (customer) risk assessment and beneficial ownership

This is the core private markets issue. 18% of firms had no formal customer risk assessment methodology, and a number of private markets firms had no process for verifying beneficial ownership within multi-layered or offshore structures, the very structures the inherent-risk data flag as the sector’s main vulnerability. Some firms with close relationships or a small investor base were relying on informal, real-time knowledge in place of a documented assessment. The FCA accepted the value of that knowledge, but was clear that it does not replace the formal assessment the MLRs require: without a risk assessment at onboarding, a firm cannot show compliance with Regulation 28(12) and (13). In practice this calls for a look-through, through feeder vehicles, nominee holdings and holding structures, to the individuals who ultimately own or control the investor, evidenced in a way that will withstand review.

Outsourced onboarding and administrator oversight

Around 40% of firms outsource part of their CDD and EDD. In private markets that usually means investor onboarding delegated to a fund administrator, often in the fund’s domicile, or to a compliance consultant. Yet only 36% of the firms that outsource had full oversight of the third party’s onboarding, and some could not describe the process at all. The FCA’s position here is well established, and readers will recognise it from its enforcement record: outsourcing the task does not outsource the responsibility. The manager or AIFM remains accountable under Regulations 28 and 33 whoever performs the work, and cannot evidence what it does not oversee. Administrator oversight should be run as a third-party and operational-resilience matter, with defined sampling, reporting and escalation, rather than treated as settled by the administration agreement. Separately, 10% of firms did not verify source of wealth for high-risk customers, a real exposure where investors are PEPs or high-net-worth individuals.

Ongoing monitoring, transfers and secondaries

Most firms monitor their relationships, and over half carry out periodic reviews, but more than a quarter, 29%, had no formal transaction monitoring, and 7% had no systematic post-onboarding monitoring of any kind. Private markets firms often justify a light or manual approach by pointing to low transaction volumes. That argument is hard to sustain once you look at the transactions that matter in private capital: capital calls and distributions routed through third-party accounts, redemptions, transfers of limited-partner interests and GP-led secondaries, each of them a recognised route for illicit funds and sanctions exposure. Where monitoring is manual, the FCA expects defined, documented triggers rather than the informal judgement of one or two people. Ongoing monitoring, including scrutiny of transactions, is mandatory under Regulation 28(11). More encouragingly, 84% of firms reviewed or audited their internal suspicious activity reports for quality.

Screening across the fund life

A minority of firms showed weaknesses in screening for PEPs, sanctions and adverse media, and 7% did not carry out repeat screening at all. Private markets funds are long-dated, often ten years or more, and an investor’s PEP or sanctions status can change over that life. Screening only at onboarding will not discharge the obligation to identify PEPs under Regulation 35(1) or the strict-liability, ongoing UK sanctions regime, and it must reach through ownership and control, applying OFSI’s 50%-and-control tests, rather than stopping at the named investor. That matters all the more given the volume of designations since 2022.

Governance and resourcing

The governance findings should give the boards and investment committees of larger platforms most pause. Over half of money laundering reporting officers (MLROs) worked part-time or in a shared role, which is often reasonable at a smaller firm. But more than a quarter of firms with over £10 billion under management also had a part-time or shared MLRO, despite wider investor bases and more complex activities. Almost all firms collect financial crime management information, yet only a little over a third discuss AML risk regularly at a governance forum, and 36% do so annually or less. Half of all firms had made no investment in remediation or systems uplift in the previous two years, and 18% had no formal quality assurance process. The contrast was firms that actually used their financial crime management information, which 88% did.

Placement agents and introducers

The review does not itself address fundraising intermediaries, but the point follows naturally from its findings and, in our view, belongs in any serious private markets analysis. Capital is routinely raised through placement agents and introducers who bring in limited partners for a fee. Those relationships carry both money-laundering and bribery risk, and the FCA has taken enforcement action against firms for poor oversight of introducers and finders. A manager’s financial crime framework should therefore extend to due diligence on its placement agents and introducers, a recorded commercial rationale for each relationship, appropriate contractual protections and continuing oversight, applying the same discipline the FCA expects for investor onboarding.

