Richard Manfredi, Author at Gibson Dunn

From the Derivatives Practice Group: This week, the CFTC announced the first-ever listed spot crypto trading on U.S. regulated exchange.

New Developments

Acting Chairman Pham Announces First-Ever Listed Spot Crypto Trading on U.S. Regulated Exchanges. On December 4, Chairman Caroline D. Pham announced that listed spot cryptocurrency products will begin trading for the first time in U.S. federally regulated markets on CFTC registered futures exchanges. This announcement follows recommendations by the President’s Working Group on Digital Asset Markets and stakeholder insights from the CFTC’s Crypto Sprint and cooperative engagement with the Securities and Exchange Commission. The Crypto Sprint also launched public consultations on all other recommendations from the President’s Working Group report relevant to the CFTC. [NEW]

Acting Chairman Pham Announces Reforms to Wells Process, and Amendments to the Rules of Practice and the Rules Relating to Investigations. On December 1, Chairman Caroline D. Pham announced the Commission is amending its Rules of Practice and its Rules Relating to Investigations. The amended Rules of Practice seek to enhance the transparency of the Commission’s enforcement actions, including changes to ensure an accurate and complete administrative record by improving internal memoranda to the Commission when the Division of Enforcement recommends an enforcement action. [NEW]

Acting Chairman Pham Announces CFTC Interpretation to Unlock Over $22 Billion of Collateral and Promote American Competitiveness. On November 25, Chairman Caroline D. Pham announced that the CFTC’s Market Participants Division published an interpretation to clarify the circumstances under which a futures commission merchant may post customer-owned securities and securities purchased with customer funds with foreign brokers and foreign clearing organizations to margin customers’ foreign futures and foreign options positions in compliance with Part 30 of CFTC regulations. [NEW]

CFTC Staff Issues CPO No-Action Letter. On November 21, the CFTC’s Market Participants Division announced it has issued a no-action letter to the Structured Finance Association, in the context of qualifying credit risk transfer transactions engaged in by their member financial institutions, and certain commodity pool operator (CPO) requirements. [NEW]

U.S. Senate Agriculture Committee Advances CFTC Chair Nominee. On November 20, the U.S. Senate Committee on Agriculture, Nutrition, and Forestry advanced Michael Selig’s nomination to serve as Chairman and Commissioner of the CFTC to the full Senate for consideration.

CFTC to Resume Publishing COT Reports. On November 18, the CFTC announced that it would resume publishing Commitments of Traders (COT) reports on November 19 and released a schedule for the publication of reports that were interrupted during the lapse in federal government appropriations. According to the CFTC, the reports will be published in chronological order beginning November 19 at 3:30 p.m. (ET). The CFTC said that it will increase publication frequency allowing for the backlog to be cleared by the report scheduled for Jan. 23.

New Developments Outside the U.S.

ESMA Welcomes Commission’s Ambitious Proposal on Market Integration. On December 4, ESMA announced that it welcomes the European Commission’s legislative proposal on market integration and supervision. According to ESMA, the package represents a major step towards deeper and more efficient EU capital markets and reflects many of the recommendations set out in ESMA’s 2024 Position Paper on building more effective and attractive capital markets in the EU. [NEW]

ESMA to Launch Common Supervisory Action on MiFID II Conflicts of Interest Requirements. On December 2, ESMA announced that it will launch a Common Supervisory Action (CSA) with National Competent Authorities on conflicts of interest in the distribution of financial instruments. The CSA will assess how firms comply with their obligations under MiFID II to identify, prevent, and manage conflicts of interest when offering investment products to retail clients. [NEW]

ESAs Designate Critical ICT Third-Party Providers. On November 18, the European Supervisory Authorities published the list of designated critical information and communication technology (ICT) third-party providers under the Digital Operational Resilience Act.

ESMA Identifies Measures to Further Enhance Depositary Supervision. On November 17, ESMA published the results of a peer review that assessed the supervision of depositaries, in particular their oversight and safekeeping obligations. According to ESMA, the peer review found that the foundational frameworks for the supervision of depositaries are in place, but also found notable divergences across jurisdictions in terms of the depth and maturity of supervisory approaches.

New Industry-Led Developments

ISDA Responds to Bank of England on Gilt Market Resilience. On December 5, ISDA responded to the Bank of England’s discussion paper on gilt market resilience. In the response, ISDA encourages the Bank of England, before introducing any significant policy changes that would affect the functioning of the gilt repo market, to consider the prudential requirements on capital and liquidity in relation to repo transactions, in conjunction with monetary policy and financial stability, to avoid unintended and detrimental consequences for the UK gilt market and firms’ risk management practices. [NEW]

ISDA Publishes Note on Determining Initial Reference Index for New Trades referencing CPI-U. On November 25, ISDA published a Market Practice Note to recommend a specific methodology that market participants could elect to use for the purposes of determining the Initial Reference Index for certain new inflation derivative transactions given that the Bureau of Labor Statistics has confirmed it will not publish the October 2025 level of the “USA – Non-revised index of Consumer Prices for All Urban Consumers (CPI-U)” as defined in the 2008 ISDA Inflation Derivatives Definitions. [NEW]

ISDA Responds to FCA on Progressing Fund Tokenization. On November 21, ISDA responded to the Financial Conduct Authority’s (FCA) consultation paper CP25/28 on progressing fund tokenization. In the response, ISDA focuses on the use of tokenized assets as both cleared and non-cleared derivatives collateral. Tokenization presents a significant opportunity in the derivatives market, improving risk management through the accelerated movement of collateral and is critical to facilitating 24/7 trading with sound risk management practices. [NEW]

ISDA Responds to CFTC Tokenized Collateral and Stablecoin Initiative. On November 21, ISDA responded to the CFTC’s request for input on the Tokenized Collateral and Stablecoin Initiative, offering perspectives on how tokenization and GENIUS Act–compliant payment stablecoins might contribute to more efficient and resilient collateral practices in derivatives markets. [NEW]

ISDA Publishes Paper Highlighting Changes in OTC IRD Markets. On November 20, ISDA published a paper highlighting changes in over-the-counter interest rate derivatives (IRD) markets between April 2022 and April 2025 based on data from the Bank for International Settlements (BIS) Triennial Central Bank Survey. ISDA said that global IRD average daily turnover rose by nearly 60% to $7.9 trillion in April 2025 from $5.0 trillion in April 2022, attributing the increase to strong growth in euro-denominated IRD trading.

ISDA Publishes Report Analyzing IRD Activity in Mainland China and Hong Kong. On November 19, ISDA published a report examining market growth, structure, and integration across onshore and offshore centers in mainland China and Hong Kong, with a particular focus on renminbi (RMB)-denominated IRD.

The following Gibson Dunn attorneys assisted in preparing this update: Jeffrey Steiner, Adam Lapidus, Marc Aaron Takagaki, Hayden McGovern, 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 )

Hayden K. McGovern, Dallas (214.698.3142, hmcgovern@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)

*Alice Wang, a law clerk in the firm’s Washington, D.C. office, is not admitted to practice law.

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In this webcast, we explore the key policy developments, enforcement risks, and latest case law shaping the future of federal contracting and grantmaking. The federal funding landscape has shifted dramatically in 2025 under the Trump administration. Executive orders targeting diversity, equity, and inclusion (DEI) initiatives, heightened scrutiny under the False Claims Act, and proposed regulatory changes are reshaping compliance obligations across sectors. These sweeping changes to federal funding policy have triggered a wave of contract and grant terminations that have landed squarely in the courts. Recent decisions – including Supreme Court rulings and conflicting circuit opinions – have complicated the path to relief, particularly for plaintiffs seeking equitable remedies like reinstatement of grants or contracts. From grant challenges to oversight of contractor conduct, understanding the evolving regulatory terrain is essential.

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PANELISTS:

Stuart F. Delery is a partner in Gibson Dunn’s Washington, D.C. office and a member of the firm’s Litigation, Crisis Management, and White Collar Defense & Investigations practice groups. He previously served as Acting Associate Attorney General of the United States, overseeing the civil and criminal work of multiple DOJ divisions, and now represents corporations and individuals in complex regulatory litigation and government investigations, including matters involving contractors and grant recipients.

Lindsay M. Paulin is a partner in Gibson Dunn’s Washington, D.C. office and Co-Chair of the firm’s Government Contracts practice. Her work spans the full lifecycle of government contracting issues—including internal investigations, bid protests, False Claims Act defense, cost-allowability disputes, suspension and debarment proceedings, and M&A involving federal contractors. She has represented clients in disputes before the United States Court of Appeals for the Federal Circuit, the United States Court of Federal Claims, the Boards of Contract Appeals, the United States Government Accountability Office, administrative agencies, and other federal and state courts.

Jake M. Shields is a partner in Gibson Dunn’s Washington, D.C. office and a member of the firm’s False Claims Act/Qui Tam Defense Practice Group. He is a seasoned FCA and white-collar defense attorney with deep experience in government enforcement, cybersecurity, and healthcare fraud matters. An expert in the FCA, Jake was a Senior Trial Counsel at the Fraud Section of the Civil Division of the DOJ, where, over an eight-year career spanning administrations of both major political parties, he investigated and litigated FCA cases on behalf of the federal government.

The National Highway Traffic Safety Administration released its proposed new corporate average fuel economy standards for light duty vehicles for model years 2022 through 2031. The proposal also aims to eliminate the manufacturer credit trading program, beginning with model year 2028.

On December 3, 2025, the National Highway Traffic Safety Administration (NHTSA) released a prepublication of its proposed new corporate average fuel economy (CAFE) standards for light duty vehicles for model years 2022 through 2031.[1] The proposal also includes several significant revisions to the CAFE program.

Key takeaways for regulated industry parties include:

NHTSA will no longer consider electric vehicles and the availability of compliance credits in proposing fuel economy standards. The new proposed model year 2022 baseline is 31.2 miles per gallon across the entire light-duty fleet (i.e., passenger cars and light trucks). The proposed rule includes gradual increases in fuel economy for subsequent model years, with NHTSA projecting that the amended standards would correspond to the industry fleetwide average of approximately 34.5 miles per gallon by model year 2031 for passenger cars and light trucks.
The proposed rule seeks to eliminate the inter-manufacturer credit trading program, beginning with model year 2028.
NHTSA’s proposal notes that, under the Energy Policy and Conservation Act (EPCA) preemption provision, states are preempted from adopting or enforcing any regulatory requirements related to fuel economy standards regardless of whether the Environmental Protection Agency (EPA) has granted waivers for such state programs under the Clean Air Act (CAA).

Second Trump Administration Fuel Economy Policy Changes

This proposed rule is one of many actions that the second Trump Administration has taken to reconsider the CAFE program.

On his first day in office, President Trump signed Executive Order 14154, “Unleashing American Energy,” where he announced policy goals of “removing regulatory barriers to motor vehicle access” and “ensuring a level regulatory playing field for consumer choice in vehicles.”[2]

U.S. Transportation Secretary Sean Duffy issued a memorandum implementing Executive Order 14154 on January 28, 2025, titled “Fixing the CAFE Program.”[3] In the memorandum, Secretary Duffy directed NHTSA to begin an immediate reconsideration of all fuel economy standards applicable to motor vehicles from model year 2022 and forward.

Congress also became involved in shaping a significant policy shift in fuel economy standards. President Trump’s signature second-term legislation, the One Big Beautiful Bill Act (OBBBA), enacted on July 4, 2025, eliminated all civil penalties for noncompliance with fuel economy standards.[4] Specifically, section 40006 of the OBBBA amends the language of the CAFE statute to reset the maximum civil penalty to $0.00.[5] Before this legislation, penalties were substantial, and they created a system of tradeable compliance credits so that companies that did not meet the standard could purchase credits from companies that exceeded the standards for a given model year. Now, after passage of the OBBBA, noncompliance with fuel economy standards no longer carries a penalty, effectively rendering the market for compliance credits a nullity.

On June 11, 2025, NHTSA issued an interpretive rule concluding that it is improper to consider the fuel economy of electric vehicles when determining the baseline for the fuel economy standards.[6]

NHTSA’s Proposed Rollback of Fuel Economy Standards

On December 3, 2025, NHTSA released a prepublication of its proposed new CAFE standards for light duty vehicles for model years 2022 through 2026 and model years 2027 through 2031.[7] The proposal also includes several significant revisions to the CAFE program.[8]

Proposed Fuel Economy Standards. Consistent with its prior June 2025 interpretive rule, NHTSA proposes that the fuel economy standards be formulated based only on the fuel economy performance of light-duty vehicles powered by gasoline and diesel fuels. The agency will no longer consider the performance of electric vehicles and plug-in hybrid electric vehicles in its standard-setting analysis, as well as the impact of compliance credits.

NHTSA concludes that it is not permitted under the CAFE statute to consider electric vehicle performance or credit availability in setting standards, noting that it has a “statutory obligation to set CAFE standards at the maximum feasible level that the agency determines vehicle manufacturers can achieve in each model year, balancing four key factors: technological feasibility, economic practicability, the need of the Nation to conserve energy, and the effect of other Federal regulations on fuel economy.”[9] But it asserts that “fuel economy standards are designed based on light-duty vehicles powered by ‘fuel,’ which is defined in EPCA to include gasoline, diesel fuel, or other liquid or gaseous fuels with similar combustion properties as identified by NHTSA.”[10]

From a policy perspective, the agency also notes that the large fuel economy values assigned to electric vehicles have “significantly increas[ed] the fuel economy requirements for traditional gasoline- or diesel-fueled fleets.”[11]

NHTSA also proposes to remove the consideration of the impact of certain technologies, such as air conditioner efficiency, in setting the standards because those technologies are “not demanded by consumers” and have “questionable fuel economy benefits.”[12]

The proposed standards also seek to alter the relationship between the footprint of vehicles—the rectangular area of a vehicle measured from tire to tire where the tires hit the ground—and fuel economy standards.[13] NHTSA points out that the relationship between footprint and fuel economy has shifted substantially since it was last calculated for model year 2008.[14] Although NHTSA will continue applying an estimated relationship that sets more stringent targets for smaller footprint vehicles and less stringent targets for larger footprint vehicles, this proposed change could have implications for the relative incentive to manufacture larger footprint vehicles.

NHTSA ultimately proposes resetting the model year 2022 baseline for passenger cars at 36 miles per gallon and light trucks at 27.7 miles per gallon, excluding the large fuel economy standards previously assigned to electric vehicles.[15] The new proposed model year 2022 baseline is 31.2 miles per gallon across the entire light-duty fleet.[16] Fuel economy standards would then increase at a rate of 0.5 percent per year between model year 2022 and model year 2026, followed by an increase at a rate of 0.25 percent per year from model year 2027 through model year 2031. NHTSA projects that the amended standards would correspond to the industry fleetwide average of approximately 34.5 miles per gallon in model year 2031 for passenger cars and light trucks.

Proposed Changes to the CAFE Program. In addition to the proposed overhaul of the fuel economy standards, the agency proposes other significant revisions to the CAFE program.

First, the proposal seeks to eliminate the manufacturer compliance credit trading program.[17] Although the OBBBA zeroed out the civil penalties for noncompliance with CAFE standards, effectively eliminating the value of credits and significantly slowing the trading market, this proposed change would formally eliminate any market for credit exchanges.[18] The agency notes that this elimination will “encourage manufacturers to provide for steady improvement in fuel economy across their fleets over time, as opposed to relying upon credits acquired from third-party [electric vehicle] manufacturers.”[19] However, because “manufacturers have made investments in particular compliance pathways—pathways that may include purchasing credits from other manufacturers even though the availability of those credits is uncertain”—the agency proposes that the elimination of credit trading not begin until model year 2028.[20]

Second, NHTSA also proposes changes to the criteria used to determine if vehicles are passenger cars or light trucks. The agency points out that “separate standards for the passenger car and light truck fleets . . . have led manufacturers to reshape the market in unanticipated ways—such as by almost eliminating the production of station wagons (passenger cars that generally have more robust cargo capacity, adding mass and reducing fuel economy) in favor of vehicles like minivans and crossover utility vehicles (considered light trucks, and subject to less stringent standards).”[21] In 1975, light trucks represented only 19.3 percent of the light-duty vehicle market, and today they represent 64.7 percent of the light-duty vehicle market.[22]

In recognition of this shift, NHTSA proposes to alter what counts as a light truck. For example, one consideration in assessing if a vehicle qualifies as a light truck is ground clearance level.[23] NHTSA finds that manufacturers have started applying high ground clearance characteristics (such as breakover angle and running clearance) to vehicles that are not otherwise intended for off-highway operation. In response to this shift in vehicle design, NHTSA proposes to eliminate axle clearance as a characteristic used to define a vehicle with high ground clearance beginning in model year 2028.[24]

Preemption. NHTSA’s proposal also notes that EPCA includes a “blanket preemption provision”[25] pursuant to which “states may not adopt or enforce regulatory requirements related to fuel economy standards.”[26] NHTSA points out that the preemptive effect “holds true regardless of whether EPA has granted waivers for emissions requirements under the CAA.”[27]

The proposal notes that President Trump signed into law three joint resolutions, adopted by Congress under the Congressional Review Act, that disapproved waivers that EPA granted under CAA section 209.[28] But NHTSA’s view is that, even if these CAA waivers were in place, the existence of those waivers would not waive EPCA preemption.

