Published in Law360 on September 15, 2025. © Copyright 2025, Portfolio Media, Inc., publisher of Law360. Reprinted here with permission.
Since the U.S. House of Representatives passed the Clarity Act on July 17, the U.S. Senate Committee on Banking, Housing and Urban Affairs, which has oversight of the U.S. Securities and Exchange Commission, has been busy working on its own version of the U.S. cryptocurrency regulatory framework.
On July 21, Chairman Tim Scott, R-SC, along with Sens. Cynthia Lummis, R-WY; Bill Hagerty, R-TN; and Bernie Moreno, R-OH, released a discussion draft of the Responsible Financial Innovation Act of 2025.[1] The committee released an updated draft on Sept. 5.
This comprehensive legislation aims to provide regulatory clarity, encourage innovation and address key risks in the rapidly evolving digital asset ecosystem. This article highlights critical elements of the draft bill, offering an overview of its major provisions and implications.
Alongside the initial draft, the Senate Banking Committee issued a broad request for information to solicit feedback from the public.[2] Many industry leaders submitted feedback by the Aug. 5 deadline.
If enacted, the Senate Banking Committee’s draft digital asset market structure bill would fundamentally reshape the regulatory landscape for financial companies and their legal counsel by establishing clear definitions for digital and ancillary assets, assigning primary oversight to the SEC with limited joint rulemaking authority alongside the Commodity Futures Trading Commission, and introducing tailored disclosure, anti-money laundering and compliance obligations.
This comprehensive framework would not only clarify the roles and responsibilities of financial institutions engaging in digital asset activities — including custody, trading and lending — but also require counsel to navigate new compliance regimes, reporting requirements, and risk management protocols, thereby significantly affecting operational, legal and strategic decision-making across the financial sector.
Key Highlights of the Draft Legislation
The Senate draft proposes a sweeping framework for digital asset regulation, building on the foundation of the Clarity Act. While the House-passed Clarity Act focused on empowering the CFTC and classifying digital assets as commodities, the Senate bill provides the SEC with primary regulatory authority over “ancillary assets.”[3]
However, the draft bill requires the SEC to consult with the CFTC on certain rulemakings — such as joint rules for portfolio margining — reflecting a divergent approach from the House while still ensuring the CFTC retains a meaningful role in the digital asset market going forward.[4]
Treatment and Exceptions for Ancillary Assets
The bill proposes that ancillary assets should not be considered securities, and secondary transactions involving ancillary assets should not be treated as securities transactions under federal securities laws — and for purposes of the Securities Investor Protection Act of 1970.[5]
Additionally, the bill specifies that gratuitous distributions of ancillary assets — meaning distributions made in exchange for no more than a nominal value — are also not considered securities transactions.[6]
Ancillary Asset Originator Disclosure Requirements
The bill centers extensively on ancillary asset originators’ disclosure requirements to the SEC, establishing a framework intended to promote transparency while tailoring obligations to the size and nature of the originator. The disclosure requirements include the following:[7]
- Ancillary asset originators must provide semiannual disclosures to the SEC, covering corporate information, economic details about the ancillary asset, risk factors and more. However, disclosure is not required if the originator raises less than $5 million per ancillary asset in a 12-month period and if the average daily trading volume of the asset is less than $5 million.
- Disclosures are deemed a “prospectus” for certain liability purposes and are not considered a registration statement.
- Periodic disclosure is not required if the originator certifies to the SEC that it has not engaged in more than a nominal level of managerial efforts in the prior year.
- Proposed rules cannot require financial statements to be present in disclosures.
- Any disclosure rule adopted should not apply to ancillary assets if the offer or sale of said asset does not exceed either 10% of the total dollar value of those ancillary assets outstanding in the market, or the asset fails to gross more than $75 million in any calendar year for a period of up to four consecutive years.