Training

Most firms train staff on financial crime, usually once a year, and the better examples tailor the content to the firm’s own risk and test it. The FCA still found MLROs who may not have been trained on their own legal responsibilities, and firms with little awareness of legal and guidance developments. In a private markets firm, training that does not reach the deal teams and investor-relations staff who first meet investors and counterparties is unlikely to be enough.

Our observations

Three points are worth drawing out for boards and senior managers.

The first is that this is as much a personal-accountability document as a systems one. The MLRO is a senior management function, SMF17, and the finding that a quarter of the largest platforms run it part-time or on shared responsibility raises the question whether the allocation holds up under the Senior Managers and Certification Regime, particularly where AML risk rarely reaches the board or the investment committee.

The second is that the FCA has told firms how it will use what it has gathered. It will work the questionnaire data to target its supervision and step in where firms fall short. The cost of leaving a gap unaddressed has gone up accordingly: a firm that sees a shortfall against these findings and does nothing is effectively on notice, and the FCA has in past enforcement cases treated a failure to act on its published findings as an aggravating factor.

The third is beneficial ownership, which runs through all of this. From the portfolio letter, through the November 2025 review, to these findings, the FCA keeps returning to the identification of ultimate beneficial owners in complex structures. For private markets firms it is the control most likely to draw scrutiny.

Non-UK-headquartered managers with a UK adviser or arranger

A common structure is a non-UK-headquartered manager whose UK presence is an FCA-authorised adviser or arranger. For those groups the starting question is one of scope. The main message for a non-UK group is not to run the UK entity off the global programme. The FCA’s recurring criticism, familiar from its enforcement record, is over-reliance on group policies that are not tailored to the UK firm’s own activities and legal obligations. A group that treats its UK adviser as an outpost of a non-UK compliance function, applying the global manual behind a UK cover page, is the case the FCA has in mind. The UK firm needs its own business-wide risk assessment built around its activities, a UK MLRO of adequate seniority, and its own governance and management information.

Where the investor relationship, the KYC and the money sit with the US manager, the fund and an administrator rather than the UK entity, the paper does not fall away; it changes where the risk lands. Reliance on a US affiliate or an administrator for customer due diligence is reliance under Regulation 39, or outsourcing under Regulations 28 and 33, and responsibility stays with the UK firm. The finding that 40% of firms outsource but only 36% have full oversight is the exposure in plain terms: a UK MLRO who cannot explain or evidence the affiliate’s onboarding, and simply trusts the non-UK process, has the gap the FCA is looking for. It also pays to be precise about who the UK entity’s customers actually are. An adviser to an affiliated manager may have a short list, its affiliate and perhaps a few counterparties; an arranger that touches transactions takes on counterparty due diligence and, importantly, UK sanctions exposure under the OFSI regime, which applies to the UK firm’s conduct independently of OFAC and on different tests. In every case the risk assessment has to be built around what the UK entity does, not lifted from a manager’s template.

What private markets firms should do now

We suggest firms treat the findings as a supervisory benchmark and work through the following, prioritising by inherent risk:

Re-read the questionnaire response. Retrieve what the firm told the FCA in 2025/26 and test whether it remains accurate and can be substantiated on a visit. Address any material divergence and consider whether a Principle 11 notification is warranted.
Make the BWRA a private-markets BWRA. Confirm it is current, formally approved and built around the firm’s real risk drivers, namely complex and cross-border ownership, PEP and high-risk investors, and international fund flows, and that it addresses proliferation financing under Regulation 18A. Reflect the 2025 NRA and the 2021 proliferation-financing NRA.
Fix beneficial-ownership look-through. Ensure a documented investor risk-assessment methodology is applied at onboarding and on review, and that ownership can be traced through feeders, nominees, trusts, foundations and multi-jurisdictional holding structures, not only simple direct holdings. Informal knowledge of the investor base is a complement, not a substitute.
Bring administrator and consultant onboarding under real oversight. Map every outsourced onboarding activity and satisfy the board that the firm exercises, and can evidence, enough oversight to demonstrate compliance with Regulations 28 and 33, with defined sampling, management information and escalation. Verify source of wealth for high-risk investors.
Monitor the transactions that matter. Do not rely on low volumes. Put documented triggers around capital calls, distributions, redemptions, transfers of interests and secondaries; where monitoring is manual, record the rationale and confirm it is defensible.
Screen across the whole fund life. Ensure PEP, sanctions and adverse-media screening is repeated over the life of long-dated funds and reaches through ownership and control, not only the named investor.
Extend the framework to placement agents and introducers. Apply due diligence, a recorded commercial rationale, contractual protections and continuing oversight to third-party fundraisers, viewed through both an AML and an anti-bribery-and-corruption lens.
Escalate financial crime to the board or investment committee and resource it. Make AML a standing agenda item supported by meaningful management information; review whether the MLRO’s seniority, time and resourcing match the platform’s scale and complexity, and record the rationale; revisit the case for systems and quality-assurance investment where there has been none.
For non-UK-headquartered groups, confirm the UK position on its own terms. Do not assume the global programme discharges the UK entity’s obligations. Confirm the UK firm’s status under the MLRs and the Handbook, its own BWRA and MLRO arrangements, and the oversight it exercises over any affiliate or administrator on which it relies.
Document the exercise. Record the firm’s consideration of the findings against its own model and the decisions taken, so that it can show the FCA it engaged.

The following Gibson Dunn lawyer prepared this update: Michelle Kirschner and Martin Coombes.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. If you wish to discuss any of the matters set out above, please contact the authors or any leader or member of Gibson Dunn’s Financial Regulatory practice group:

Michelle M. Kirschner – London (+44 20 7071 4212, mkirschner@gibsondunn.com)

Martin Coombes – London (+44 20 7071 4258, mcoombes@gibsondunn.com)

Partner Angelique Kaounis and of counsel Joseph Gorman authored “Clean Rooms in Trade Secret Litigation: Promises and Pitfalls” for IAM (subscription required). The article discusses litigation involving “clean rooms,” which are controlled development environments “in which personnel who might otherwise have access to a competitor’s confidential information are deliberately isolated from it, so that any resulting work can be shown to have been developed independently.”

“For companies whose personnel have been exposed to a competitor’s trade secrets —through due diligence, lateral hiring or a joint venture — it can be a useful tool both as a risk management measure and as a litigation defense,” they write.

Angelique and Joe identify emerging themes in U.S. court cases involving clean rooms, including the importance of an active monitor, the dangers of tainted starting points, the implications of clean room assertions in the face of actual development timelines, and the risk of inadvertently waiving attorney-client privilege.

Fox Paine & Co. v. Twin City Fire Insurance Co., S287404 – Decided July 27, 2026

The California Supreme Court unanimously held today that an insured may pursue claims for declaratory relief and tortious breach of the implied covenant of good faith and fair dealing against excess insurers even where the insurance coverage underlying the excess policies has not yet been exhausted.

“[A] lack of exhaustion does not categorically make a coverage dispute involving an excess policy unduly abstract or hypothetical.”

Chief Justice Guerrero, writing for the Court

Background:

Excess insurance policies provide coverage after the limits of underlying policies have been exhausted. The policies’ exhaustion provisions determine when the excess insurer becomes obligated to pay a covered loss. Fox Paine & Co. and related parties bought a $10 million primary professional-liability policy and four successive $10 million excess layers. After a business dispute between Fox Paine’s principals generated extensive litigation, the primary insurer paid its $10 million limits to one group of insureds. The Fox Paine plaintiffs then sought coverage for their litigation-related losses and sued the excess insurers for declaratory relief (on coverage) and breach of the implied covenant of good faith and fair dealing.