However, NHTSA states that it is not taking formal action regarding preemption in the proposal.

The proposal will be open to comments for 45 days after publication in the Federal Register.

[1] National Highway Traffic Safety Administration, The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule III for Model Years 2022 to 2031 Passenger Cars and Light Trucks, Prepublication Version (Dec. 3, 2025), here.

[2] Exec. Order No. 14,154, 90 Fed. Reg. 8353 (Jan. 29, 2025).

[3] Fixing the CAFE Program, Memorandum from Sean Duffy, the Secretary of Transportation, to the Office of the Administrator of the National Highway Traffic Safety Administration (Jan. 28, 2025).

[4] One Big Beautiful Bill Act, Pub. L. No. 119-21, § 40006, 139 Stat. 72, 136 (2025) (codified at 49 U.S.C. § 32912).

[5] Id.

[6] National Highway Traffic Safety Administration, Resetting the Corporate Average Fuel Economy Program, 90 Fed. Reg. 24518 (Jun. 11, 2025).

[7] National Highway Traffic Safety Administration, The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule III for Model Years 2022 to 2031 Passenger Cars and Light Trucks, Prepublication Version (Dec. 3, 2025), here.

[8] Id. at 1.

[9] Id. at 17.

[10] Id. at 300.

[11] Id. at 15.

[12] Id. at 18.

[13] Id. at 23.

[14] Id.

[15] Id. at 24.

[16] Id.

[17] Id. at 398.

[18] On July 25, 2025, NHTSA sent a letter to manufacturers indicating that it would not be issuing compliance notifications for credits generated in model years 2022 and later, but that it “anticipates” reissuing compliance notifications after completion of its rulemaking implementing OBBB. In the meantime, companies have not been able to finalize credit transactions because NHTSA will not honor credit transfers until the corresponding credits are added to the manufacturer’s account, which cannot be done until NHTSA issues a compliance notification. NHTSA does not explain in its proposal whether or when it will begin issuing credit compliance notification letters for credits generated between model years 2022 and 2028.

[19] Id. at 19.

[20] Id.

[21] National Highway Traffic Safety Administration, The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule III for Model Years 2022 to 2031 Passenger Cars and Light Trucks, Prepublication Version (Dec. 3, 2025), at 14, here.

[22] Id. at 382.

[23] Id. at 385–86.

[24] Id. at 386.

[25] Id. at 315.

[26] Id.

[27] Id.

[28] H.J. Res. 87 (Pub. L. 119-15); H.J. Res. 88 (Pub. L. 119-16); H.J. Res. 89 (Pub. L. 119-17); see also The White House, Statement by the President, Last revised: June 12, 2025, available at: https://www.whitehouse.gov/briefingsstatements/2025/06/statement-by-the-president/ (accessed: Sept. 10, 2025).

The following Gibson Dunn lawyers prepared this update: Stacie Fletcher, Rachel Levick, Veronica Goodson, and Laura Stanley.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. To learn more about these issues, please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any leader or member of the firm’s Environmental Litigation and Mass Tort practice group:

Stacie B. Fletcher – Washington, D.C. (+1 202.887.3627, sfletcher@gibsondunn.com)

Rachel Levick – Washington, D.C. (+1 202.887.3574, rlevick@gibsondunn.com)

New simplified ESRS introduce reductions in data requirements, streamlined materiality assessments, and enhanced alignment with global sustainability standards.

On December 3, 2025, the European Financial Reporting Advisory Group (EFRAG) has released its draft simplified European Sustainability Reporting Standards (ESRS)[1] together with its final technical advice[2] to the European Commission, building on its Exposure Draft[3] published on July 31, 2025. This development marks an important step in the European Commission’s 2025 Sustainability Omnibus initiative, which aims to streamline regulatory obligations and reduce compliance burdens without compromising the fundamental objective of the Green Deal to advance sustainability in the European Union.[4]

The Commission indicated that it intends to review the draft and prepare its Delegated Act revising the original ESRS in the first half of 2026, with the applicability date of the new ESRS to be confirmed in the delegated act. The introductory wording in Delegated Regulation (EU) 2025/1416 seems to suggest that the revised standards will only start to apply for the reporting period of financial year 2027.

Key Simplifications and Reforms

EFRAG’s draft simplified ESRS introduce a series of structural and substantive changes intended to make sustainability reporting more proportionate and practical as well as increasing interoperability with other reporting standards such as ISSB:

Stronger Emphasis on Usefulness of Information

A new overarching principle allows companies to filter disclosures through a “usefulness and fair presentation” lens (similar to requirements in the IFRS and ISSB standards), reducing compliance-driven reporting and emphasizing information that is genuinely relevant to investors and other users.

Simplified Materiality Assessment

The materiality process – cited as one of the most complex elements of the first-year reporting cycle – has been streamlined with:

Clearer guidance, more flexibility and more practical instructions,
Reduced documentation requirements, and
Better alignment with auditor expectations.

These changes aim to limit administrative burden while preserving robust decision-making and a “balanced consideration of the costs”.

Reduced Value Chain Burden

The prior preference for direct data collection from value chain partners has been deleted. Companies may now rely more broadly on estimates and indirect sources, alleviating pressure to obtain granular upstream and downstream data.

Substantial Reliefs and Phasing-In Measures

Similarly to the extension of phase-ins for so-called wave 1 companies (i.e. companies being required to report already starting with financial year 2024) under the European Commission’s “quick fix” Delegated Regulation (EU) 2025/1416, the simplified standards incorporate a wider array of phase-ins and “undue cost”-exemptions for disclosures that have proven operationally challenging, such as ESRS S2 or S3.

More Principles-Based Narrative Reporting

Policies, actions, and targets may now be described in a more flexible, narrative manner, with companies free to determine how best to structure these disclosures.

Fewer and Clearer Requirements

According to EFRAG, mandatory datapoints have been reduced in the simplified ESRS by 61 %, and all voluntary datapoints have been removed, making the standards shorter, more accessible, and more coherent.

Improved Interoperability With ISSB Standards

EFRAG has preserved common disclosure elements where possible and further aligned ESRS with ISSB Standards (including adjustments for GHG boundaries and anticipated financial effects). However, some ESRS reliefs go beyond what ISSB permits; companies intending to assert both ESRS and ISSB compliance should evaluate the implications carefully.

Next Steps and Applicability Considerations

The European Commission will now prepare its Delegated Act incorporating EFRAG’s technical advice. The European Commission can do so unilaterally, with the delegated act being subject to a two months’ scrutiny period by the European Parliament and Council of the EU after publication. The introductory wording in the European Commission’s “quick fix” Delegated Regulation (EU) 2025/1416 seems to suggest that the revised standards will only start to apply for the reporting period of financial year 2027.

What This Means for Companies

Companies already subject to CSRD, i.e. so-called wave 1 companies, should carefully monitor the publication of the European Commission’s Delegated Act in the upcoming months, in particular with regard to its application date.

Large EU subsidiaries of U.S. and other non-EU companies, so-called wave 2 companies, generally due to report in 2028 for financial year 2027, should begin to assess how the simplified ESRS may affect their reporting strategy and internal processes. Although the simplifications reduce the reporting obligations, companies will still need to maintain robust materiality assessments, governance structures, and data systems to ensure reliable, audit-ready sustainability disclosures.

Companies aligning with both ESRS and ISSB frameworks should pay particular attention to areas where reliefs under the simplified ESRS may create divergence.

[1] See https://www.efrag.org/en/draft-simplified-esrs (last accessed on December 4, 2025).

[2] See here (last accessed on December 4, 2025).

[3] See https://www.efrag.org/en/projects/esrs-simplification (last accessed on December 4, 2025).

[4] We regularly report on the latest Omnibus Simplification developments in our monthly ESG: Risk, Litigation, and Reporting Update.

The following Gibson Dunn lawyers prepared this update: Ferdinand Fromholzer, Carla Baum, Johannes Reul, Babette Milz, and Vanessa Ludwig

Gibson Dunn lawyers are available to assist in addressing any questions you may have about these issues. Please contact the Gibson Dunn lawyer with whom you usually work, any leader or member of the firm’s ESG: Risk, Litigation, and Reporting practice group, or the authors: :

Ferdinand Fromholzer – Munich (+49 89 189 33-270, ffromholzer@gibsondunn.com)

Carla Baum – Munich (+49 89 189 33-263, cbaum@gibsondunn.com)

Johannes Reul – Munich (+49 89 189 33-272, jreul@gibsondunn.com)

Babette Milz – Munich (+49 89 189 33-283, bmilz@gibsondunn.com)

Vanessa Ludwig – Frankfurt (+49 69 247 411 531, vludwig@gibsondunn.com)

Join us for a recorded webinar that explores the current state of play in U.S. Attorneys’ Offices, including pending challenges to the appointment process of certain U.S. Attorneys and the ramifications of such challenges, changing Department of Justice and U.S. Attorney enforcement priorities, and successful strategies for escalating cases up the chain both within and outside the DOJ.

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PANELISTS:

Nicola (Nick) T. Hanna is a partner in Gibson Dunn’s Los Angeles office and Co-Chair of the firm’s White Collar Defense and Investigations Practice Group. He represents Fortune 500 companies and executives in high-stakes civil litigation, white collar crime, and regulatory and securities enforcement – including internal investigations, False Claims Act cases, and compliance counseling. A former United States Attorney for the Central District of California, Nick draws on his extensive government and trial experience to advise boards and senior executives in matters involving the DOJ, SEC, and other enforcement agencies.

Matthew (Matt) S. Axelrod is a partner in Gibson Dunn’s Washington, D.C. and Co-Chair of the firm’s Sanctions & Export Enforcement practice. Matt is the only person to have previously served as both Principal Associate Deputy Attorney General at the U.S. Department of Justice and Assistant Secretary for Export Enforcement at the U.S. Department of Commerce’s BIS. His over 25 years of government enforcement, white-collar defense, and crisis management experience are why clients consistently rely on Matt to help them navigate their most sensitive and complex matters.

Douglas Fuchs is a partner in Gibson Dunn’s Los Angeles office and Co-Chair of the firm’s Los Angeles Litigation Department. He represents clients in white-collar and regulatory enforcement matters—including securities fraud, public corruption, antitrust, and FCPA issues—conducts internal investigations, develops compliance programs, and handles complex civil litigation arising from related criminal or regulatory actions Prior to joining the firm, Doug was an Assistant U.S. Attorney for the Central District of California for seven years, and served as Deputy Chief of the Major Frauds Section.

Debra Wong Yang is a partner in Gibson Dunn’s Los Angeles office and Chair of the firm’s Crisis Management Practice Group. Debra has a strong background in addressing and resolving problems across the white collar litigation spectrum, including through corporate and individual representations, internal investigations, crisis management and compliance. She previously served as the U.S. Attorney for the Central District of California, where she led significant criminal prosecutions and enforcement initiatives.

This update discusses arguments that district courts have found compelling in dismissing these cases, as well as recommendations for plan sponsors and fiduciaries to manage litigation risk.

Over the last eighteen months, class action lawsuits challenging the use of ERISA 401(k) plan forfeitures to offset employer contributions have proliferated in the federal courts. Although this use of forfeitures is a longstanding practice recognized by the U.S. Department of Treasury, a handful of favorable district court decisions allowing such claims to proceed to discovery have apparently emboldened plaintiffs to challenge this practice. Fortunately for defendants, recent cases have suggested a growing skepticism of this theory, with most district courts granting motions to dismiss. A few of these decisions are now pending review in the Third, Eighth, and Ninth Circuit Courts of Appeals.

In this update, we provide an overview of arguments that district courts have found compelling in dismissing these cases, as well as recommendations for plan sponsors and fiduciaries to manage litigation risk.

Background on ERISA Plan Forfeitures

The forfeitures in the crosshairs in these lawsuits are unvested employer contributions to plan accounts that are forfeited by the employee participant when the employee separates from the company before becoming fully vested in the funds. To illustrate, an employer might commit to matching its employees’ 401(k) contributions up to 4% of covered compensation, while requiring that the employees complete three years of service before the contributions vest. If an employee leaves her job before completing three years of service, she would forfeit these matching funds. Plan terms may spell out how such forfeited funds are to be used, typically for paying plan expenses, offsetting future employer contributions, or increasing benefits to other participants’ accounts. Plan sponsors may also include plan language specifying that forfeitures be used for only one of these purposes.

Forfeiture lawsuits generally allege that the use of forfeitures to offset future employer contributions—rather than to pay plan expenses otherwise borne by plan participants or to reallocate to other eligible plan participants—prioritizes the plan sponsor’s financial interests over those of plan participants and therefore violates ERISA. Specifically, plaintiffs allege that this practice (1) violates fiduciary duties of loyalty and prudence owed to the plan; (2) violates ERISA’s anti-inurement provision; and (3) constitutes a prohibited transaction under ERISA.

As we reported previously, early decisions were split on the viability of plaintiffs’ theory. However, over the last year, an increasing number of courts have rejected these cases at the motion-to-dismiss stage. In fact, of twenty-eight recently filed suits, courts have granted defendants’ motions to dismiss in twenty-four of them. And fourteen of these twenty-four suits were dismissed partially or entirely without leave to amend. While these dismissals are welcome news for plan sponsors, these cases are still in their infancy, and a few are currently on appeal. Until the circuit courts weigh in, the threat of litigation still looms.

The Key Arguments for Defendants in Refuting Plaintiffs’ Forfeiture Claims

As noted above, to date, most forfeiture cases have failed at the pleadings stage. Defendants have made an array of jurisdictional and merits arguments in motions to dismiss challenging plaintiffs’ theories. While factual differences between plan terms have influenced the outcome of several cases, certain merits arguments have consistently gained traction in the courts.

Plaintiffs’ Central Theory of Fiduciary Breach Is Often Deemed Overbroad

Plaintiffs’ foundational argument is that employers breach fiduciary duties when they use forfeited funds to offset company contributions rather than pay plan expenses otherwise paid by plan participants. Such a move, plaintiffs argue, necessarily amounts to a breach of the duties of prudence and loyalty owed by plan fiduciaries under ERISA.

While a few courts have accepted this theory, the bulk have not, finding that the claims are overbroad and insufficient under Federal Rule 12(b)(6). Courts reason that ERISA does not require fiduciaries to “maximize pecuniary benefits” or “resolve every issue of interpretation in favor of plan beneficiaries.”[1] These decisions often note that defendants’ actions were permitted by—or even required by—the terms of their plan documents. As an example, a district court judge, confronted with a plan that explicitly allowed its sponsor “to use forfeited funds as company contributions or administrative expenses,” stressed that plaintiffs were essentially asking the court to read a new benefit into their plan’s own terms: “paying [p]laintiffs’ administrative costs.”[2] Framing that interpretation as “impermissibl[e],” the judge went on to dismiss plaintiffs’ breach of fiduciary duty claim.