Safe Harbor for Forward-Looking Statements
The Senate draft also includes important protections for those promoting ancillary assets by providing that no liability arises for forward-looking statements made in disclosures if the statements are clearly identified as forward-looking statements, accompanied by meaningful cautionary language, and the party bringing the action fails to prove that the person making the statement knew it was false or misleading at the time it was made.[8]
Special Disposition Restrictions by Related Persons
The bill further anticipates the power dynamic between ancillary asset originators and general ancillary asset holders, and it provides important safeguards to address this power dynamic.
Specifically, it imposes holding periods and volume limits on sales of ancillary assets by related persons, along with additional reporting requirements for significant holders.
Furthermore, if a related person sells ancillary assets in violation of these restrictions, any profits realized from such sales are recoverable by other holders of the ancillary asset, ensuring accountability and discouraging improper disposition practices.[9]
Protections From Illicit Activity
The bill includes a comprehensive approach to combating illicit finance risks associated with digital assets.[10] It mandates new anti-money laundering and countering the financing of terrorism regulations, directing the secretary of the Treasury to establish a risk-focused examination and review process for financial institutions engaged in digital asset activities.
Additionally, the bill calls for the creation of a pilot information-sharing program that enables secure collaboration between government agencies and private sector entities to identify and address potential illicit finance violations and emerging risks.
To further strengthen these efforts, the bill establishes an “Independent Financial Technology Working Group to Combat Terrorism and Illicit Financing,” which brings together representatives from multiple federal agencies and private sector experts.
This working group is tasked with conducting research on the illicit use of digital assets and developing legislative and regulatory proposals to improve AML and countering the financing of terrorism regulations.[11]
Application to the Banking Sector
One of the biggest challenges to establishing a robust digital asset market is defining how banks and traditional financial institutions fit into the evolving digital asset ecosystem.
The bill addresses this challenge by expressly permitting banks and financial holding companies to engage in a wide range of digital asset activities — including custody, trading, lending, payment activities, node operation, and brokerage or derivatives services — subject to existing banking laws.[12]
Regulatory Innovation
The bill takes significant steps to promote regulatory innovation and international cooperation in the digital asset space. The bill directs the SEC to pursue reciprocal arrangements with foreign regulators to maintain U.S. leadership in digital asset regulation and to advocate for the development and adoption of technology-neutral, open standards globally.
To further foster responsible innovation, the bill establishes what it calls the “CFTC-SEC Micro-Innovation Sandbox,” allowing eligible firms to test innovative products and services under limited exemptions, excluding anti-fraud laws, for up to two years, with possible extension if the firm is actively pursuing permanent regulatory relief.
The bill also encourages international cooperation through cross-border sandboxes and tasks the SEC with leading these international coordination efforts, reflecting a comprehensive approach to harmonizing domestic and global digital asset regulation while supporting technological advancement and market integrity.[13]
SEC-CFTC Joint Rulemaking
Finally, the bill does strike a balance of regulatory authority between the SEC and the CFTC.
It requires both agencies to jointly issue rules to facilitate portfolio margining of securities, swaps, futures, options and digital commodities.
This collaborative approach ensures that both the SEC and CFTC play a meaningful role in overseeing critical aspects of the digital asset market, reflecting the bill’s intent to coordinate regulatory oversight and leverage the expertise of both commissions.[14]
Request for Information: Shaping the Future of Digital Asset Regulation
The committee’s RFI sought detailed feedback on a wide range of topics, including:[15]
- The appropriate allocation of regulatory jurisdiction between the SEC and CFTC;
- The definition and classification of digital assets;
- Disclosure requirements and investor protection mechanisms;
- The role of intermediaries, including access to digital assets and custody solutions;
- Illicit finance risks, AML compliance and potential solutions to curb the use of digital assets in unlawful activities; and
- The treatment of new technological developments underpinning digital assets.
Final Thoughts
The Senate Banking Committee’s release of these discussion drafts and RFI joined the whirlwind of legislative and regulatory developments in the digital assets space this summer.
The committee’s updated discussion draft furthers CFTC and SEC cooperation through the establishment of the Joint Advisory Committee on Digital Assets, which would be responsible for providing nonbinding recommendations on the regulation of digital assets.