The trial court allowed the claims involving the first excess layer to proceed past a demurrer because the primary policy had allegedly been exhausted, but it dismissed the claims against the insurers that issued the second through fourth excess layers, ruling that the plaintiffs had not alleged exhaustion of the policies underlying the higher layers. The Court of Appeal affirmed, holding that no obligations arose under the higher-layer excess policies before exhaustion of the underlying policies and that declaratory relief was neither necessary nor appropriate while the claims against the first-layer insurer remained unresolved.

Issues Presented:

(1) When a policyholder alleges losses sufficient to reach an excess policy, but the underlying insurance layers have not yet been exhausted, may the policyholder nevertheless seek declaratory relief against the excess insurer?

(2) May a policyholder state a claim against an excess insurer for bad faith before the underlying policy layers have been exhausted?

Court’s Holdings:

Yes, as to both:

(1) Exhaustion of underlying insurance is not categorically necessary to plead an actual controversy supporting declaratory relief against an excess insurer, but to survive demurrer the plaintiff still must make sufficient allegations of either actual or reasonably likely attachment of coverage under the excess policy.

(2) An insured suing an excess insurer for bad faith need not allege prior exhaustion of all underlying insurance; it is enough to allege facts showing that coverage under the excess policy will attach, or would attach but for the insurer’s bad-faith conduct, and that the insurer’s misconduct has impaired the insured’s recovery of policy benefits.

What It Means:

The decision is significant for policyholders with layered insurance coverage. The Court rejected a strict exhaustion prerequisite that would have obligated insureds to scale the coverage tower through policy-by-policy lawsuits, reasoning that a single action resolving coverage across the tower avoids serial litigation and the risk of inconsistent rulings.
Ordinarily, an insured must “allege a covered loss that reaches an excess policy’s attachment point in order to state an actual controversy involving that policy” sufficient to support declaratory relief. But “additional considerations” may warrant application of a more lenient standard requiring only a “reasonable likelihood” of attachment—for instance, where mounting losses or liabilities have not yet been fully ascertained, or where it is uncertain how much other insureds’ claims will draw upon (and help exhaust) lower-layer policies.
Under either standard, precision matters: the Court disapproved earlier decisions suggesting that no covered-loss allegation is required, and it faulted plaintiffs for commingling covered loss with prejudgment interest because only covered loss counts toward exhaustion and can cause higher-layer policies to attach.
The Court cautioned that a trial court’s discretion under Code of Civil Procedure section 1061 to decline declaratory relief “is not boundless.” Where a complaint shows that declaratory relief would be appropriate, a trial court may not refuse to entertain the action.
For excess insurers, the decision confirms that the implied covenant of good faith and fair dealing operates from the inception of the policy, not merely once the policy attaches. Conduct occurring before exhaustion, such as allegedly favoring rival claimants or concealing coverage decisions and settlements from the insured, can give rise to tort liability.
The Court left several questions for remand, including which pleading standard governs plaintiffs’ declaratory relief claims, whether plaintiffs’ allegations satisfy it, and whether plaintiffs have alleged unreasonable conduct amounting to bad faith. The Court also reserved the question whether, “in unusual circumstances involving consequential harm to an insured,” a bad-faith claim should be permitted even if there is no coverage under an insurance policy.

The Court’s opinion is available here.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the California Supreme Court. Please feel free to contact the following practice group leaders:

Appellate and Constitutional Law

Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com	Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com	Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com	Jeffrey B. Wall +1 202.955.8533 jwall@gibsondunn.com
Bradley J. Hamburger +1 213.229.7658 bhamburger@gibsondunn.com	Michael J. Holecek +1 213.229.7018 mholecek@gibsondunn.com	Daniel R. Adler +1 213.229.7634 dadler@gibsondunn.com

Related Practice: Insurance and Reinsurance

Geoffrey Sigler
+1 202.887.3752
gsigler@gibsondunn.com

Deborah L. Stein
+1 213.229.7164
dstein@gibsondunn.com

Richard J. Doren
+1 213.229.7038
rdoren@gibsondunn.com

Matthew A. Hoffman
+1 213.229.7584
mhoffman@gibsondunn.com

This alert was prepared by Matt Aidan Getz, and Soumya B. Kandukuri.