Some judges also point out that the use of forfeitures to offset company contributions (where permitted by plan terms) is recognized under a Treasury Department regulation in the defined benefit context, as well as under proposed regulations in the defined contribution context.[3]

Accordingly, district courts are increasingly rejecting plaintiffs’ arguments that defendants should be categorically precluded from taking an action that the plan itself permits. As one district court noted, plaintiffs must “plead something more than an ordinary use of forfeited funds to pay future employer contributions, or in other words, behavior that is not consistent with the practices of perhaps all 401(k) plan fiduciaries.”[4]

District Courts Are Not Buying Plaintiffs’ Prohibited Transaction and Anti-Inurement Claims

Plaintiffs’ class action complaints also typically allege that using forfeitures to offset company contributions violates both ERISA’s anti-inurement and prohibited transactions provisions. Regarding the anti-inurement provision, plaintiffs claim that the use of forfeitures to offset company contributions effectively “inures” plan assets to the benefit of the employer, rather than the plan participants. Additionally, plaintiffs argue that this practice constitutes a prohibited transaction because it amounts to self-dealing by reducing the contributions an employer must make to that plan.

Neither argument has been particularly persuasive to the courts. Only two of the earliest motion to dismiss opinions permitted prohibited transaction and anti-inurement claims to proceed: Qualcomm and Intuit.[5] Most district courts to address these claims have dismissed them. Courts emphasize that to state a claim for violation of the anti-inurement provision, plaintiffs must allege that plan assets reverted back to the plan sponsor.[6] However, forfeited funds remain in the plan when used to offset company contributions and thus plaintiffs cannot allege that any plan assets reverted back to the plan sponsor.[7] The fact that plan sponsors benefit “through the reduction in [their] matching contributions does not make the use of forfeited amounts in this way a violation of the anti-inurement provision.”[8]

As for prohibited transaction claims, district courts consistently hold that the reallocation of forfeited funds within a plan—including to offset company contributions—does not constitute a “transaction” as that term is used in Sections 406(a) or 406(b) of ERISA. The transactions prohibited by these provisions are typically “commercial bargains that present a special risk of plan underfunding,” for example credit extensions, not simply a reallocation of funds within a plan between purposes.[9] Thus, these claims also fail.[10]

Forfeiture Cases Pending Appeal

Although most district courts presented with 401(k) forfeiture claims are now disposing of them on motions to dismiss, courts of appeal have yet to address the matter. Multiple dismissal decisions are pending on appeal, however, with appellate briefing complete in one case and underway in five others—actions that cumulatively touch the Third, Eighth, and Ninth Circuits.[11] Opinions issued in these cases in the coming months will likely influence the direction of future district court decisions and—if favorable to defendants—could substantially narrow the opportunities for viable 401(k) forfeiture lawsuits.

Future Considerations for Plan Sponsors and Fiduciaries

These cases are facing significant headwinds, which may make them less appealing for plaintiffs. Nevertheless, with some cases still allowed to proceed to discovery, and no appellate decisions yet issued in this space, the law remains to be fully written. For now, sponsors and fiduciaries should anticipate more cases on the horizon.

While this wave of litigation continues, sponsors may want to consider reviewing their plan documents to assess whether their uses of forfeitures comply with IRS guidance and proposed Treasury Department regulations, as well as with the terms of their plans.[12] Fiduciaries may also consider documenting any decision-making related to their use of forfeitures, including detailing their compliance with plan terms. They may also review participant communications, such as the summary plan description, to assess how forfeiture allocations are explained to plan participants.

[1] Wright v. JPMorgan Chase & Co., 2025 WL 1683642, at *5 (C.D. Cal. June 13, 2025) (quoting Wright v. Oregon Metallurgical Corp., 360 F.3d 1090, 1100 (9th Cir. 2004)).

[2] Middleton v. Amentum Parent Holdings, LLC, 2025 WL 2229959, at *14-15 (D. Kan. Aug. 5, 2025).

[3] Polanco v. WPP Group USA, Inc., 2025 WL 3003060, at *4-5 (S.D.N.Y. Oct. 27, 2025) (quoting 26 C.F.R. § 1.401-7(a)); Hutchins v. HP Inc., 737 F. Supp. 3d 851, 863-64 (N.D. Cal. 2024).

[4] McWashington v. Nordstrom, Inc., 2025 WL 1736765, at *14 (W.D. Wash. June 23, 2025).

[5] Perez-Cruet v. Qualcomm Inc., 2024 WL 2702207, at *3-7 (S.D. Cal. May 24, 2024), reconsideration denied, 2024 WL 3798391 (S.D. Cal. Aug. 12, 2024); Rodriguez v. Intuit Inc., 744 F. Supp. 3d 935, 946-49 (N.D. Cal. 2024).

[6] E.g., Hutchins, 737 F. Supp. 3d at 865-66 (N.D. Cal. 2024).

[7] See e.g., Fumich v. Novo Nordisk Inc., 2025 WL 2399134, at *8 (D.N.J. Aug. 19, 2025); Barragan v. Honeywell Int’l Inc., 2024 WL 5165330, at *5-6 (D.N.J. Dec. 19, 2024); Hutchins, 737 F. Supp. 3d at 868 (N.D. Cal. 2024) (same); Dimou v. Thermo Fisher Scientific Inc., 2024 WL 4508450 at *10 (S.D. Cal. Sept. 19, 2024) (same).

[8] Hutchins, 737 F. Supp. 3d at 866 (N.D. Cal. 2024).

[9] Barragan, 2024 WL 5165330, at *7 (D.N.J. Dec. 19, 2024) (internal citation omitted).

[10] Sievert v. Knight-Swift Transportation Holdings, Inc., 780 F. Supp. 3d 870, 880 (D. Ariz. 2025); Barragan, 2024 WL 5165330, at *7 (dismissing prohibited transaction claim because “the allegations demonstrate that the forfeited amounts remain as Plan assets and are reallocated to other Plan participants”); Hutchins, 737 F. Supp. 3d at 868 (same); Dimou, 2024 WL 4508450 at *11 (same).

[11] Hutchins, 767 F. Supp. 3d 912 (N.D. Cal. 2025), appellate briefing completed, No. 25-826 (9th Cir.); JPMorgan Chase, 2025 WL 1683642 (C.D. Cal. June 13, 2025), briefing underway, No. 25-4235 (9th Cir.); McWashington, 2025 WL 1736765 (W.D. Wash. June 23, 2025), briefing underway, No. 25-4613 (9th Cir.); Barragan, 2025 WL 2383652 (D.N.J. Aug. 18, 2025), briefing underway, No. 25-2609 (3d. Cir.); Cain v. Siemens Corp, 2025 WL 2172684 (D.N.J. July 31, 2025), briefing underway, No. 25-2564 (3d. Cir.); Matula v. Wells Fargo & Co., 2025 WL 1707878 (D. Minn. June 18, 2025), briefing underway, No. 25-2441 (8th Cir.).

[12] Use of Forfeitures in Qualified Retirement Plans, 88 FR 12282-01.

The following Gibson Dunn lawyers prepared this update: Ashley Johnson, Jennafer Tryck, Laura Lashus, and Wyatt Hayden.

Gibson Dunn lawyers are available to assist in addressing any questions you may have about these developments. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any leader or member of the firm’s ERISA Litigation, Labor & Employment, or Executive Compensation & Employee Benefits practice groups:

ERISA Litigation:
Karl G. Nelson – Dallas (+1 214.698.3203, knelson@gibsondunn.com)
Ashley E. Johnson – Dallas (+1 214.698.3111, ajohnson@gibsondunn.com)
Heather L. Richardson – Los Angeles (+1 213.229.7409, hrichardson@gibsondunn.com)
Jennafer M. Tryck – Orange County (+1 949.451.4089, jtryck@gibsondunn.com)

Labor & Employment:
Jason C. Schwartz – Washington, D.C. (+1 202.955.8242, jschwartz@gibsondunn.com)
Katherine V.A. Smith – Los Angeles (+1 213.229.7107, ksmith@gibsondunn.com)

Executive Compensation & Employee Benefits:
Michael J. Collins – Washington, D.C. (+1 202.887.3551, mcollins@gibsondunn.com)
Sean C. Feller – Los Angeles (+1 310.551.8746, sfeller@gibsondunn.com)
Krista Hanvey – Dallas (+1 214.698.3425, khanvey@gibsondunn.com)

‘Tis the Christmas auction season – the other bidder is behind you!’

AIM traded Inspecs Group announced on 20 November that it is now juggling indicative offers from: H2 Equity partners; a consortium comprising Risk Capital Partners and Ian Livingston; and Safilo Group. The PUSU deadline for all three has been extended to 18 December 2025. It also told the audience (and the other actors) that the highest proposal is currently from H2 – which is a cash offer with an unlisted share alternative.
Cometh (not quite midnight on) the third PUSU deadline on 7 November for JTC suitors Permira and Warburg Pincus, and JTC (Cinderella) was in receipt of proposals from each at an equivalent offer price and where both had completed due diligence; agreed the form of transaction documentation; and wanted to move to make a firm offer asap. Permira ultimately got the nod with a further revised proposal which led to it announcing a recommended all cash offer on 10 November which values JTC at approximately £2.3 billion on a fully diluted basis.
To round out the show Bluefield Solar Income Fund Limited (main market), PPHE Hotel Group (main market), Kore Potash plc (AIM) and Management Consulting Group plc (delisted) all announced formal sale processes.

The November Data

Offers Announced

Offers by Sector (YTD)

Bid Premia	Financial Advisor Fees (% deal value)

What’s Happened

BHP no longer in ore of Anglo – talks off

BHP never wanted the deeds to a platinum mine for Christmas. The demerger of Anglo Platinum was a condition (together with the parallel demerger of Kumba Iron Ore) to its £38.6 billion indicative proposal put to the Anglo American board in April last year. Anglo cited the implementation risk of an unprecedented two public company spin outs as one of the reasons for not taking discussions further. But with (now renamed) Valterra Platinum successfully spun-out in June (and ignoring for a moment Anglo’s announced merger with Teck Resources), there were thoughts as to whether this could be another “boomerang” return deal, similar to compatriot Macquarie’s acquisition of Renewi.

In 2023, Macquarie (like BHP) came up against the hard edges of the PUSU regime in its initial approach to Renewi but, together with British Columbia Investment Management, successfully revived/“recycled” that transaction in June this year. However, last week BHP announced that following preliminary discussions with Anglo it is no longer considering an approach. Although BHP may have to consider what to do about its long-standing investment in Solgold, with Solgold announcing earlier in the week that it had received a non-binding proposal from its largest shareholder Jiangxi Copper Company. JCC currently has a festive PUSU deadline of 26 December.

Just not cricket! They play by different rules Down Under

Australian public M&A has a new pantomime villain (not the English cricket team). Back in February, Cosette Pharmaceuticals Inc. announced a recommended scheme of arrangement for Mayne Pharma. Two months later Mayne put out a profit downgrade. Cosette attempted to rely on a MAC condition to back out, but was ultimately denied. It also announced that, if the deal still went through, it would close one of Mayne’s plants in South Australia. The scheme was conditional on Australian foreign investment approval and the plant closure was seen by some as gaming that approval. Last month, to the disappointment of Mayne shareholders, the Australian Treasurer declined to approve the deal (there having been a separate debate about what would happen if it was approved but subject to conditions).

The UK has very different rules on MACs (with a notoriously high hurdle of “striking at the heart of the purpose of the transaction”); it is also not possible to invoke a regulatory condition without Panel approval; and the Code requires a bidder to set out its intentions for the target business and employees in detail in the offer announcement and documentation. However, in the case of a regulatory approval, without which it is almost impossible to proceed, and which is refused, would the ultimate outcome be different? The UK rules would hopefully never have let the genie out of the bottle in the first place.

Pens down, tools down on HICL Infrastructure and TRIG merger

Another bidder with a change of heart is HICL. On 17 November, HICL Infrastructure and The Renewables Infrastructure Group Limited announced an agreed merger to create the UK’s largest listed infrastructure company with net assets of £5.3 billion. Despite both being FTSE 250 companies, and it being one of the larger announced transactions of the year, it is not covered by the Code as it involved the reconstruction and voluntary winding up of TRIG under Guernsey law. This has proved pivotal. After reported feedback from HICL shareholders, the parties announced earlier this week that the merger is off. Something which would not have been possible under the Code (without the express consent of the Panel). HICL stated that it could not progress the transaction without a substantial majority of support from its investors. HICL shares jumped more than 4% on the news.

Looking Ahead

Predictions for December:

Will the ghosts of schemes past come back to haunt Cicor’s bid for TT Electronics?

At the end of October, Six Swiss listed Cicor Technologies announced a recommended cash and share offer for TT Electronics. There would appear to have been shareholder feedback on the Swiss share component, as on 18 November Cicor announced a revised final all cash offer (with an optional only share alternative). Cicor should then have been able to sleep better with an equity raise planned post the shareholder vote to pay down the resulting additional borrowings. However, the day after, significant shareholder DBAY Advisors (which came out against the deal when it originally broke and which itself had previously put proposals to the TT board), disclosed that it had increased its shareholding from 16% to over 24%.

Last month saw the unusual event of the scheme of arrangement for Natara’s offer for Treatt being voted down by Treatt shareholders (with Döhler amassing a 28% blocking stake). It will be interesting to see what is unwrapped at the TT shareholder meeting scheduled for the week before Christmas.

P2P Financing

The most significant debt financing backing a public to private bid in November was the £1.5 billion private credit facility provided to support Permira’s acquisition of funds administration and services provide JTC plc in a deal that values the target at £2.3 billion. The financing is led by Blackstone and other lenders include CVC Credit, Singapore’s GIC, Oak Hill, Blue Owl, PSP Investments and Jefferies. The debt will consist of £1.3 billion worth of senior term loans (split into sterling, euro and dollar tranches) to fund the acquisition and refinancing of target debt, as well as a £250 million delayed draw term loan and a £150 million bridge to a revolving credit facility.

The documentation disclosed in connection with the bid assumes a financing EBITDA of £160 million (subject to final structuring analysis) indicating that leverage through the drawn term loan exceeds 8x. This is higher than the leverage usually available for broadly syndicated deals, proving once again the importance of the private credit space to fund competitive bids for acquisitions.

Another feature distinguishing private credit facilities from syndicated loans is the availability of PIK toggles, allowing borrowers to reduce the burden of cash pay interest in difficult markets. The JTC plc financing documents give the borrower an option to capitalise up to 50% of the margin on its term loans (at a sliding scale premium rate capped at 0.25%) for a period of up to three years during the life of the loans.

However, perhaps the most notable term of these facilities is the pricing. The sterling and euro facilities are priced at 4.75% over the respective reference rates, whilst the dollar tranche is priced at 4.50% and further margin step downs are available beginning 6 months after closing. This is very close to the levels of pricing recently seen on broadly syndicated loans for new acquisitions and shows that, for deals with a strong credit story, private credit now provides a welcome alternative liquidity source for bidders, with the ability to absorb larger deals without a huge pricing premium.

Equity Capital Markets

After several London main market IPOs in September and October (The Beauty Tech Group, Shawbrook and Princes Group), no main market IPOs were announced in November, reflecting in part the usual slow-down in IPO activity following the expiry of the 135-day negative assurance accounting comfort period for issuers with a 31 December year end, going to market on the back of 30 June interim numbers. The most notable primary ECM transaction in November was a capital raise by SSE.

SSE Placing

On 12 November, energy utility SSE announced, pre-market open, an equity raise of approximately £2 billion as part of its £33 billion investment programme for FY26-30. This represented the second largest equity raise by a company on the LSE in the past five years after the £7 billion rights issue by National Grid in May 2024. The equity raise amounted to approximately 8.8% of SSE’s existing issued share capital and included an approximately £2 billion institutional placing (on a “soft” pre-emptive basis), alongside an £8 million retail offer conducted via RetailBook and a £330,000 director subscription. In total, 97,916,637 new shares were issued at a price of 2,050 pence per share, reflecting a 3.8% premium to the closing price on 11 November. The equity raise was well received by the market with the share price increasing to 2,307 pence at market close on 12 November.