It also further defines “ancillary asset” and adds provisions on tokenization and decentralized finance software developers.[16] After the release of the updated discussion draft, on Sept. 9, 12 Democratic senators unveiled a framework for market structure legislation.[17] The proposal outlines seven key pillars, such as closing gaps in the spot market for nonsecurity digital assets, clarifying legal statuses and preventing illicit finance.
At the SALT Wyoming Blockchain Symposium in August, Lummis said she anticipates the committee will pass a proposal by the end of September, and she still expects market legislation to be on the president’s desk before the end of 2025, perhaps even prior to Thanksgiving.
Scott has said his goal is to get the SEC portion of the legislation voted out of the committee by Sept. 30, and during his remarks at the SALT symposium indicated an expectation that 12-18 Democrats are open to voting for market structure legislation.
The Senate Committee on Agriculture, Nutrition and Forestry, which has oversight of the CFTC, is then expected to take up the legislation in October, including drafting language focused on digital commodities.
During a Senate Agricultural Committee hearing in July titled “Stakeholder Perspectives on Federal Oversight of Digital Commodities,” which focused on how to divide regulatory authority over digital assets between the CFTC and the SEC, Chairman John Boozman, R-Ark., shared his perspective that jurisdiction over the trading of digital commodities should be exclusively with the CFTC, while others advocated for a joint regulatory framework involving both the CFTC and SEC.
The two committees will need to reconcile questions about jurisdiction between the SEC and CFTC prior to a comprehensive legislative package advancing to the Senate floor.
[1] See generally Senate Banking Committee Digital Asset Market Structure Legislation Discussion Draft (Discussion Draft) at https://www.banking.senate.gov/imo/media/doc/senate_banking_committee_digital_asset_market_structure_legislation_discussion_draft.pdf.
[2] See generally Market Structure RFI at https://www.banking.senate.gov/imo/media/doc/market_structure_rfi.pdf.
[3] Ancillary asset means an intangible, commercially fungible asset, including a digital commodity [not defined], that is offered, sold, or otherwise distributed to a person in connection with the purchase and sale of a security through an arrangement that constitutes an investment contract. Ancillary assets specifically exclude assets that provide debt or equity interests, liquidation rights, entitlements to interest or dividends, or other express or implied financial interests in the originator. Discussion Draft at 3. Note, the SEC must adopt a final rule specifying clear criteria and definitions, which for the term “investment contract” requires the following elements: (1) an investment of more than a de minimis amount of money or services; (2) investment in a business entity; (3) an express or implied agreement for the issuer to perform essential managerial efforts; (4) a reasonable expectation of profits based on the agreement and statements by the issuer; and (5) profits derived from the entrepreneurial or managerial efforts of the counterparty or its agents on behalf of the enterprise, where such efforts (i) are post-sale and essential to the operation or success of the enterprise and (ii) do not include ministerial, technical, or administrative activities. Discussion Draft at 18-19.
[4] Discussion Draft at 11-12, 28-29.
[5] Id. at 4-5.
[6] Id.
[7] See id. at 5-12. The updated draft released on Sept. 5 removes the SEC’s obligation to consult with the CFTC prior to establishing requirements for disclosure.
[8] Id. at 11.
[9] See id. at 15-18.
[10] Digital asset means any digital representation of value that is recorded on a cryptographically-secured distributed ledger; Discussion Draft at 2. The updated draft released on Sept. 5 removes the prior exclusion of nonfungible assets from the definition of digital assets.
[11] See id. at 21-26.
[12] Id. at 20-21.
[13] See id. at 30-31, 33-34.
[14] Id. at 11-12, 28-29.
[15] See generally Market Structure RFI.
[16] See generally at https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2025/09/05/Market_Structure-Discussion-Draft-9-5-25.pdf. Unlike the initial draft, which was accompanied by a Majority press release from the Senate Banking Committee, the committee has not formally released the updated draft or issued a press release regarding it.