Partner Vivek Mohan, Co-Chair of our Artificial Intelligence Practice Group, is quoted in Agenda’s (subscription required) “Another Production Line Dries Up After Ransomware Attack.” Vivek spoke about how companies can effectively prepare, manage, and respond to incidents arising from the increased automation and delegation of workflows to AI.

Gibson Dunn is acting as counsel to global investment firm KKR, as well as co-counsel to the consortium formed by KKR and Energy Capital Partners, on KKR’s largest public-to-private transaction in Europe in more than a decade — the proposed acquisition of DCC Energy plc.

DCC Energy is a Dublin-headquartered, London-listed international energy sales and distribution group, and a constituent of the FTSE 100.

The proposed acquisition values the entire issued and to-be-issued share capital of DCC Energy at an equivalent of approximately $7.68 billion (£5.75 billion). Full details are available here.

“We are proud to be advising KKR on this landmark transaction,” said Will McDonald, Co-Head of Gibson Dunn’s Cross-Border M&A Practice. “A public-to-private acquisition of this scale for a London-listed group with operations spanning Europe and North America demands the seamless integration of public M&A, private equity, antitrust, and tax expertise across multiple jurisdictions. That is precisely where Gibson Dunn’s global platform and our long-standing relationship with KKR set us apart. Drawing on our team’s deep experience of complex UK and European public deals, Gibson Dunn is uniquely placed to help KKR navigate a complex, multi-stakeholder process.”

Federico Fruhbeck, Co-Chair of Gibson Dunn’s Projects and Infrastructure Practice Group and Co-Head of Private Equity in Europe, said: “The partnership we have with KKR and its infrastructure portfolio is going from strength to strength, as this proposed acquisition demonstrates. Along with our deep understanding of and familiarity with KKR as a client, our prowess in advising on global energy projects and transactions is a key element in delivering on major deals in the energy and infrastructure sectors.”

The Gibson Dunn team is being led from London by corporate partners Will McDonald and Federico Fruhbeck. In the London corporate team, they are being supported by partner Jakob Egle; of counsel James Addison, Gisele Zouein, and Tom Barker; and associates Lauren Richardson, Saav Shah, Sam Wolfe-Murray, Lena Tarrin, Carmen Heredia, Willem van Hootegem, and Jonathon Macnab.

Antitrust and regulatory advice, covering merger control and foreign investment clearances, is being led by partner Christian Riis-Madsen, Co-Chair of the firm’s Antitrust and Competition Practice Group and Partner in Charge of the Brussels office, with partner Valeri Bozhikov and associates Jonas Jousma, Wladimir Soltmann, Anastasia Katsari, and Sruti Sivasubramanian.

Tax advice is being provided by partner James Chandler and of counsel Graham Crocker.

The proposed acquisition remains subject to the satisfaction (or, where appropriate, waiver) of certain conditions, including approval by DCC Energy’s shareholders and receipt of regulatory clearances.

Gibson Dunn announced today that Christopher Scavone has joined the firm’s New York office as a partner in its market-leading Investment Funds Practice Group. His practice focuses on GP stakes and asset management M&A transactions, joint ventures and strategic partnerships involving investment firms, succession planning arrangements, and other upper-tier liquidity and structuring solutions.

“Chris is an outstanding addition to our Investment Funds team and further deepens our capabilities in GP stakes and asset management M&A,” said Shukie Grossman, Global Chair of the Investment Funds Practice Group. “He brings a highly differentiated practice which sits at the intersection of M&A and investment funds, an area that continues to see significant market growth. His experience will be tremendously valuable as we continue advising sponsors and strategic capital providers on their most important transactions.”