Key Contacts:

Will McDonald Partner, Corporate	Chris Haynes Partner, Corporate	David Irvine Partner, Finance	Kavita Davis Partner, Finance
James Addison Of Counsel, Corporate	Thomas Barker Of Counsel, Corporate	Sarah Leiper-Jennings Of Counsel, Corporate	Pete Usher Associate, Corporate

With the launch of the new U.S. Department of Justice/Department of Homeland Security cross-agency Trade Fraud Task Force, importers and their affiliates are at heightened risk of criminal and civil enforcement actions for alleged violations of tariffs, duties, and import restrictions. In this recorded webinar, we explore the theories of criminal prosecution the DOJ has used in the past to prosecute tariff evasion, the investigative tools they might employ, scenarios that are most likely to attract regulatory scrutiny, and the steps companies can take to mitigate their risk of enforcement.

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 1.0 credit hours, of which 1.0 credit hours 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.

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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:

Christopher (Chris) T. Timura is a partner in Gibson Dunn’s Washington, D.C. office and a member of the International Trade and White Collar Defense & Investigations Practice Groups. He advises clients on complex matters at the intersection of U.S. national security, foreign policy and international trade regulation — including export controls, economic sanctions, and import-related investigations — and regularly represents companies before agencies such as the OFAC, BIS and CBP. Chris currently serves on the Department of Commerce’s Regulations and Procedures Technical Advisory Committee.

We are pleased to provide you with the November edition of Gibson Dunn’s monthly U.S. bank regulatory update. Please feel free to reach out to us to discuss any of the below topics further.

KEY TAKEAWAYS

The Board of Governors of the Federal Reserve System (Federal Reserve), Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) jointly issued a final rule modifying the enhanced supplementary leverage ratio (eSLR) for the largest banks. The rule is broadly consistent with the proposal and replaces the fixed 2% eSLR buffer for GSIBs and their subsidiaries with a buffer equal to half of the GSIB’s Method 1 surcharge, noting that “[t]his recalibration is important to help mitigate potential disincentives for GSIBs to engage in low-risk, low-return, balance-sheet-intensive activities, such as intermediation by GSIBs’ broker-dealer subsidiaries in markets for Treasury securities, and from holding low-risk assets in general.” In a change to the proposed rule, the buffer would be capped at 1% for subsidiary banks. Although the final rule goes into effect April 1, 2026, it includes an option for banking organizations to start using it as early as January 1, 2026.
The Federal Reserve finalized revisions to its Large Financial Institution (LFI) rating system for large bank holding companies and its rating system for supervised insurance organizations (SIOs), specifically to address the “well managed” status of those firms under the frameworks. The effective date of the final notice is January 16, 2026.
The Federal Reserve publicly released a Statement of Supervisory Operating Principles (Statement), previously provided to all Federal Reserve supervisory leadership and staff, which aligns supervisory practices with the policy direction set by Vice Chair for Supervision Michelle Bowman. The Statement translates Vice Chair for Supervision Bowman’s priorities into specific supervisory and operational expectations for implementation by supervisory staff of the Federal Reserve Board and Federal Reserve Banks.
As signaled by leadership of the federal banking agencies, the Federal Reserve, FDIC and OCC issued a proposed rule to lower the community bank leverage ratio (CBLR) requirement from 9% to 8% and extend the compliance grace period from two to four quarters. The proposal is part of a broader recalibration of capital and other regulatory and supervisory requirements for smaller institutions. Comments on the proposal are due by January 30, 2026.
The OCC continued its regulatory and supervisory tailoring efforts for community banks (now defined as institutions with up to $30 billion in assets) by issuing new guidance clarifying BSA/AML examination procedures, reducing certain data-collection requirements and outlining how examiners may exercise discretion in the examination process. The OCC also issued a request for information (RFI) seeking input on the “key challenges” and “barriers” community banks face when engaging with core service providers and other essential third-party providers. Comments on the RFI are due by January 27, 2026.
The OCC published an interpretive letter authorizing national banks to pay network fees on blockchain networks to support otherwise permissible activities and hold, as principal, amounts of crypto-assets reasonably necessary to cover anticipated network fee obligations. The interpretive letter continues the OCC’s incremental approach to clarifying the permissibility of crypto-related activities.

DEEPER DIVES

Federal Banking Agencies Finalize Changes to Enhanced Supplementary Leverage Ratio. On November 25, 2025, the Federal Reserve, FDIC and OCC jointly issued a final rule modifying the enhanced supplementary leverage ratio (eSLR) requirements applicable to the largest banks. The rule was adopted unanimously by the FDIC and OCC but approved by a 5-2 vote of the Federal Reserve Board. In dissent, Governor Cook expressed concerns with the reduction of capital at the holding company levels, noting that “well-intended, individually reasonable actions can nevertheless result in disproportionately large reductions in overall capital that can reduce the resilience of the system.”

Under the final rule, the eSLR buffer for GSIBs will equal 50 percent of a GSIB’s method 1 surcharge, replacing the current fixed 2% buffer. The banking agencies explained that, since the adoption of the eSLR standards, the supplementary leverage ratio requirements have become a binding constraint rather than a backstop to risk-based capital requirements. Accordingly, the final rule would modify the calibration of the eSLR standards to help ensure that supplementary leverage ratio requirements generally serve as a backstop to risk-based capital requirements. The eSLR final rule also modifies the standard for subsidiary depository institutions from the current 6 percent standard (3 percent supplementary leverage ratio requirement plus 3 percent) to 3 percent plus the lesser of (i) one percent; or (ii) 50 percent of the method 1 risk-based capital surcharge applicable to the GSIB holding company that controls the national bank or federal savings association. It also removes the eSLR standard from the definition of “well capitalized” under the prompt corrective action framework, further aligning leverage requirements with their intended role.

Insights. The adoption of the eSLR rule further reflects the tailoring efforts on banking regulation and reducing U.S. gold-plating relative to international standards. As adopted, the banking agencies emphasized the purpose of the eSLR to serve as a buffer based on the GSIB surcharge framework would tailor the eSLR to each GSIB’s systemic footprint and produce a calibration that is consistent with the objective for supplementary leverage ratio requirements to act as a backstop to risk-based capital requirements. It also highlights the importance of balancing the risks within the financial system with the intended role of financial institutions, including that “GSIBs play a key role in supporting market liquidity and providing financing in Treasury markets.” At the same time, dissenting Federal Reserve Governors expressed skepticism whether additional balance-sheet capacity will, in practice, be deployed to Treasury-market support during periods of stress, underscoring the policy debate over the rule’s implications for capital resilience.

Federal Reserve Finalizes Revisions to Supervisory Rating Framework for Large Bank Holding Companies and Supervised Insurance Organizations. On November 5, 2025, the Federal Reserve finalized revisions to its LFI rating system for large bank holding companies and its rating system for SIOs specifically to address the “well managed” status of those firms. The final notice was adopted substantially as proposed in July. Under the revised framework, a firm will be considered “well managed” if it receives at least two Broadly Meets Expectations or Conditionally Meets Expectations component ratings and no more than one Deficient-1 component rating. A firm will not be considered “well managed” if it receives a Deficient-1 for two or more component ratings or it receives a Deficient-2 for any of the component ratings.

The final notice also eliminates the enforcement presumption that a firm with one or more Deficient-1 component ratings will be subject to an informal or formal enforcement action. Instead, such firms may be subject to a formal or informal enforcement action based on the particular facts and circumstances. The final rule makes parallel changes to the SIO ratings framework. Federal Reserve Board Governor Barr issued a dissenting statement.

Insights. According to the Federal Reserve, as of the third quarter of 2025, 36 holding companies were subject to the LFI framework, 17 of which were not considered “well managed”. Federal Reserve staff estimated that the revised framework would reduce the number of holding companies categorized as not “well managed” by seven. Importantly, however, only three of the seven firms would also qualify as “well managed” under the Bank Holding Company Act, which requires that both the holding company and each depository institution subsidiary be “well managed” in order for the firm to elect financial holding company status.
These data points—and the continuing emphasis across the federal banking agencies to align supervisory ratings with material financial risks—strongly suggest that CAMELS ratings will be the next area of reform. Recent statements by Vice Chair for Supervision Bowman (“we and the other FFIEC agencies are reviewing the CAMELS ratings system, which is long past due for reform”) and FDIC Acting Chairman Hill (“we are also working hard on potential reforms to the CAMELS rating system”) reinforce this hypothesis.

Federal Reserve Releases Statement of Supervisory Operating Principles. On November 18, 2025, the Federal Reserve released a Statement of Supervisory Operating Principles (Statement), previously provided to all Federal Reserve supervisory leadership and staff. The Statement aligns supervisory practices with the policy direction set by Vice Chair for Supervision Michelle Bowman—namely refocusing the examination process to prioritize a firm’s material financial risks over process-related factors or concerns.

Insights. The Statement reinforces the Federal Reserve’s continuing shift under Vice Chair for Supervision Bowman toward a supervisory philosophy centered on material financial risks rather than process-driven or documentation-centric deficiencies. Although the principles articulated in the Statement parallel those reflected in the OCC’s and FDIC’s recent proposal to define “unsafe or unsound practices” and revise the framework for issuing MRAs and other supervisory communications—and, indeed, the Statement notes that work in these areas is already underway—the Statement is broader in scope. It addresses expectations for the use of horizontal reviews, supervisory practices related to liquidity risk, ratings considerations and other themes that affect how examinations are conducted across the Federal Reserve System. Because the Statement represents a formalized directive to supervisory staff, institutions should expect its principles to be incorporated into examination planning and execution relatively quickly.

Federal Banking Agencies Propose Revisions to the CBLR Framework. On November 25, 2025, the Federal Reserve, FDIC and OCC issued a proposed rule to revise the community bank leverage ratio (CBLR) framework. The proposal would lower the CBLR requirement from 9% to 8%—measured as tier 1 capital divided by average total consolidated assets—and would extend the grace period for qualifying community banking organizations that temporarily fall below the threshold from two quarters to four quarters (subject to a limit of eight quarters in any five-year period). The agencies stated that these changes are intended to provide community banking organizations with greater flexibility to manage balance sheet fluctuations and temporary stress conditions.

According to the proposal, lowering the CBLR to 8% would allow an estimated 475 additional community banking organizations to qualify for the CBLR framework, should they choose to opt in. Under the CBLR framework, a qualifying community banking organization (defined as an insured depository institution or its holding company with total consolidated assets of less than $10 billion and satisfying certain other criteria) is deemed to satisfy all generally applicable risk-based and leverage capital requirements and, in the case of an insured depository institution, is considered well capitalized under the agencies’ prompt corrective action framework.

Insights. The proposed revisions to the CBLR framework reflect the federal banking agencies continued focus on regulatory tailoring for smaller institutions. The proposal aligns with recent efforts at the agencies to recalibrate supervisory expectations for community banks. These initiatives solidify the agencies’ willingness to differentiate smaller institutions from larger, more complex firms. In the case of smaller institutions considering an opt-in, lowering the CBLR to 8% and extending the grace period would provide community banks with greater flexibility to manage short-term fluctuations in deposits, liquidity positions and asset mixes without immediately triggering more complex risk-based capital requirements.

OCC Continues Regulatory and Supervisory Tailoring Efforts for Community Banks. On November 24, 2025, the OCC announced a series of supervisory and regulatory actions that build on the OCC’s broader initiative to tailor risk-based supervision for smaller institutions and prioritize reforms aligned with the risk profiles of community banks.

In two BSA/AML-related bulletins, the OCC issued supplementary guidance clarifying how examiners should apply BSA/AML examination procedures at community banks. The guidance tailors the agency’s approach based on the generally low money-laundering and terrorist-financing risk profiles of community banks, allowing examiners to rely on a bank’s actual risk profile rather than minimum procedural baselines that may be disproportionate to the risks posed. The OCC also announced the discontinuation of its Money Laundering Risk (MLR) system data collection, eliminating a longstanding reporting requirement.

Separately, the OCC issued a request for information (RFI) seeking input on the challenges community banks face in working with core service providers and other essential third-party providers. The RFI reflects the OCC’s concerns that structural barriers in the third-party-services market may impair community banks’ competitiveness and operational resilience. Comments on the RFI are due by January 27, 2026.

Insights. Similar to its October 6, 2025 announcement, the OCC’s initiatives underscore again its continued commitment to regulatory tailoring for community banks and reflect an interagency recognition that one-size-fits-all regulation can disproportionately burden smaller institutions. The RFI on core service providers highlights a longstanding structural challenge: many community banks operate in a highly concentrated market for core service providers, limiting their negotiating leverage and constraining their ability to innovate. Attention to this issue could precede future guidance or rulemaking on third-party risk management, potentially reshaping expectations for both community banks and their vendors.

FDIC Issues Final Rule Adjusting and Indexing Certain Regulatory Thresholds. Consistent with broader initiatives aimed at reducing regulatory burden on smaller institutions, on November 25, 2025, the FDIC finalized amendments to adjust several regulatory thresholds across its regulations to reflect inflation and provide for future adjustments under an indexing methodology. The final rule affects six parts of the FDIC’s regulations: Part 303 (filing procedures); Part 335 (securities of nonmember banks and state savings associations); Part 340 (restrictions on sale of assets by a failed institution by the FDIC); Part 347 (international banking); Part 363 (audit committee requirements); and Part 380 (orderly liquidation authority). The final rule becomes effective January 1, 2026.

With respect to Part 363 audit requirements, the FDIC clarified that insured depository institutions that have prospective filing and compliance requirements based on thresholds in place in 2025, but that will fall below the updated thresholds as of January 1, 2026, will not be required to comply with Part 363 requirements for the 2025 reporting cycle.

Insights. Most notably, the proposed rulemaking adjusts specific thresholds in 12 C.F.R. Part 363, including those set forth in the table below. According to the FDIC, increasing Part 363’s applicability threshold would result in approximately 780 fewer institutions being subject to Part 363. Raising specific Part 363 thresholds from $1 billion to $5 billion would benefit more than 700 institutions, many of whom should benefit from changes to the audit committee composition requirements and reduced audit costs. Institutions should be mindful that relief under Part 363 does not override: (i) applicable audit or audit committee composition requirements for state-chartered banks under state law; and (ii) audit committee requirements that apply to public companies or subsidiaries of public companies under federal securities laws and exchange listing standards. The indexing methodology incorporated into the final rule also signals that the FDIC intends for these thresholds to evolve over time, potentially reducing the need for future ad hoc adjustments. As a result, institutions near the revised thresholds should expect periodic updates and plan for governance and audit requirements to shift accordingly.

12 C.F.R. Part 363	Subject	Current threshold	Amended threshold
§ 363.1(a)	Applicability	$500 million	$1 billion
§ 363.2(b)(3)	Assessment of the effectiveness of internal controls	$1 billion	$5 billion
§ 363.3(b)	Independent auditor attestation concerning effectiveness of internal control over financial reporting	$1 billion	$5 billion
§ 363.4(a)(2)	Part 363 Annual Report	$1 billion	$5 billion
§ 363.4(c)(3)	Independent public accountant’s letters and reports	$1 billion	$5 billion
§ 363.5(a)(1)	Audit committee composition – all independent directors	$1 billion	$5 billion
§ 363.5(a)(2)	Audit committee composition – majority independent directors	$500 million/ $1 billion	$1 billion/ $5 billion
§ 363.5(b)	Members with “banking or related financial management expertise”	$3 billion	$5 billion
Remaining thresholds in the Part 363 Guidelines will increase from $500 million to $1 billion; $1 billion to $5 billion; and $3 billion to $5 billion. The “independent of management” criteria concerning director compensation will increase from $100,000 to $120,000 to align with the listing standards of national securities exchanges for purposes of making director independence determinations.

OTHER NOTABLE ITEMS

OCC Clarifies Bank Authority to Engage in Certain Crypto-Related Activities. On November 18, 2025, the OCC issued Interpretive Letter No. 1186, confirming that national banks may hold crypto-assets as principal to pay network fees (gas fees) when needed to support otherwise permissible activities. The Interpretive Letter further authorizes banks to hold limited amounts of crypto-assets necessary to test internally developed or third-party crypto platforms before offering services to customers.

OCC Makes Public Supervisory Non-Objection Requests for Crypto Activities. The OCC published 21 supervisory non-objection requests, along with corresponding agency responses, where applicable, submitted by national banks seeking to engage in digital assets activities under the now-rescinded Interpretive Letter No. 1179. The summaries provide insight into the types of digital asset activities banks have explored and the supervisory considerations applied at the time.