[17] See generally A Framework for Market Structure Legislation at https://www.gallego.senate.gov/wp-content/uploads/2025/09/Market-Structure-Framework-Final.pdf.
The Federal Trade Commission (FTC) announced on September 10 that it issued several warning letters to large health care employers and staffing firms regarding potentially anticompetitive conduct in the health care sector, specifically inappropriate employee restrictive covenants. The letters urged their recipients to “conduct a comprehensive review of [their] employment agreements—including any noncompetes or other restrictive covenants—to ensure that they comply with applicable laws and are appropriately tailored to the circumstances.” The FTC’s announcement did not name the companies that received the letters.
This move comes on the heels of an agency vote to drop its defense of the agency’s 2024 nationwide noncompete ban, which was enjoined on constitutional grounds. Despite that withdrawal, FTC Commissioner Ferguson stated that the agency will continue “enforcing the antitrust laws aggressively against noncompete agreements” by “patrolling our markets for specific anticompetitive conduct that hurts American consumers and workers, and taking bad actors to court.” In short, the FTC will continue to police noncompete agreements on a case-by-case basis.
In its September 4 request to the public for information on noncompetes, the FTC stated that it had reviewed evidence suggesting that these types of restraints may “unjustifiably prevent workers from moving to better jobs, impede new business formation, prevent the shift of labor from over-served to under-served markets, and harm rival employers’ ability to compete.” The request to the public included two requests specifically focused on harm in the health care services sector:
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Have any noncompete agreements covering workers in the health care sector affected wages, labor mobility, or the availability, quality, or cost of health care services in particular? If so, how?
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Have any noncompete agreements made it more difficult for providers of health care services to hire physicians, nurses, or other professionals? If so, how?
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Has the provision of or the competition within any specific health care service in a geographic area been substantially affected by noncompete agreements? Can you provide examples?
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In the letters, the FTC noted that noncompete agreements used by health care employers and staffing companies can have “particularly harmful effects in healthcare markets where they can restrict patients’ choices of who provides their medical care—including, critically, in rural areas where medical services are already stretched thin.”
In addition to encouraging the recipients of the letters to review their employment agreements, the agency urged any company that currently uses unfair or anticompetitive noncompetes “to discontinue them immediately and to notify relevant employees of the discontinuance.” According to the FTC, noncompetes may run afoul of Section 5 of the FTC Act if they are “overbroad in duration or geographic scope.” The FTC also noted that they “may be inappropriate for certain roles entirely.” On the other hand, based on the agency’s recent enforcement action, the use of noncompete agreements for directors, officers, and senior managers tied to the grant of equity or equity-based awards, and noncompetes entered into in connection with the sale of a business by the preexisting equity holders, are unlikely to raise concern.
Any company that receives such a letter and that requires some or all of its employees to agree to restrictive covenants should consult with counsel and take action to avoid further agency scrutiny. Similarly, if the letter recipients are or might be in litigation against employees over noncompete or nonsolicitation agreements, the letter and the manner in which the employer responded to the letter are likely to be raised. More generally, the agency’s recent actions are a clear sign that the FTC will continue to enforce the law against what it views as overly restrictive noncompete agreements. To mitigate the FTC Act risks, employers should, at a minimum:
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Document the justifications for their noncompetes;
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Limit their use to employees with job responsibilities relevant to those justifications;
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Narrow the restrictions in terms of geography, timeframe, and types of later employment;
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Consider the use of less restrictive options, such as nondisclosure and nonsolicitation agreements and, where possible, use less restrictive alternatives; and
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Where less restrictive alternatives are not sufficient, document why they are not adequate.
It is also important for companies to ensure compliance with the many and evolving state laws governing employee restrictive covenants.
Troutman Pepper Locke’s Health Care, Antitrust, and Labor + Employment teams will continue to monitor the activity in this evolving area.