“Chris brings a rare combination of M&A sophistication and deep knowledge of the GP stakes market,” said Michael De Voe Piazza, Co-Chair of the U.S. Private Equity Practice Group. “His experience advising sponsors and strategic investors on complex, high-value transactions further strengthens our ability to deliver specialized counsel across the asset management M&A landscape.”

“Gibson Dunn has built a premier platform for clients in the GP stakes and asset management M&A space, with fully integrated funds, M&A, tax, regulatory, and finance capabilities,” said Chris. “Demand for these transactions continues to accelerate, and I am excited to join a team with the depth, breadth, and collaborative culture needed to help clients navigate their most complex and strategic matters.”

Gibson Dunn’s Investment Funds Practice Group is a top-tier practice advising sponsors across geographies, asset classes, and fund structures. With a deep bench and extensive experience, the team provides the full scope of fund services needed to navigate the challenges and opportunities facing investment fund managers in today’s market. From fund formation to fund servicing to fund finance, and tax planning, complex secondaries, management company transactions, and regulatory and compliance matters, the team delivers top-of-the-market knowledge and senior-level, commercial counsel across the lifecycle of a fund.

The practice has continued to expand its integrated, full-service platform, most recently with the additions of a team in Paris; Blake Estes and Duncan McKay in New York; Marian Fowler in Washington, D.C.; James O’Donnell and Hannah Watson Fanin in London; and Carolyn Abram in Dubai.

About Christopher Scavone

Chris advises on GP stakes and asset management M&A transactions, joint ventures and strategic partnerships involving investment firms, succession planning arrangements, and other upper-tier liquidity and structuring solutions.

Prior to joining Gibson Dunn, Chris served as a partner at another international law firm.

Partner Roger Singer is quoted in PERE’s (subscription required) “Private Real Estate Fund Managers Go Harder on Fee Discounts,” which discusses the publication’s fund formation law firm rankings. Gibson Dunn ranked third among real estate fund formation law firms by dollar value and fifth among real estate fund formation law firms by number of funds.

From the Derivatives Practice Group: This week, the CFTC announced it is extending the deadline for public comment related to (1) the extension of standard futures contracts to 24/7 trading and (2) the potential listing of energy commodity perpetual contracts. The deadline is extended to August 26, 2026.

New Developments

CFTC Extends Public Comment Period on Proposed Rule on the Extension of Standard Futures Contracts to 24/7 Trading and on Perpetual Contracts Referencing Physically Delivered or Storable Energy Commodities. On July 23, the CFTC announced it is extending the deadline for public comment on two related developments in the energy derivatives markets: the extension of standard futures contracts to 24/7 trading and the potential listing of energy commodity perpetual contracts. Based on requests by commenters and the addition of several questions to the request, the deadline is being extended by 30 days to August 26, 2026. [NEW]

Chairman Selig Announces Agenda for July 29 Agricultural Advisory Committee Meeting in Washington. On July 23, CFTC Chairman Michael S. Selig, sponsor of the Agricultural Advisory Committee (AAC), released the agenda for the AAC’s first meeting of 2026. Among other topics, attendees will discuss the Basel III proposal, risk management tools for agricultural end users, 24/7 trading and emerging markets, and recent CFTC activity in the agricultural industry. The full agenda can be found here. [NEW]

Senator Lummis Releases Revised Text of the Clarity Act. On July 22, Senate Banking Digital Assets Subcommittee Chair Cynthia Lummis (R-WY) released an updated text for the Digital Asset Market Clarity Act (H.R. 3633), which reflects the merged work products of the Banking and Agriculture Committees. [NEW]

CFTC Sunsets Routine Large Trader Reporting Requirements for Physical Commodity Swaps. On July 17, the CFTC issued a final order sunsetting the routine position-reporting requirements of Part 20, the large trader reporting rules for physical commodity swaps. Under the order, clearing organizations, clearing members, and swap dealers will no longer be required to file the daily and event-based position reports currently required under Part 20.