Federal Reserve Extends Comment Period on Stress Test Transparency Proposal. On November 21, 2025, the Federal Reserve extended the comment period for its proposal to enhance transparency in supervisory stress test models and scenarios, moving the date from January 22, 2026 to February 21, 2026. The extension does not affect the separate December 1, 2025 deadline for comments on the proposed 2026 stress test scenarios.

Federal Reserve Board Publishes Financial Stability Report. On November 7, 2025, the Federal Reserve published its semi-annual Financial Stability Report. According to the Federal Reserve Bank of New York’s industry survey, there was another moderate increase relative to its spring 2025 survey in the percentage of respondents citing risks emanating from policy uncertainty as their top risk to financial stability, with meaningful increases in the percentage of respondents citing geopolitical risks and the potential for elevated long-term interest rates as top risks to financial stability. Notably, the share of respondents identifying risks associated with AI-driven market sentiment surged, with about 30% naming AI-related sentiment among their top near-term concerns, signaling a new and significant source of financial stability risk.

Speech by Governor Miran on Stablecoins and Monetary Policy. On November 7, 2025, Federal Reserve Board Governor Stephen Miran delivered a speech titled “A Global Stablecoin Glut: Implications for Monetary Policy.” In his speech, Miran argued that the rapid global growth of dollar-denominated stablecoins is increasing demand for U.S. Treasuries and other liquid dollar assets, a trend he cautioned could put downward pressure on the neutral interest rate (r*) with important implications for monetary policy. He emphasized that while he does not expect stablecoins to broadly draw deposits away from U.S. banks, he anticipates meaningful future stablecoin growth will come from foreign users and investors seeking dollar-based payment and savings instruments they cannot easily access in their home jurisdictions.

Speeches by Vice Chair Jefferson on AI. On November 7, 2025, Vice Chair Jefferson delivered a speech titled “AI and the Economy,” and on November 21, 2025, delivered a speech titled “AI, the Economy, and Financial Stability,” in which he argued that rapid advances in AI could materially reshape productivity, employment and inflation dynamics with important implications for the Federal Reserve’s dual mandate. Across both speeches, he emphasized rising uncertainty about AI-driven structural change and highlighted growing concerns—reflected in the Federal Reserve’s most recent Financial Stability Report—that shifts in sentiment around AI may increasingly influence market functioning and financial system resilience.

Speech by Governor Cook on Financial Stability. On November 20, 2025, Governor Lisa D. Cook delivered a speech titled “A Policymaker’s View of Financial Stability.” In her speech, Governor Cook stated that while the U.S. financial system remains broadly resilient, she identified several emerging vulnerabilities deserving close attention: elevated asset valuations, rapid growth of private credit markets and the growing role of hedge funds in the U.S. Treasury market.

Supreme Court Declines Expedited Review of Harper-Otsuka Removal Challenge. On November 24, 2025, the Supreme Court declined expedited review in the petition filed by former National Credit Union Administration Board members Todd Harper and Tanya Otsuka contesting their April 2025 removals. The Court’s decision leaves the challenge pending before the U.S. Court of Appeals for the D.C. Circuit, where proceedings remain paused. The denial also places greater focus on Trump v. Slaughter, which the Court will hear in December. Although that case concerns removal protections for Federal Trade Commission officials, the Court’s resolution is expected to address broader constitutional questions surrounding presidential authority to remove leaders of independent regulatory agencies.

CFPB Notifies Court it Cannot Lawfully Draw Funds from the Federal Reserve. On November 11, 2025, the Consumer Financial Protection Bureau (CFPB) filed a notice in National Treasury Employees Union v. Vought informing the court that the U.S. Department of Justice’s (DOJ) Office of Legal Counsel has concluded the CFPB may not legally request further funds from the Federal Reserve under the statutory funding mechanism established by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The notice states that the agency expects to have sufficient resources to continue operations through at least December 31, 2025. Because of the funding limitation, news reports have indicated the CFPB reportedly plans to begin transferring its remaining enforcement litigation and pending cases to the DOJ starting in early 2026.

Acting Chairman Hill’s Nomination Advances to Senate Floor. On November 19, 2025, the nomination of Acting Chairman Travis Hill to be the Chairman of the FDIC Board advanced out of the Senate Banking Committee.

FDIC Releases Public Sections of Six Banks’ Informational Filings. On November 30, 2025, the FDIC released the public sections of informational filings for six large insured depository institutions.

FDIC Updates PPE List. On November 26, 2025, the FDIC announced an updated list (as of November 15, 2025) of companies that have submitted notices for a Primary Purpose Exception (PPE) under the 25% or Enabling Transactions test.

FRBNY’s Teller Window Discusses the Federal Home Loan Bank System. On November 19, 2025, the Federal Reserve Bank of New York’s Teller Window published an article titled “Understanding the Federal Home Loan Bank System: What It Is and Why It Matters.”

FRBNY’s Liberty Street Economics Blog Examines U.S. Banks’ Nonbank Footprint. On November 18, 2025, the Federal Reserve Bank of New York published a Liberty Street Economics blog post titled “U.S. Banks Have Developed a Significant Nonbank Footprint,” examining how U.S. banks have evolved from entities principally focused on taking deposits and making loans to diversified conglomerates incorporating a variety of nonbank activities. In a companion post titled “Banks Develop a Nonbank Footprint to Better Manage Liquidity Needs,” the Liberty Street Economics blog examines an important driver of this evolution: the need to efficiently manage liquidity needs.

The following Gibson Dunn lawyers contributed to this issue: Jason Cabral and Ro Spaziani.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding the issues discussed in this update. Please contact the Gibson Dunn lawyer with whom you usually work or any of the member of the Financial Institutions practice group:

Jason J. Cabral, New York (+1 212.351.6267, jcabral@gibsondunn.com)

Ro Spaziani, New York (+1 212.351.6255, rspaziani@gibsondunn.com)

Stephanie L. Brooker, Washington, D.C. (+1 202.887.3502, sbrooker@gibsondunn.com)

M. Kendall Day, Washington, D.C. (+1 202.955.8220, kday@gibsondunn.com)

Jeffrey L. Steiner, Washington, D.C. (+1 202.887.3632, jsteiner@gibsondunn.com)

Sara K. Weed, Washington, D.C. (+1 202.955.8507, sweed@gibsondunn.com)

Ella Capone, Washington, D.C. (+1 202.887.3511, ecapone@gibsondunn.com)

Sam Raymond, New York (+1 212.351.2499, sraymond@gibsondunn.com)

Rachel Jackson, New York (+1 212.351.6260, rjackson@gibsondunn.com)

Hayden McGovern, Dallas (+1 214.698.3142, hmcgovern@gibsondunn.com)

Gibson Dunn has extensive experience advising multinational companies operating online services on a wide variety of regulatory and law enforcement investigation, enforcement, strategic counseling, litigation, and appellate matters relating to youth online safety, including on privacy and AI-related issues.

On October 21, 2025, the 2025 National Association of Attorneys General (NAAG) Consumer Protection Fall Conference brought together State Attorneys General (State AGs), their staff, and public and private sector stakeholders to discuss priorities and trends in consumer protection enforcement.

The conference highlighted State AGs’ focus on consumer protection enforcement efforts, including through the establishment of dedicated resources within State AG offices to pursue consumer issues.

Consumer Protection As An Enforcement Priority

A bipartisan panel of state AGs, including New Hampshire Attorney General John Formella, Pennsylvania Attorney General Dave Sunday, and D.C. Attorney General Brian Schwalb, moderated by Todd Leatherman (NAAG, Director of Center for Consumer Protection), outlined their approaches to consumer protection enforcement and their offices’ top priorities. The panel highlighted opportunities for bipartisan work and cross-state collaboration in the consumer protection space, particularly on issues related to consumer fraud. D.C. AG Brian Schwalb said he viewed affordability as central to consumer protection: “People should get what they pay for, they shouldn’t be scammed, and they shouldn’t be taken advantage of.” AG Schwalb contended that what he viewed as a tapering of federal enforcement by the Department of Justice (DOJ), Federal Trade Commission (FTC), and Consumer Financial Protection Bureau (CFPB) means that companies should expect increased state AG action as well as increased collaboration between state AGs. The panel of State AGs all noted their concerns about scams associated with emerging technologies, such as cryptocurrency and AI. New Hampshire AG Formella explained that his office is particularly focused on the use of technology in the collection and use of consumer data.

Price Transparency Enforcement

Later in the day, Jessica Whitney (Deputy Attorney General, Minnesota Attorney General’s Office) moderated a conversation between Nick Akers (Senior Assistant Attorney General, Consumer Protection Section, Office of the California Attorney General), Beth Chun (Special Counsel, Kelly Drye), Doug Crapo (Deputy Attorney General, Consumer Protection Department, Utah Attorney General’s Office), and Jason Pleggenkuhle (Manager of the Consumer Protection Division, Minnesota Attorney General’s Office) which discussed state and federal enforcement actions targeting hidden fees and price transparency.

The panel covered enforcement priorities in Minnesota and California in particular as shaped by state legislation. Assistant AG Akers highlighted California’s efforts to regulate price disclosures against online delivery platforms, and Jason Pleggenkuhle described two recent statutes passed by the Minnesota legislature targeting price transparency – the Minnesota Price Transparency “Junk Fees” Act and Ticket Sales Price Transparency (Taylor’s Law).

Deputy Utah AG Doug Crapo detailed the rulemaking background of the FTC’s Junk Fees Rule. The Junk Fees Rule requires the mandatory disclosure of the total price, including all mandatory fees, in the advertised price for two industries: live-event tickets and short-term lodging. Crapo noted that enforcement actions have been brought under this rule against ticket sale platforms in D.C. and Texas, and emphasized he expects price transparency to continue to grow as an enforcement area. Panelists also noted that states beyond California and Minnesota have recently passed laws regulating fee transparency, though those state laws vary in terms of the industries to which they apply and disclosure requirements. The panel agreed that in the absence of broader applicability of the FTC Junk Fees Rule, a patchwork of state regulation and enforcement is emerging in this area.

Looking Ahead

The conference emphasized that State AGs will continue to pursue consumer protection investigations and enforcement actions amid what several AGs argued they perceive as reduced federal action by DOJ, FTC, and CFPB. The sessions suggest that price transparency and the use of emerging technology, including AI-related scams and collection of consumer data, will remain enforcement priorities for state regulators. Multistate actions could also increase in frequency.

Businesses should expect that state regulators will continue to apply established consumer protection laws to address new and evolving challenges.

The following Gibson Dunn lawyers prepared this update: Natalie Hausknecht, Ashley Rogers, Gustav Eyler, James Zelenay, Rachel Baron, Zoey Clark, and Wynne Leahy.

Gibson Dunn’s State AG Task Force assists clients in responding to subpoenas and civil investigative demands, interfacing with state or local grand juries, representing clients in civil and criminal proceedings, and taking cases to trial.

Gibson Dunn lawyers are closely monitoring developments and are available to discuss these issues as applied to your particular business. If you have questions, please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any of the following members of Gibson Dunn’s State Attorneys General (AG) Task Force, who are here to assist with any AG matters:

State Attorneys General (AG) Task Force:

Artificial Intelligence:
Keith Enright – Palo Alto (+1 650.849.5386, kenright@gibsondunn.com)
Eric D. Vandevelde – Los Angeles (+1 213.229.7186, evandevelde@gibsondunn.com)

Antitrust & Competition:
Eric J. Stock – New York (+1 212.351.2301, estock@gibsondunn.com)

Climate Change & Environmental:
Rachel Levick – Washington, D.C. (+1 202.887.3574, rlevick@gibsondunn.com)

Consumer Litigation & Products Liability:
Christopher Chorba – Los Angeles (+1 213.229.7396, cchorba@gibsondunn.com)

Consumer Protection:
Gustav W. Eyler – Washington, D.C. (+1 202.955.8610, geyler@gibsondunn.com)
Svetlana S. Gans – Washington, D.C. (+1 202.955.8657, sgans@gibsondunn.com)
Natalie J. Hausknecht – Denver (+1 303.298.5783, nhausknecht@gibsondunn.com)
Ashley Rogers – Dallas (+1 214.698.3316, arogers@gibsondunn.com)

DEI & ESG:
Stuart F. Delery – Washington, D.C. (+1 202.955.8515,sdelery@gibsondunn.com)
Mylan L. Denerstein – New York (+1 212.351.3850, mdenerstein@gibsondunn.com)

False Claims Act & Government Fraud:
Winston Y. Chan – San Francisco (+1 415.393.8362, wchan@gibsondunn.com)
Jonathan M. Phillips – Washington, D.C. (+1 202.887.3546, jphillips@gibsondunn.com)
Jake M. Shields – Washington, D.C. (+1 202.955.8201, jmshields@gibsondunn.com)
James L. Zelenay Jr. – Los Angeles (+1 213.229.7449, jzelenay@gibsondunn.com)

Labor & Employment:
Jason C. Schwartz – Washington, D.C. (+1 202.955.8242, jschwartz@gibsondunn.com)
Katherine V.A. Smith – Los Angeles (+1 213.229.7107, ksmith@gibsondunn.com)

Privacy & Cybersecurity:
Ryan T. Bergsieker – Denver (+1 303.298.5774, rbergsieker@gibsondunn.com)
Cassandra L. Gaedt-Sheckter – Palo Alto (+1 650.849.5203, cgaedt-sheckter@gibsondunn.com)
Vivek Mohan – Palo Alto (+1 650.849.5345, vmohan@gibsondunn.com)

Securities Enforcement:
Osman Nawaz – New York (+1 212.351.3940, onawaz@gibsondunn.com)
Tina Samanta – New York (+1 212.351.2469, tsamanta@gibsondunn.com)
David Woodcock – Dallas (+1 214.698.3211, dwoodcock@gibsondunn.com)
Lauren Cook Jackson – Washington, D.C. (+1 202.955.8293, ljackson@gibsondunn.com)

Tech & Innovation:
Ashlie Beringer – Palo Alto (+1 650.849.5327, aberinger@gibsondunn.com)

White Collar & Litigation:
Collin Cox – Houston (+1 346.718.6604,ccox@gibsondunn.com)
Trey Cox – Dallas (+1 214.698.3256,tcox@gibsondunn.com)
Nicola T. Hanna – Los Angeles (+1 213.229.7269, nhanna@gibsondunn.com)
Allyson N. Ho – Dallas (+1 214.698.3233,aho@gibsondunn.com)
Poonam G. Kumar – Los Angeles (+1 213.229.7554, pkumar@gibsondunn.com)

From the Derivatives Practice Group: This week, the U.S. Senate Agriculture Committee advanced Michael Selig’s nomination to serve as Chairman and Commissioner of the CFTC to the full Senate for consideration.

Please note that there will be no newsletter next week as we pause for the U.S. Thanksgiving holiday. We wish all who celebrate a happy Thanksgiving!

New Developments

U.S. Senate Agriculture Committee Advances CFTC Chair Nominee. On November 20, the U.S. Senate Committee on Agriculture, Nutrition, and Forestry advanced Michael Selig’s nomination to serve as Chairman and Commissioner of the CFTC to the full Senate for consideration. [NEW]

Senate Agriculture Committee Publishes Draft Crypto Market Structure Bill. On November 10, U.S. Senate Committee on Agriculture, Nutrition, and Forestry Chairman John Boozman (R-AR) and Senator Cory Booker (D-NJ) released a discussion draft of legislation that would provide new authority to the CFTC to regulate digital commodities. According to the Committee, the proposal is bipartisan and expands upon the CLARITY Act approved by the House of Representatives in July. [NEW]

Deputy Director of Enforcement Antonia M. Apps to Conclude Her Tenure at the SEC. On November 13, the SEC announced that Antonia M. Apps, Deputy Director of the Division of Enforcement (Northeast), will conclude her tenure with the agency effective December 1, 2025. Ms. Apps was appointed Acting Deputy Director of the Division of Enforcement in January 2025 and, subsequently, Deputy Director of Enforcement (Northeast), helping to lead the Division of Enforcement on a national level.

New Developments Outside the U.S.