State attorneys general increasingly impact businesses in all industries. Our nationally recognized state AG team has been trusted by clients for more than 20 years to navigate their most complicated state AG investigations and enforcement actions.
State Attorneys General Monitor analyzes regulatory actions by state AGs and other state administrative agencies throughout the nation. Contributors to this newsletter and related blog include attorneys experienced in regulatory enforcement, litigation, and compliance. Also visit our State Attorneys General Monitor microsite.
Contact our State AG Team at StateAG@troutman.com.
Troutman Pepper Locke Spotlight
Effective Strategies for Managing Cybersecurity Breaches: How to Navigate State AG Investigations and Federal Agency Actions
By Troutman Pepper Locke State Attorneys General Team
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Thursday, September 25 • 1:00 – 3:10 p.m. ET
Stephen Piepgrass and Sadia Mirza, co-leaders of Troutman Pepper Locke’s Incidents + Investigations practice, along with Privacy + Cyber Partner Timothy St. George, will participate in an upcoming CLE with myLawCLE to examine the nuances of navigating cybersecurity breaches.
Podcast Updates
Solicitors General Insights: The Art of Oral Advocacy With Michigan and New Jersey
By Stephen C. Piepgrass and Jeff Johnson
In this episode of our special Regulatory Oversight: Solicitors General Insights series, RISE Counsel Jeff Johnson, a former deputy solicitor general in the Missouri Attorney General’s office, welcomes Michigan Solicitor General Ann Sherman and New Jersey Solicitor General Jeremy Feigenbaum. They explore the art of oral advocacy, sharing insights into how they effectively present cases. The conversation also addresses state sovereignty, emphasizing the importance of allowing states to experiment with policies and the impact of bipartisan issues, particularly those that resonate most effectively in front of SCOTUS.
State AG News
FTC and Utah Settle UDAP Claims Against Online Adult Content Provider
By Troutman Pepper Locke State Attorneys General Team and Dascher Pasco
The Federal Trade Commission (FTC) and the Utah Department of Commerce’s Division of Consumer Protection (Division), represented by the Office of the Utah Attorney General (AG), recently announced a proposed consent order with Aylo, the company that owns and operates pornography websites, including Pornhub.com and Redtube.com. The proposed consent order includes the implementation of a compliance program and a $5 million penalty.
What Businesses Need to Know: Colorado’s First-in-the-Nation AI Act Diverges From Federal Approach to Disparate Impact
By Troutman Pepper Locke State Attorneys General Team
What Happened
Last week, Colorado lawmakers held a special session that culminated in a decision to delay the implementation of the Colorado Artificial Intelligence Act (CAIA) until June 30, 2026, extending the timeline beyond its original February 2026 start date. That delay gives businesses a brief window to prepare, but the law remains in effect, requiring companies to build governance programs and perform regular impact assessments of high-risk AI systems.
AG of the Week
Chris Carr, Georgia
Chris Carr has served as Georgia’s attorney general (AG) since 2016, initially appointed by Governor Nathan Deal and subsequently elected to full terms in 2018 and 2022. As AG, Carr has prioritized combating opioid misuse, gang violence, human trafficking, elder abuse, and consumer fraud. He established the Statewide Opioid Task Force, which includes more than 400 members, and the Georgia Anti-Gang Network, focused on strengthening multijurisdictional investigations and prosecutions. In 2019, Carr created Georgia’s first Human Trafficking Prosecution Unit, which works with statewide partners to address trafficking and support victims. He also developed the Georgia Consumer Protection Guide for Older Adults to help prevent scams and exploitation.
Carr’s public service includes membership on Georgia’s Judicial Nominating Commission from 2011 to 2018 and the Executive Committee for the Georgia Older Adults Cabinet from 2016 to 2018. He is active in the National Association of Attorneys General, serving on committees related to human trafficking, substance abuse, and elder abuse.