Chairman Selig Announces CFTC Agricultural Advisory Committee to Meet July 29 in Washington. On July 15, CFTC Chairman Michael S. Selig, sponsor of the Agricultural Advisory Committee (AAC), announced that the AAC will host its first meeting of 2026 at 1:00 PM EST on July 29, 2026, at CFTC Headquarters. This meeting is open to the public and will be streamed live on CFTC.gov.

CFTC Stays KalshiEX Rule Change and Exercises Emergency Authority to Order Fulfillment of Pending Trades. On July 14, the CFTC exercised its authority to stay an emergency rule change proposed by KalshiEX, LLC in response to a Michigan state court order directing the company to cancel certain previously executed trades involving Michigan residents. The CFTC also exercised its emergency authority to order KalshiEX, LLC to fulfill the open trades in accordance with its normal practices.

CFTC Approves Final Rule Amending Margin Requirements for Uncleared Swaps. On July 13, the CFTC approved a final rule that amends margin requirements for uncleared swaps for swap dealers and major swap participants who are not subject to prudential regulator margin rules. The CFTC said the amendments enhance market efficiency, promote global harmonization, and support responsible financial innovation, while maintaining robust risk management standards.

CFTC to Stay Self-Certified Contract on 24/7 Trading for Crude Oil Futures. On July 9, the CFTC announced that it will exercise its authority to stay the listing of a contract that would have allowed the Chicago Mercantile Exchange (CME) to initiate 24/7 trading on crude oil futures as soon as July 10. The CFTC’s regulations offer exchanges two methods to list contracts — self certification under 40.2 or to seek Commission review and approval under 40.3. CME made simultaneous, but separate filings under both provisions.

New Developments Outside the U.S.

ESMA Calls on Firms to Finalize Preparations Ahead of T+1 Settlement Deadlines. On July 20, ESMA published a statement highlighting key deadlines and action points in preparation for the transition to a T+1 settlement cycle in EU financial markets. According to ESMA, the statement outlines key milestones, including the first regulatory deadline on December 7, 2026. ESMA states that market participants are encouraged to prepare and test their own readiness across the entire trading and settlement chain. [NEW]

ESMA Publishes Report on Cross-border Investment Services Supervision. On July 20, ESMA published its follow-up report to the peer review on the supervision of cross-border activities of investment firms. The report assesses the progress made by national competent authorities in implementing recommendations issued in 2022 and covers the Netherlands, Germany, the Czech Republic, Luxembourg, Cyprus and Malta. [NEW]

Joint Board of Appeal Dismisses Appeal Against the EBA. On July 16, the Joint Board of Appeal of the European Supervisory Authorities issued a decision stating that an appeal brought by an individual against the European Banking Authority (EBA) is inadmissible. The appeal concerned a response by the EBA to a complaint regarding the closure of a bank account by a credit institution and the handling of the matter by the Finnish National Competent Authority (FIN-FSA). The appellant had requested that the EBA investigate a possible breach of Union law by FIN-FSA. The Board of Appeal concluded that, under established EU case law, any decision to initiate an investigation is at the EBA’s discretion. [NEW]

ESMA Launches Data Collection Under the First Phase of ESAP. On July 10, ESMA launched the collection of information from Officially Appointed Mechanisms (OAMs) and National Competent Authorities (NCAs) for the first phase of implementation of the European Single Access Point (ESAP). Starting July 10, OAMs and NCAs will start providing ESAP the information and the metadata collected from financial entities.

ESMA Publishes First Market Capitalization Data for EU Member States. On July 10, ESMA published annual market capitalization and market capitalization ratios of EU Member States for 2024 and 2025. According to ESMA, the data provides clarity on Member States’ position within the framework and helps authorities and market participants prepare for and implement these requirements in a timely manner.

ESMA Publishes Report on EU Carbon Markets. On July 9, ESMA published its third annual market report on EU carbon markets. The report showed that financial intermediaries are central to the functioning of the EU carbon market. According to ESMA’s report, they provide liquidity, act as counterparties to non-financial firms, and help compliance entities access allowances and manage price risk.