ESMA Finds that Distribution Costs Account for Almost Half of Total Costs Paid to Invest in UCITS. On November 6, ESMA published its report on the total costs of investing in the Undertakings for Collective Investment in Transferable Securities (UCITS) and Alternative Investment funds. According to ESMA, the report provides an innovative analysis on distribution costs, which account for 48% of total costs for UCITS, which it said are primarily driven by the traditional and dominant role of credit institutions and investment firms in the distribution chain across many Member States.

New Industry-Led Developments

ISDA Publishes Paper on Proposal 6 of BCBS-CPMI-IOSCO Report on Margin Transparency. On November 14, ISDA published a paper containing proposals that it said could improve the margin transparency process set for in proposal 6 of the final Basel Committee on Banking Supervision, Committee on Payments and Market Infrastructures and International Organization of Securities Commissions report on margin transparency. [NEW]

IOSCO Publishes Final Report on Neo-Brokers. On November 11, IOSCO published its Final Report on Neo-Brokers. The report sets forth five recommendations for IOSCO members and neo-brokers, including acting honestly and fairly with retail investors as well as providing appropriate disclosure of fees and charges to retail investors and advertising.

IOSCO Publishes Final Report on Financial Asset Tokenization. On November 11, IOSCO published its Final Report on the Tokenization of Financial Assets. According to IOSCO, the report seeks to build a shared understanding among IOSCO members of how tokenization is being adopted across capital markets and how regulators are responding, and examines potential implications for market integrity and investor protection to guide members in shaping effective regulatory responses.

ISDA Publishes Paper About ISDA SIMM. On November 11, ISDA published a paper that summarizes the reasons why it believes the ISDA Standard Initial Margin Model (ISDA SIMM) has become the trusted industry standard for calculating risk-sensitive initial margins to satisfy margin rules for non-cleared derivatives.

ISDA and the Credit Derivatives Governance Committee Issue Invitation to Tender for DC Administrator Role. On November 11, ISDA and the Credit Derivatives Governance Committee issued an invitation to tender for an independent regulated entity to serve as the administrator for the Credit Derivatives Determinations Committees (DCs), which includes assuming the role of DC secretary. ISDA said that the DC secretary is responsible for various administrative tasks, including distributing questions submitted by eligible market participants to the relevant DC members, convening DC meetings and publishing the results of DC votes.

ISDA Publishes Industry Perspectives on ISDA DRR. On November 10, ISDA published a report that examines how financial institutions are adopting the ISDA Digital Regulatory Reporting (DRR) solution, which ISDA describes as a standardized and open-access initiative built on the Fintech Open Source Foundation Common Domain Model. ISDA noted that the report draws on insights from structured interviews with industry stakeholders and highlights how firms are implementing the ISDA DRR to enhance regulatory reporting processes.

ISDA Publishes Updates to SPS Matrix and SPS Naming Conventions. On November 7, in an effort to increase consistency and understandability, ISDA updated its naming convention for how the Settlement Price Sources, as defined in the ISDA Digital Asset Derivatives Settlement Price Matrix, should be named.

ISDA Issues Guidance on Delayed CPI-U Due to Government Shutdown. On November 7, ISDA published guidance addressing the potential delay in the release of the U.S. Consumer Price Index for All Urban Consumers (CPI-U) resulting from the current U.S. government shutdown. The guidance provides clarification on how such delays may affect the calculation and settlement of inflation-linked derivatives referencing the CPI-U.

Global Standard-setting Bodies Publish Assessment Report and Consultative Report On General Business Risks and Losses. On November 7, the BIS Committee on Payments and Market Infrastructures and the IOSCO published an implementation monitoring report on general business risks and a consultative report on financial market infrastructures’ management of general business risks and general business losses.

The following Gibson Dunn attorneys assisted in preparing this update: Jeffrey Steiner, Adam Lapidus, Marc Aaron Takagaki, Hayden McGovern, Karin Thrasher, and Alice Wang*.

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 )

Hayden K. McGovern, Dallas (214.698.3142, hmcgovern@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)

*Alice Wang, a law clerk in the firm’s Washington, D.C. office, is not admitted to practice law.

Join us for a recorded presentation that provides an overview on crossover rounds leading up to an Initial Public Offering. The one-hour CLE session provides key legal and operational considerations for companies looking to undertake a venture financing ahead of a proposed IPO.

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PANELISTS:

Melanie Neary is a partner in the San Francisco office of Gibson Dunn where she practices in the firm’s Capital Markets Practice Group, focusing on representing leading life sciences companies and investors. Melanie advises clients on a wide range of complex financing transactions and matters, including initial public offerings, secondary equity offerings, and venture and growth equity financings, as well as mergers and acquisitions, spin-offs, and PIPEs. Melanie regularly serves as principal outside counsel for numerous publicly-traded companies and advises management and boards of directors on corporate law matters, Securities and Exchange Commission reporting requirements and ownership filings, and corporate governance.

Chris Trester is a partner in the Palo Alto office of Gibson Dunn and Chair of our Emerging Companies/Venture Capital Practice Group. He focuses his corporate practice on representing start-ups and investors (ranging from angel investors to corporate venture capital) in the full life cycle of emerging companies from incorporation to financings to exits, with a specific emphasis on the tech, entertainment and life science industries. He also counsels companies on general corporate matters, corporate governance and accounting issues.

This edition of Gibson Dunn’s Federal Circuit Update for October summarizes the current status of petitions pending before the Supreme Court and recent Federal Circuit decisions concerning standing, jurisdiction, recusal, and the meaning of “by another” under pre-AIA 35 U.S.C. § 102.

Federal Circuit News

Supreme Court:

The Supreme Court granted the petition in Trump v. V.O.S. Selections, Inc. (US No. 25-250) as we summarized in our September 2025 update. Oral arguments were heard on November 5, 2025.

Noteworthy Petitions for a Writ of Certiorari:

There were a couple potentially impactful petitions filed before the Supreme Court in October 2025:

Percipient.ai, Inc. v. United States (US No. 25-428): The question presented is: “Did the en banc Federal Circuit err in holding that a person must meet the requirements for challenging a solicitation or contract award under the first two prongs of 28 U.S.C. § 1491(b)(1) to qualify as an ‘interested party’ who can challenge violations under the broader third prong?” The response brief is due on December 8, 2025, and to date, five amicus briefs have been filed.

Recentive Analytics, Inc. v. Fox Corp. (US No. 25-505): The questions presented are: (1) “Whether the Federal Circuit’s approach to patent eligibility under 35 U.S.C. § 101 flouts this Court’s instruction to consider preemption, as discussed in Alice Corp. v. CLS Bank International and Mayo Collaborative Services v. Prometheus Laboratories, Inc.” (2) “Whether the Federal Circuit erred in holding that claims directed to the application of machine-learning techniques to new data environments are categorically ineligible for patent protection under Section 101, absent a showing of improvement to the underlying machine-learning model itself.” The respondent waived its right to file a response. The Court will consider this petition at its December 5, 2025 conference.

We provide an update below of the petitions pending before the Supreme Court, which were summarized in our September 2025 update:

In MSN Pharmaceuticals, Inc. v. Novartis Pharmaceuticals Corp. (US No. 25-225), a response brief was filed on November 7, 2025, and six amicus briefs have been filed.

In Lynk Labs, Inc. v. Samsung Electronics Co. (US No. 25-308), after the respondent waived its right to file a response, the Court requested a response, which is due January 2, 2026. Two amicus briefs have been filed.

The Court denied the petitions in EcoFactor, Inc. v. Google, LLC (US No. 25-341) and Gesture Technology Partners, LLC v. Unified Patents, LLC (US No. 24-1281).

Upcoming Oral Argument Calendar

The list of upcoming arguments at the Federal Circuit is available on the court’s website.

Key Case Summaries (October 2025)

US Inventor, Inc. et al. v. PTO, No. 24-1396 (Fed. Cir. Oct. 3, 2025): US Inventor filed a petition for rulemaking proposing certain limitations on the Patent and Trademark Office (PTO)’s authority to institute inter partes review (IPR) and post grant review (PGR). The PTO denied the petition, reasoning that it overlapped with a then-pending request for comments on a rule regarding the PTO’s discretion to institute IPR and PGR. US Inventor sued the PTO for violating the Administrative Procedure Act (APA) and America Invents Act (AIA) by denying its rulemaking petition without sufficiently explaining its denial and without promulgating notice-and-comment rulemaking. The district court dismissed the complaint for lack of associational standing because US Inventor’s theory of injury was too speculative.

The Federal Circuit (Reyna, J., joined by Lourie and Stark, JJ.) affirmed. The Court explained that “[a]dvocacy organizations like appellants have associational standing if . . . [inter alia] ‘at least one of their members would have standing to sue.’” The Court determined that US Inventor failed to allege that at least one of its members had standing to sue because none of its members suffered a non-speculative injury-in-fact from the PTO’s denial of the petition for rulemaking. Specifically, the Court determined that US Inventor’s alleged harm based on the PTO’s institution of a third party’s petition, which would result in potential cancellation of appellants’ members’ patent claims, was speculative and insufficient for standing.

IQE, PLC v. Newport Fab, LLC et al., No. 24-1124 (Fed. Cir. Oct. 15, 2025): IQE makes wafer products used in semiconductors. Newport et al. (collectively referred to as Tower) are semiconductor manufacturers that make specialized integrated circuits that utilize said wafers. IQE shared information with Tower under a mutually binding non-disclosure agreement when the parties began discussing a potential collaboration. While discussions were ongoing, Tower filed patent applications directed to porous semiconductor technology that IQE alleges it developed. IQE sued Tower asserting several state and federal causes of action relating to the alleged theft of trade secrets and a claim for correction of inventorship on the patents. Tower moved to dismiss and filed an anti-SLAPP (Strategic Lawsuit Against Public Participation)[1] motion to strike several of IQE’s claims, arguing that Tower’s use of confidential information to file the patent applications was petitioning activity protected by the First Amendment. The district court denied the motion.

The Federal Circuit (Hughes, J., joined by Stark and Wang (district judge sitting by designation), JJ.) remanded the case for further proceedings. Because there was not yet a final judgment from the district court, the Court first had to decide whether the denial of Tower’s anti-SLAPP motion was immediately appealable. The Court explained that the collateral order doctrine is an exception to the rule of finality, and an interlocutory appeal is allowed when a trial court’s order affects rights that will be irretrievably lost in the absence of an immediate appeal. The Court then determined that Federal Circuit law, and not Ninth Circuit law, applied in this case because it was a question of the Federal Circuit’s jurisdiction. The Court concluded that the denial of an anti-SLAPP motion to strike under California law is immediately appealable under the collateral order doctrine in part because the denial of an anti-SLAPP motion would be unreviewable on appeal after final judgment as Tower would already have had to litigate the case.

Centripetal Networks LLC v. Palo Alto Networks Inc., No. 23-2027 (Fed. Cir. Oct. 18, 2025): Palo Alto Networks filed an IPR challenging claims of Centripetal’s patent directed to technology for detecting network threats in encrypted communications. A Patent Trial and Appeal Board (Board) panel, including Administrative Patent Judge McNamara, instituted the IPR. After the Board instituted IPR, Cisco joined the proceeding. Centripetal later learned that Judge McNamara owned Cisco stock and filed a motion requesting recusal of the entire panel and vacatur of the institution decision, asserting that Judge McNamara’s stock ownership cast a shadow over the whole panel. Judge McNamara disagreed that regulations required his recusal, but he nonetheless withdrew as did one of the other judges on the panel. They were replaced by two new judges and the new panel denied Centripetal’s motion to vacate, calling the arguments frivolous and finding the request untimely.

The Federal Circuit (Cunningham, J., joined by Moore, C.J. and Hughes, J.) vacated and remanded. The Court held that the Board did not abuse its discretion in finding the recusal motion untimely. The Court explained that Centripetal was aware of Judge McNamara’s stock holdings, but sat on the conflict for more than three months and only raised recusal concerns after it received unfavorable decisions. The Court also noted that the unique setup of the Board and the compressed timeline “heightens the need to raise conflicts at the first opportunity.”

Merck Sorono S.A. v. Hopewell Pharma Ventures, Inc., Nos. 25-1210, 25-1211 (Fed. Cir. Oct. 30, 2025): Hopewell filed IPR petitions challenging Merck’s patents directed to methods for treating multiple sclerosis (MS) by orally administering cladribine. The Board determined that all challenged claims were unpatentable as obvious over prior art references, Bodor and Stelmasiak. The Board rejected Merck’s argument that Bodor did not qualify as prior art because it had one inventor in common with the patent at issue, and therefore, was not a publication “by another” as required under 35 U.S.C. § 102.

The Federal Circuit (Linn, J., joined by Hughes and Cunningham, JJ.) affirmed. The Court explained that “for a reference not to be ‘by another,’ and thus unavailable as prior art under pre-AIA § 102(e), the disclosure in the reference must reflect the work of the inventor of the patent in question.” The Court explained that when the patented invention is the result of the work of joint inventors, the disclosure must reflect the collective work of the “same inventive entity” to be excluded as prior art. The Court further stated that “[a]ny incongruity in the inventive entity between the inventors of a prior reference and the inventors of a patent claim renders the prior disclosure ‘by another,’ regardless of whether inventors are subtracted from or added to the patent.”

[1] Under California’s anti-SLAPP statute, if a cause of action “aris[es] from any act . . . in furtherance of [a] person’s right of petition or free speech,” the court shall strike the cause of action unless “the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.”

The following Gibson Dunn lawyers assisted in preparing this update: Blaine Evanson, Jaysen Chung, Audrey Yang, Hannah Bedard, Vivian Lu, Julia Tabat, and Michelle Zhu.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Federal Circuit. Please contact the Gibson Dunn lawyer with whom you usually work, any leader or member of the firm’s Appellate and Constitutional Law or Intellectual Property practice groups, or the following authors:

Blaine H. Evanson – Orange County (+1 949.451.3805, bevanson@gibsondunn.com)
Audrey Yang – Dallas (+1 214.698.3215, ayang@gibsondunn.com)

Appellate and Constitutional Law:
Thomas H. Dupree Jr. – Washington, D.C. (+1 202.955.8547, tdupree@gibsondunn.com)
Allyson N. Ho – Dallas (+1 214.698.3233, aho@gibsondunn.com)
Julian W. Poon – Los Angeles (+ 213.229.7758, jpoon@gibsondunn.com)

Intellectual Property:
Kate Dominguez – New York (+1 212.351.2338, kdominguez@gibsondunn.com)
Josh Krevitt – New York (+1 212.351.4000, jkrevitt@gibsondunn.com)
Jane M. Love, Ph.D. – New York (+1 212.351.3922, jlove@gibsondunn.com)

Corporate directors face unique challenges when confronting major white collar enforcement matters or questions that implicate board oversight of a company’s compliance program. Join lawyers from our White Collar Defense and Investigations Practice Group for a recorded panel discussion of pitfalls, best practices, and practical tips for boards navigating major investigations or interactions with enforcement authorities, as well as authorities’ baseline expectations for compliance program oversight.

MCLE CREDIT INFORMATION:

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 1.0 hours 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:

Barry Berke is a partner in Gibson Dunn’s New York office and Co-Chair of the firm’s White Collar Defense and Investigations Practice Group. He is widely recognized as one of the nation’s leading trial lawyers and white collar defense attorneys. Barry represents corporations, boards, and senior executives in high-stakes criminal, regulatory, and civil matters, including investigations by the DOJ, SEC, and other enforcement agencies. He has extensive experience handling complex litigation and advising clients on compliance and governance issues.

Winston Y. Chan is a partner in Gibson Dunn’s San Francisco office and Co-Chair of the firm’s White Collar Defense and Investigations Practice Group. He leads internal investigations, government enforcement defense, and compliance counseling and regularly represents clients before and in litigation against federal, state, and local agencies—including the DOJ, SEC, and State Attorneys General. He frequently advises boards and senior management on regulatory interactions and guides clients through high-stakes investigations and enforcement exposure. Prior to joining the firm, Winston served as an Assistant United States Attorney in the Eastern District of New York.

Jina Choi is a partner in the San Francisco office of Gibson Dunn and a member of the firm’s Securities Enforcement and White Collar Defense and Investigations Practice Groups. Jina represents and counsels major public and private companies and financial institutions, as well as their executives and boards of directors, on government and internal investigations, enforcement-related litigation, whistleblower complaints and compliance programs.

F. Joseph Warin is chair of the 250-person Litigation Department of Gibson Dunn’s Washington, D.C. office and is Co-Chair of the firm’s White Collar Defense and Investigations Practice Group. He represents corporations in high-stakes internal investigations, enforcement defense, and regulatory litigation spanning FCPA, False Claims Act, securities, compliance counseling, audit and special committee investigations, and complex cross-border matters. His clients include corporations, officers, directors and professionals in regulatory, investigative and trials involving federal regulatory inquiries, criminal investigations and cross-border inquiries by dozens of international enforcers. Early in his career, he served as Assistant United States Attorney in Washington, D.C.

An Expert Analysis of National Security Deference Given in the US and EU Foreign Direct Investment Regimes

Gibson Dunn is pleased to announce with Global Legal Group the release of the International Comparative Legal Guide – Foreign Direct Investment Regimes 2026. Gibson Dunn partners Stephenie Gosnell Handler and Robert Spano were contributing editors to the publication, which covers issues including foreign investment policy, law and scope of application, jurisdiction and procedure, and substantive assessment. The Guide, containing 2 expert analysis chapters and 30 jurisdiction-specific chapters, is live and FREE to access HERE.

Ms. Handler, Mr. Spano, partner Sonja Ruttmann, and associates Hugh Danilack and Natan Sebhat co-authored the Expert Analysis Chapter, “National Security Deference Given in the US and EU Foreign Direct Investment Regimes.”

Please view this informative and comprehensive chapter via the links below:

CLICK HERE to view “National Security Deference Given in the US and EU Foreign Direct Investment Regimes.”

CLICK HERE to view, download or print a PDF version.

The following Gibson Dunn lawyers assisted in preparing this publication: Stephenie Gosnell Handler, Robert Spano, Sonja Ruttmann, Hugh Danilack, and Natan Sebhat.

Stephenie Gosnell Handler – Washington, D.C. (+1 202.955.8510, shandler@gibsondunn.com)

Robert Spano – London/Paris (+33 1 56 43 13 00, rspano@gibsondunn.com)

Sonja Ruttmann – Munich (+49 89 189 33 150, sruttmann@gibsondunn.com)

Hugh N. Danilack – Washington, D.C. (+1 202.777.9536, hdanilack@gibsondunn.com)

As the first year of the second Trump administration draws to a close, public companies and accounting firms face uncertainty regarding the financial reporting and securities and audit enforcement landscape. This webcast reviews how financial reporting and audit regulation have already changed under the new administration, and reads the tea leaves regarding what enforcement structures and priorities market participants can expect in the year to come.

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 1.0 credit hour, of which 1.0 credit hour may be applied toward the area 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 1.0 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:

Michael Scanlon is a partner in Gibson Dunn’s Washington, D.C. office and a member of the firm’s Securities Regulation & Corporate Governance and Securities Enforcement groups. He regularly advises corporate clients on SEC compliance and disclosure issues, with a particular focus on financial reporting matters. He also represents both accounting firms and public companies in enforcement investigations conducted by the SEC, PCAOB, and state accountancy boards and conducts internal investigations involving irregularities accounting.

Osman Nawaz is a partner in Gibson Dunn’s New York office and a member of the firm’s Securities Enforcement and White Collar Defense and Investigations groups. He advises clients on internal and government investigations and enforcement actions, as well as follow-on civil litigation and regulatory and compliance-related issues. Prior to joining Gibson Dunn, Osman concluded a 14-year career with SEC, most recently serving as a Senior Officer in the agency’s Division of Enforcement and in national leadership where he led Enforcement’s Complex Financial Instruments Unit.

Tina Samanta is a partner in Gibson Dunn’s New York office and a member of the firm’s Securities Enforcement and White Collar Defense and Investigations groups. Her work centers on representing financial institutions, corporations, and individuals in high-stakes securities investigations and litigation involving the SEC, DOJ, FINRA, state regulators, and other enforcement bodies. She is a frequent speaker and author on securities enforcement topics and has handled matters at all phases of litigation, including trial.

David C. Ware is a partner in Gibson Dunn’s Washington, D.C. office and a member of the firm’s Securities Enforcement and White Collar Defense and Investigations groups. His practice centers on government investigations and enforcement actions, internal investigations, and litigation involving auditing, accounting, and securities fraud, and he advises clients on SEC and PCAOB compliance and enforcement risk. David serves as a member of the Auditing Standards Board, which promulgates auditing standards for private companies in the United States.

The Statement applies during the current proxy season (i.e., October 1, 2025, through September 30, 2026) to all grounds of exclusion under Rule 14a-8 other than Rule 14a-8(i)(1).

On November 17, 2025, the Division of Corporation Finance (the Staff) of the U.S. Securities and Exchange Commission (the Commission) announced that the Staff will not respond to most Rule 14a-8 no-action requests or express any views on companies’ intended reliance on any basis for excluding shareholder proposals under Rule 14a-8. The Statement Regarding the Division of Corporation Finance’s Role in the Exchange Act Rule 14a-8 Process for the Current Proxy Season (the Statement) reflects the Staff’s resource constraints and backlog of registration statements and other filings following the lengthy federal government shutdown, and “the extensive body of guidance” available under Rule 14a-8. It applies during the current proxy season (i.e., October 1, 2025, through September 30, 2026) to all grounds of exclusion under Rule 14a-8 other than Rule 14a-8(i)(1).

However, the Statement does not give companies carte blanche to exclude shareholder proposals. Companies intending to exclude a shareholder proposal from their proxy statement pursuant to Rule 14a-8 remain obligated to notify the Commission and the proponent of that fact, setting forth an explanation of why the company believes that it may exclude the proposal and citing any applicable authority. If the notice also includes an “unqualified representation that the company has a reasonable basis to exclude the proposal based on the provisions of Rule 14a-8, prior published guidance, and/or judicial decisions,” the Staff will respond with a letter stating that, based on the representation, it will not object to the exclusion of the shareholder proposal from the company’s proxy materials.

Below, we address key aspects of, and considerations in light of, this development.

Key Takeaways from the Statement

The Staff will not respond to most no-action requests or otherwise express a view on whether proposals are excludable under Rule 14a-8. As detailed in the Statement, the Staff will not respond to most no-action requests or express any views on companies’ intended reliance on any basis for excluding shareholder proposals under Rule 14a-8, except for no-action requests under Rule 14a-8(i)(1). This carveout for Rule 14a-8(i)(1) exclusion arguments follows SEC Chairman Atkins’ recent remarks questioning whether precatory proposals are proper subjects for shareholder action under Delaware law.[1] If the determination is that they are not proper subjects under Delaware corporate law, precatory proposals would be excludable from Delaware companies’ proxy statements under Rule 14a-8(i)(1). Given this open question, the Staff will continue to review no-action requests under Rule 14a-8(i)(1) until it determines that there is sufficient guidance available to assist companies and proponents in their decision-making process related to the exclusion of shareholder proposals on that basis.[2]
Companies are still required to notify the Commission and proponents before they exclude shareholder proposals from their proxy materials. Consistent with the requirements of Rule 14a-8(j), the Statement reminds companies that they must still notify the Commission and shareholder proponents of their intent to exclude a shareholder proposal no later than 80 calendar days before filing a definitive proxy statement. Rule 14a-8(j) requires the notice to include the company’s reason(s) for excluding the proposal, together with a copy of the proposal, “an explanation of why the company believes that it may exclude the proposal, which should, if possible, refer to the most recent applicable authority,” and a supporting opinion of counsel when such reasons are based on matters of state or foreign law. However, the Statement indicates that the notice requirement is informational only. Although the Staff, as a convenience to both companies and proponents, has for many years engaged in the informal practice of expressing its enforcement position on such submissions, the Statement emphasizes there is no requirement to do so. Accordingly, companies are not required to obtain a letter from the Staff in order to exclude a shareholder proposal, and should not request a no-action response when notifying the Commission of their intention to exclude proposals.
The Staff will issue a “no objection” response to non-Rule 14a-8(i)(1) exclusions in some instances. If a company’s exclusion notice includes an “unqualified representation that the company has a reasonable basis to exclude the proposal based on the provisions of Rule 14a-8, prior published guidance, and/or judicial decisions,” the Staff will issue a letter indicating that, based solely on the company’s or counsel’s representation, the Staff will not object if the company omits the proposal from its proxy materials. The “no objection” response is similar to the statement the Staff issues in other contexts, such as when responding to certain legal or accounting inquiries.
Companies can form a reasonable basis to exclude a proposal even without a prior Staff response concurring with exclusion of the same or similar proposal. The Statement reiterates that prior Staff responses to Rule 14a-8 no-action requests are not binding and reflect only informal Staff views. As such, the Statement notes that a company may form a reasonable basis to exclude a proposal (a) in the absence of a prior Staff response concurring that there was some basis to exclude the proposal, and (b) if the Staff in the past declined to concur with a company’s view that the same or a similar proposal could be excluded.
The Statement applies to the current proxy season. The Statement applies to no-action requests submitted through September 30, 2026, including to no-action requests received by the Staff before October 1, 2025, to which the Staff has not yet responded. The Statement also indicates that if a company has already submitted a request relying on a basis for exclusion other than Rule 14a-8(i)(1) and wishes to receive a “no objection” response from the Staff, it should supplement its no-action request with a notice that includes an unqualified representation that the company has a reasonable basis to exclude the proposal. Helpfully, the Statement makes clear that for those companies the time of the initial submission of the no-action request will apply for purposes of complying with the 80-day requirement in Rule 14a-8(j). Notably, more change is likely ahead for Rule 14a-8 in future proxy seasons, as the Commission turns to the “Shareholder Proposal Modernization” proposed rulemaking included on the Commission’s Spring 2025 Unified Agenda of Regulatory and Deregulatory Actions, which is intended to “modernize the requirements of Exchange Act Rule 14a-8 to reduce compliance burdens for registrants and account for developments since the rule was last amended.”[3]

Key Considerations Following the Statement

The Statement puts all participants in the shareholder proposal process – companies, proponents, proxy advisory firms, and shareholders – in unchartered territory. Shareholder proponents will, for example, need to carefully consider whether they can achieve more through negotiating a withdrawal of their proposal in contrast to having their proposal excluded and having to pursue other means to advocate for their views. Institutional investors, despite growing frustration with the proliferation of shareholder proposals, will need to consider whether companies’ decisions to exclude shareholder proposals given the Statement raise governance concerns, and if so under what circumstances. With the Staff’s limited involvement in the coming year’s Rule 14a-8 process, the burdens of Rule 14a-8 may be greater this year than in the past. Public companies will need to bear in mind a number of competing considerations, including the following.

Rule 14a-8(j) Notifications Should Be Mindful of Other Audiences. Companies will need to send Rule 14a-8(j) notifications to the shareholder proponent and may wish to make their analysis available to proxy advisory firms or other shareholders. Accordingly, we expect many Rule 14a-8(j) notifications will elaborate on the bases for exclusion, similar to no-action requests. That reasoning will be closely scrutinized by shareholder proponents and subject to potential legal challenge, so companies should work closely with inside or outside counsel to assess the merits of their arguments before deciding to exclude the proposal under the Statement’s new process.
Potential for Litigation. While litigation has always been a potential avenue for addressing proposals under Rule 14a-8, companies and proponents generally have deferred to the more efficient and predictable process of Staff review. However, given the Staff’s determination not to issue most no-action responses during the current proxy season, litigation may be pursued by companies seeking greater certainty or by proponents that view a company’s exclusion notice as being unjustified. Unfortunately, the playing field is not level in this context, as some courts have declined to entertain company lawsuits under Rule 14a-8.
Proponents May Look for Other Options to Raise Their Concerns. In recent years, shareholder proponents and other interested parties have increasingly issued public statements and filed Notices of Exempt Solicitation with the Commission to publicize their views on various proposals and, in some cases, have engaged in “vote no” campaigns against certain directors. Proponents may resort to using exempt solicitation filings and other public relations strategies to raise their concerns or criticize companies for excluding their shareholder proposal. Accordingly, companies should continue to actively monitor for PX14A6G submissions on EDGAR, review them carefully, and inform the Staff to the extent they believe a filing contains materially false or misleading information or otherwise fails to satisfy the requirements of Rule 14a-6(g).
Proxy Advisors Have Yet to Respond. ISS’s current Procedures & Policies Frequently Asked Questions state that it will generally recommend votes against the chair of the nominating and governance committee if a company excludes a properly submitted proposal without obtaining a voluntary withdrawal by the proponent, no-action relief from the Staff, or a U.S. District Court ruling that the proposal can be excluded. This FAQ was issued in response to the Staff’s announcement in 2015 that it would not issue no-action request responses under Rule 14a-8(i)(9), while the Staff reconsidered its approach to that provision. Similarly, Glass Lewis will consider recommending votes against all members of the nominating and governance committee if a proposal is excluded but the Staff has declined to state a view on whether the proposal should be excluded. The proxy advisory firms’ voting positions were adopted in a very different context, and they reflect the type of “one-size-fits-all” approach to corporate governance that has drawn scrutiny from regulators and legislatures. Given the reasons underlying and broad applicability of the Staff’s Statement and ongoing scrutiny of the proxy advisory firms’ practices, companies will want to monitor the approach ISS and Glass Lewis will take this proxy season.
Stay Tuned. Several details on how the Statement will implicate Staff processes have not yet been announced, such as whether the Staff’s “no objection” correspondence will be publicly posted on the Commission’s website. As well, since it is early in the proxy season, and the role of proxy advisory firms and shareholder proposals remain in the political limelight, further developments are possible.

[1] See Chairman Paul S. Atkins, Keynote Address at the John L. Weinberg Center for Corporate Governance’s 25th Anniversary Gala (Oct. 9, 2025), https://www.sec.gov/newsroom/speeches-statements/atkins-10092025-keynote-address-john-l-weinberg-center-corporate-governances-25th-anniversary-gala.

[2] For further information on Chairman Atkins’ recent comments related to asserting Rule 14a-8(i)(1), please see our client alert “SEC Chairman Atkins Comments on Rule 14a-8 Challenges to Non-Binding Shareholder Proposals, as well as Delaware and Texas Corporate Laws.”

[3] For further information regarding the Commission’s rulemaking priorities, please see our client alert “A New Day at the SEC: The SEC’s Spring 2025 Reg Flex Agenda.”

The following Gibson Dunn lawyers prepared this update: Aaron Briggs, Mellissa Campbell Duru, Elizabeth Ising, Thomas Kim, Brian Lane, Julia Lapitskaya, Ronald Mueller, Geoffrey Walter, Lori Zyskowski, and Natalie Abshez.

Gibson Dunn’s lawyers are available to assist with any questions you may have regarding the SEC’s announcement, or federal securities laws and regulations more generally. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any of the following leaders and members of the firm’s Securities Regulation & Corporate Governance practice group:

Securities Regulation & Corporate Governance:
Aaron Briggs – San Francisco (+1 415.393.8297, abriggs@gibsondunn.com)
Mellissa Campbell Duru – Washington, D.C. (+1 202.955.8204, mduru@gibsondunn.com)
Elizabeth Ising – Washington, D.C. (+1 202.955.8287, eising@gibsondunn.com)
Thomas J. Kim – Washington, D.C. (+1 202.887.3550, tkim@gibsondunn.com)
Brian J. Lane – Washington, D.C. (+1 202.887.3646, blane@gibsondunn.com)
Julia Lapitskaya – New York (+1 212.351.2354, jlapitskaya@gibsondunn.com)
Ronald O. Mueller – Washington, D.C. (+1 202.955.8671, rmueller@gibsondunn.com)
Michael A. Titera – Orange County (+1 949.451.4365, mtitera@gibsondunn.com)
Geoffrey E. Walter – Washington, D.C. (+1 202-887-3749, gwalter@gibsondunn.com)
Lori Zyskowski – New York (+1 212.351.2309, lzyskowski@gibsondunn.com)

Join our leading anti-corruption and Foreign Corrupt Practices Act lawyers for a dynamic webcast covering the latest global enforcement trends and legislative developments. From new anti-corruption laws in key jurisdictions to evolving U.S. Department of Justice and Securities and Exchange Commission priorities under the FCPA, this recorded session provides practical insights for in-house counsel, compliance professionals, and deal teams navigating cross-border risk. Our lawyers discuss recent cases, regulatory shifts, and best practices for managing investigations, disclosures, and compliance programs in an increasingly complex global landscape.