New Industry-Led Developments

IOSCO Announces Themes of the 10th Edition of World Investor Week. On July 22, IOSCO announced that the primary themes for World Investor Week 2026 (taking place from October 5 to 11, 2026) are Investor Resilience, Digital Deception, and Scam Alert, which it states reflects some of the most significant challenges facing investors today. [NEW]

ISDA Comments on EP’s MISP Draft Reports. On July 15, ISDA shared comments with policymakers in the European Union on the European Parliament’s (EP) draft reports by Member of the European Parliament Markus Ferber and MEP Eero Heinäluoma on the Market Integration and Supervision Package (MISP). ISDA’s commentary discusses amendments in relation to the European Securities and Markets Authority’s mandate and powers, the Markets in Financial Instruments Regulation transparency, and the European Market Infrastructure Regulation transaction reporting, among other topics. [NEW]

HMT Lays SI Granting UK EMIR Article 25(1) Equivalence to Several Jurisdictions. On July 13, the UK Treasury (HMT) laid before Parliament a statutory instrument (SI) setting out UK European Market Infrastructure Regulation (EMIR) Article 25(1) equivalence determinations in respect of the regulatory framework for CCPs established in Australia, Hong Kong, India, Japan, South Africa, the United Arab Emirates and the US. The statutory instrument will come into force on August 3.

UK Digital Markets Champion Publishes First Report on Wholesale Markets Tokenization. On July 13, Christopher Woolard CBE, the UK’s Wholesale Markets Digital Champion, published his first report on the future of UK wholesale financial markets. The report recommends that the Bank of England consider broader acceptability of tokenized collateral in the market (for example, for use in central counterparties).

ISDA Comments on EP’s MISP Draft Reports. On July 15, ISDA shared comments with policymakers in the European Union on the European Parliament’s (EP) draft reports by Member of the European Parliament (MEP) Markus Ferber and MEP Eero Heinäluoma on the Market Integration and Supervision Package (MISP). According to ISDA, its commentary discusses amendments in relation to the European Securities and Markets Authority’s mandate and powers, the Markets in Financial Instruments Regulation transparency, and the European Market Infrastructure Regulation transaction reporting, among other topics.

ISDA Publishes Report on Key Trends in the Size and Composition of OTC Derivatives Markets. On July 9, ISDA published a report outlining the latest data from the Bank for International Settlements OTC derivatives statistics, which showed an increase in notional outstanding of OTC derivatives during the second half of 2025 compared to the same period in 2024. Notional outstanding rose across all major asset classes, including interest rate derivatives, foreign exchange, equity and commodity derivatives.

The following Gibson Dunn attorneys assisted in preparing this update: Jeffrey Steiner, Adam Lapidus, Karin Thrasher, and Alice Wang.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Derivatives practice group, or the following practice leaders and authors:

Jeffrey L. Steiner, Washington, D.C. (202.887.3632, jsteiner@gibsondunn.com)

Michael D. Bopp, Washington, D.C. (202.955.8256, mbopp@gibsondunn.com)

Michelle M. Kirschner, London (+44 (0)20 7071.4212, mkirschner@gibsondunn.com)

Darius Mehraban, New York (212.351.2428, dmehraban@gibsondunn.com)

Jason J. Cabral, New York (212.351.6267, jcabral@gibsondunn.com)

Adam Lapidus, New York (212.351.3869, alapidus@gibsondunn.com )

Stephanie L. Brooker, Washington, D.C. (202.887.3502, sbrooker@gibsondunn.com)

William R. Hallatt, Hong Kong (+852 2214 3836, whallatt@gibsondunn.com )

David P. Burns, Washington, D.C. (202.887.3786, dburns@gibsondunn.com)

Marc Aaron Takagaki, New York (212.351.4028, mtakagaki@gibsondunn.com )

Karin Thrasher, Washington, D.C. (202.887.3712, kthrasher@gibsondunn.com)

Alice Yiqian Wang, Washington, D.C. (202.777.9587, awang@gibsondunn.com)