Topics include:

New anti-corruption laws in Europe, Asia, and the Middle East
DOJ/SEC enforcement priorities and FCPA updates
Cross-border investigations and multi-jurisdictional risk
Compliance program expectations and voluntary disclosure strategies

MCLE CREDIT INFORMATION:

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 1.0 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:

Patrick F. Stokes is a partner in Gibson Dunn’s Washington, D.C. office and Co-Chair of the Anti-Corruption & FCPA Practice Group. He handles internal corporate investigations, government enforcement matters, and compliance reviews and routinely advises clients on anti-corruption compliance, monitorships, and risk assessments. Prior to joining Gibson Dunn, Patrick headed the FCPA Unit of the U.S. Department of Justice, where he managed the FCPA enforcement program and all criminal FCPA matters throughout the United States.

Katharina Humphrey is a partner in Gibson Dunn’s Munich office and a member of the firm’s White-Collar Defense and Investigations practice. She advises clients on internal investigations and compliance matters across Europe and beyond, with particular expertise in anti-bribery (including German laws and the U.S. FCPA), sanctions, AML, and the design and evaluation of compliance management systems.

Oliver Welch is resident partner in Gibson Dunn’s Hong Kong office and is a member of the White Collar Defense and Investigations Practice Group. He has extensive experience representing multi-national corporations throughout the Asia region on a wide variety of compliance and anti-corruption issues. He focuses on internal and regulatory investigations, including those involving the FCPA, and regularly counsels clients on their anti-corruption compliance programs and controls and advises on anti-corruption due diligence in connection with corporate acquisitions.

Marija Bračković is an associate in the London office of Gibson Dunn. She is a member of the firm’s Litigation, White Collar Defense and Investigations, Fintech and Digital Assets and Privacy, Cybersecurity and Data Innovation Practice Groups. Marija has substantial experience in both domestic and international dispute resolution, including litigation and investigations, and regulatory compliance and counselling across sectors, with a focus on fintech and emerging digital regulations. Her practice has an emphasis on high-profile and politically sensitive matters, such as cases relating to bribery, money laundering and allegations of cross-border and international crimes.

Rashed Khalifah is an associate in the Riyadh office of Gibson Dunn. Rashed is a dispute resolution and regulatory associate with a focus on complex commercial, construction, and tax disputes, as well as advisory mandates involving government entities and legal reform. Rashed joined the Riyadh office of Gibson Dunn after serving as a Senior Associate at a leading law firm in Jordan. He regularly advises government bodies and state-owned companies on procurement and compliance matters, particularly in connection with public construction contracts and project-related agreements.

While its final shape is subject to change, the Digital Omnibus is expected to introduce far-reaching amendments that would impact core data protection principles and obligations.

1. Executive Summary

Draft versions of the European Commission’s forthcoming Digital Omnibus Package (Digital Omnibus) have recently become publicly available ahead of the official presentation scheduled for 19 November 2025. The initiative marks one of the most wide-ranging overarching revisions of the EU’s digital regulatory framework since the General Data Protection Regulation (GDPR) entered into application in 2018. The Commission positions the Digital Omnibus as a competitiveness-driven simplification effort aimed at reducing administrative burdens and compliance costs, improving legal certainty for businesses, and making the EU’s digital rulebook easier to navigate.

While its final shape is subject to change, the Digital Omnibus is expected to introduce far-reaching amendments that would impact core data protection principles and obligations.

2. Background and Target Areas

The Digital Omnibus follows increasing feedback from the European business community that the EU’s digital regulatory landscape has become fragmented and difficult to navigate. Similar recommendations were set out in the 2024 Draghi Report, which called for measures to strengthen EU competitiveness, foster innovation, and simplify regulatory requirements.

In response, the Commission has prepared two legislative proposals that together would amend multiple EU digital regulations in parallel, including the GDPR and the recently issued AI Act. According to the available draft texts and preparatory materials, the Digital Omnibus revolves around three main regulatory areas: data, cybersecurity, and artificial intelligence.

3. Key Proposals

The draft proposals cover a broad range of regulatory issues, ranging from personal-data processing and consent management to the governance of AI systems and related compliance obligations. Set out below are selected aspects that are of particular relevance for businesses operating in the EU digital market.

a. Consent Fatigue and Cookie Rules – Toward Recognition of Automated Signals

According to the recitals, the Commission intends to address so-called “consent fatigue” by revising the rules on cookies and similar tracking technologies. The Digital Omnibus proposal pursues a two-part approach: first, by broadening the situations in which cookies and comparable technologies may be used without consent, extending the current exceptions under the ePrivacy framework to include additional purposes such as security, audience measurement, and the provision of user-requested services[1]; and second, by introducing a mechanism for the automated and machine-readable expression of user preferences, designed to reduce the need for repetitive consent banners.[2] Controllers would be required to respect such automated signals once corresponding technical standards are adopted.

b. AI Training and Operation – Legitimate Interest as Legal Basis

The Digital Omnibus proposal introduces a new provision under the GDPR[3] establishing that the development and operation of AI systems or models constitutes a legitimate interest of the controller for the purpose of processing. In essence, the Commission is carving out AI-training and usage as a recognized legal basis for companies, provided that the processing of personal data is necessary for that purpose and such interest is not overridden by the rights and freedoms of individuals. If confirmed, this change would mark the end of an ongoing debate within the EU over whether legitimate interest can lawfully underpin AI model training, and would even go beyond that to include the operation of AI systems as well.

c. Automated Decision-Making (ADM) – Clarifying the Exemptions

The GDPR currently provides individuals with a qualified right not to be subject to solely automated decisions that have legal or similarly significant effects (Article 22 GDPR), subject to three limited exemptions: where the decision is necessary for entering into or performing a contract, authorised by law, or based on explicit consent. The Digital Omnibus proposal would amend the contractual exemption by clarifying that an automated decision may be taken even where the same outcome could also be reached by human means. This adjustment would provide greater legal certainty for the deployment of automated decision making within the EU.

d. Sensitive Data – Narrowing the Scope of Article 9 GDPR

The Digital Omnibus proposal intends to narrow the scope of the GDPR’s protection for special categories of personal data under Article 9. Enhanced protection would apply only to data that directly reveal a person’s racial or ethnic origin, political opinions, religious or philosophical beliefs, trade-union membership, health status, or sexual orientation. By contrast, inferred characteristic, such as information deduced through profiling or cross-referencing, would no longer automatically qualify as “sensitive” data.

This represents a marked departure from current practice, where the notion of sensitive data is interpreted broadly in line with CJEU case law.

e. AI Act – Facilitating Implementation and Oversight

To ensure a smooth rollout of the AI Act, the proposal introduces several targeted adjustments aimed at easing initial implementation. It provides a one-year transitional period for providers to comply with the Act’s content-labelling and watermarking obligations, giving additional time for technical adaptation. At the institutional level, the proposal strengthens the supervisory mandate of the AI Office by centralizing oversight over AI embedded in very large online platforms and search engines. Finally, it seeks to improve coherence with other EU digital legislation, notably by clarifying the interplay with the Cyber Resilience Act and facilitating compliance with data protection laws.

4. Key Implications

The overall direction of the Digital Omnibus is expected to be favorable for companies operating in the EU’s digital economy. In practice, businesses may reasonably expect fewer procedural overlaps, clearer interfaces between existing legal frameworks, and a more predictable compliance environment overall.

At the same time, certain elements could introduce new uncertainty. While the Digital Omnibus consolidates certain instruments and clarifies their interaction, it largely builds on existing rules rather than replacing them. In some areas, such as the GDPR, the approach of adding new provisions to amend existing ones may even increase structural complexity. Moreover, the envisaged mechanism for automated consent signals under the revised cookie rules could materially alter how digital services collect and use user-level data, and in turn affect their ability to provide and maintain the quality of their services.

5. Outlook

The Commission is expected to present the Digital Omnibus on 19 November 2025, after which the proposals will move through the ordinary legislative procedure in the European Parliament and the Council. Substantive amendments are likely during the legislative process before any final text is adopted.

For now, companies should monitor the official release, assess which proposals are most relevant to their operations, and consider early policy engagement to position themselves for upcoming regulatory developments and maintain alignment with evolving EU priorities. A forward-looking compliance strategy will be essential once the legislative process clarifies the final scope and timing of the reforms.

[1] Art. 88a GDPR-Draft

[2] Art. 88b GDPR-Draft

[3] Art. 88c GDPR-Draft

The following Gibson Dunn lawyers prepared this update: Ahmed Baladi, Kai Gesing, Joel Harrison, Vera Lukic, Robert Spano, Yannick Oberacker, and Victor Thonke.

Gibson Dunn’s lawyers are available to assist with any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any leader or member of the firm’s Artificial Intelligence or Privacy, Cybersecurity & Data Innovation practice groups:

Ahmed Baladi – Paris (+33 1 56 43 13 00, abaladi@gibsondunn.com)
Kai Gesing – Munich (+49 89 189 33 285, kgesing@gibsondunn.com)
Joel Harrison – London (+44 20 7071 4289, jharrison@gibsondunn.com)
Vera Lukic – Paris (+33 1 56 43 13 00, vlukic@gibsondunn.com)
Robert Spano – London/Paris (+33 1 56 43 13 00, rspano@gibsondunn.com)
Yannick Oberacker – Munich (+49 89 189 33 282, yoberacker@gibsondunn.com)
Victor A. Thonke – Frankfurt (+49 69 247 411 526, vthonke@gibsondunn.com)

Artificial Intelligence:
Keith Enright – Palo Alto (+1 650.849.5386, kenright@gibsondunn.com)
Cassandra L. Gaedt-Sheckter – Palo Alto (+1 650.849.5203, cgaedt-sheckter@gibsondunn.com)
Vivek Mohan – Palo Alto (+1 650.849.5345, vmohan@gibsondunn.com)
Robert Spano – London/Paris (+33 1 56 43 13 00, rspano@gibsondunn.com)
Eric D. Vandevelde – Los Angeles (+1 213.229.7186, evandevelde@gibsondunn.com)

Privacy, Cybersecurity & Data Innovation:
Ahmed Baladi – Paris (+33 1 56 43 13 00, abaladi@gibsondunn.com)
Ashlie Beringer – Palo Alto (+1 650.849.5327, aberinger@gibsondunn.com)
Joel Harrison – London (+44 20 7071 4289, jharrison@gibsondunn.com)
Jane C. Horvath – Washington, D.C. (+1 202.955.8505, jhorvath@gibsondunn.com)

From the Derivatives Practice Group: This week, the SEC announced that Deputy Director of Enforcement Antonia Apps will conclude her tenure with the agency on December 1, 2025.

New Developments

White House Nominates Michael Selig for CFTC Chairman. On October 25, President Trump nominated Michael Selig, chief counsel for the SEC’s crypto task force, for the role of CFTC Chairman.

New Developments Outside the U.S.

ESMA Finds that Distribution Costs Account for Almost Half of Total Costs Paid to Invest in UCITS. On November 6, ESMA published its report on the total costs of investing in the Undertakings for Collective Investment in Transferable Securities fund (UCITS). Notably, the report provides an innovative analysis on distribution costs, which account for 48% of total costs for UCITS. These high costs are primarily driven by the traditional and dominant role of credit institutions and investment firms in the distribution chain across many Member States.

ESMA Publishes Data for Quarterly Bond Liquidity Assessment. On October 31, ESMA published its latest quarterly liquidity assessment for bonds available for trading on EU trading venues. ESMA’s liquidity assessment for bonds is based on a quarterly assessment of quantitative liquidity criteria, which includes the daily average trading activity (trades and notional amount) and the percentage of days traded per quarter.

New Industry-Led Developments

IOSCO Publishes Final Report on Financial Asset Tokenization. On November 11, IOSCO published its Final Report on the Tokenization of Financial Assets. The report seeks to build a shared understanding among IOSCO members of how tokenization is being adopted across capital markets and how regulators are responding. It examines potential implications for market integrity and investor protection to guide members in shaping effective regulatory responses. [NEW]

ISDA and the Credit Derivatives Governance Committee Issue Invitation to Tender for DC Administrator Role. On November 11, ISDA and the Credit Derivatives Governance Committee issued an invitation to tender for an independent regulated entity to serve as the administrator for the Credit Derivatives Determinations Committees (DCs), which includes assuming the role of DC secretary. The DC secretary is responsible for various administrative tasks, including distributing questions submitted by eligible market participants to the relevant DC members, convening DC meetings and publishing the results of DC votes. [NEW]

ISDA Publishes Industry Perspectives on ISDA DRR. On November 10, ISDA published a report that examines how financial institutions are adopting the ISDA Digital Regulatory Reporting (DRR) solution, a standardized and open-access initiative built on the Fintech Open Source Foundation Common Domain Model. Drawing on insights from structured interviews with industry stakeholders, this report highlights how firms are implementing the ISDA DRR to enhance regulatory reporting processes. [NEW]

ISDA Publishes Updates to SPS Matrix and SPS Naming Conventions. On November 7, ISDA updated its naming convention for how the Settlement Price Sources (SPSs), as defined in the ISDA Digital Asset Derivatives Settlement Price Matrix (the SPS Matrix), should be named to increase consistency and understandability.

ISDA Issues Guidance on Delayed CPI-U Due to Government Shutdown. On November 7, published guidance addressing the potential delay in the release of the U.S. Consumer Price Index for All Urban Consumers (CPI-U) resulting from the current U.S. government shutdown. The guidance provides clarification on how such delays may affect the calculation and settlement of inflation-linked derivatives referencing the CPI-U.

ISDA Publishes Paper on Modernizing the FRTB. On November 4, ISDA published a paper discussing some of the key areas where it has focused its advocacy in relation to the Fundamental Review of the Trading Book (FRTB) and the Basel III market risk framework.

IOSCO Publishes Final Report on the Single-Name Credit Default Swaps Market. On November 4, IOSCO published its Final Report on the Single-Name Credit Default Swaps (“CDS”) Market, which was prepared at the invitation of the Financial Stability Board. The report examines market events that impacted the banking industry in March 2023 and the functioning of the single-name CDS market following concerns raised regarding market turmoil.

ISDA Publishes SwapsInfo for Third Quarter of 2025 and Year-to September 30, 2025. On November 3, ISDA published its SwapsInfo quarterly review. The review noted that trading activity in interest rate derivatives (IRD) and credit derivatives increased in the third quarter of 2025 compared with the same period in 2024, reflecting shifting monetary policy expectations and broader market conditions. IRD traded notional rose by more than 50% year-on-year, led by an increase in overnight index swaps. Index credit derivatives traded notional grew by about 23%, accompanied by a decline in trade count.

ISDA Extends Saudi Arabia Netting Opinions. On November 3, ISDA extended its netting opinions for Saudi Arabia to cover regulations published by the Capital Market Authority earlier this year that recognize the enforceability of close-out netting.

IOSCO Board Meets in Madrid and Issues Four New Publications. On November 3, IOSCO published the following reports: (1) Final Report on Pre-Hedging; (2) Final Report on Environmental, Social and Governance (ESG) Indices as Benchmarks; (3) Consultation Report on Recommendations for Secondary Market Disclosure; and (4) Statement on the Importance of High-Quality Valuation Information in Financial Reporting. These publications are products of the 2025 workplan and part of the outcomes of the board meeting that took place in Madrid last week.

The following Gibson Dunn attorneys assisted in preparing this update: Jeffrey Steiner, Adam Lapidus, Marc Aaron Takagaki, Hayden McGovern, Karin Thrasher, and Alice Wang*.

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 )

Hayden K. McGovern, Dallas (214.698.3142, hmcgovern@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)

*Alice Wang, a law clerk in the firm’s Washington, D.C. office, is not admitted to practice law.