Before his tenure as AG, Carr was commissioner of the Georgia Department of Economic Development from 2013 to 2016, where he led efforts in business recruitment, retention, international trade, tourism, and the arts. During his leadership, Georgia was recognized as the top state for business for three consecutive years, and the department facilitated more than 1,000 projects representing $14.4 billion in investment and the creation of more than 84,000 jobs. Carr also served as chief of staff for U.S. Senator Johnny Isakson, advising on federal legislation and judicial nominations.
Carr began his career with Georgia-Pacific, practiced law with Alston & Bird LLP in Atlanta, and served as vice president and general counsel for the Georgia Public Policy Foundation. He holds degrees from the University of Georgia’s Terry College of Business and Lumpkin School of Law. On November 21, 2024, Carr announced his candidacy for governor of Georgia in the 2026 election.
Georgia AG in the News:
- Carr released a statement supporting the Federal Communications Commission’s (FCC) efforts to combat contraband cellphones in prisons.
- Carr announced the indictment of a suspect in connection with two shootings that occurred at Albany State University in October 2024.
Upcoming AG Events
- September: RAGA | Fall National Meeting | Miami, FL
- September: DAGA | Denver Policy Conference | Denver, CO
- October: AGA | Anti-Human Trafficking Summit | Oxford, MS
For more on upcoming AG Events, click here.
Troutman Pepper Locke’s State Attorneys General team combines legal acumen and government experience to develop comprehensive, thoughtful strategies for clients. Our attorneys handle individual and multistate AG investigations, proactive counseling and litigation, and manage ancillary regulatory issues. Our successful approach has been recognized by Chambers USA, which ranked our practice as a leader in the industry.
The United States is a party to the Madrid Protocol, an international treaty simplifying and centralizing the process for registering trademarks on an international basis. This treaty allows owners of U.S. trademark registrations and pending applications for registration to utilize a simplified and streamlined procedure for obtaining trademark protection in many foreign jurisdictions.
Troutman Pepper Locke has significant experience in trademark protection and licensing, in the United States and internationally. We have been filing international trademark applications under the Madrid Protocol since the accession of the United States in November 2003 and will be able to assist you when seeking international trademark registration through the Madrid Protocol or otherwise.
SUMMARY OF MADRID PROTOCOL SYSTEM
For a modest fee, any trademark owner based in the United States may apply to register a trademark covered by a U.S. trademark application or registration on an International Register maintained by the World Intellectual Property Organization (WIPO). The application is filed through the U.S. Patent and Trademark Office and registration on the International Register is automatic upon compliance with the proper filing formalities and payment of the appropriate filing fees. Registration of a mark on the International Register provides no trademark protection on its own, but the owner of a trademark registered on the International Register obtains trademark protection in jurisdictions that are parties to the Madrid Protocol by “designating” one or more such jurisdictions. A list of the jurisdictions that are parties or soon to become parties to the Madrid Protocol is set forth on Table A.
When the trademark owner designates countries to be covered by the international registration, WIPO forwards the details of the international registration to the trademark authorities in each designated country. Each trademark office then has up to 18 months to review the application to determine whether it complies with local legal requirements for registration. If any substantive objection is raised, the applicant must address it in accordance with the local laws of the designated country. If the designated country fails to raise an objection to the application during the 18-month examination period or if all objections raised are resolved, the international registration becomes effective as a trademark registration in the designated country, with the same effect as if the applicant had obtained a trademark registration by applying under the laws of the designated country.
When filing an application for registration on the International Register, the applicant must designate at least one foreign jurisdiction and pay the applicable jurisdiction-specific fee for each jurisdiction covered (in addition to the filing fees for the international registration itself). Additional jurisdictions covered by the Madrid Protocol may be subsequently added to the international registration by the applicant at any time by payment of a subsequent designation fee and the applicable jurisdiction-specific fees.
Filings Fees and Renewal
The filing fees under the Madrid Protocol are denominated in Swiss Francs. The base filing fee for the international registration is currently CHF 653 for a trademark (CHF 903 when the mark is in color) and the subsequent designation fee is currently CHF 300. The jurisdiction-specific filing fees vary and are set forth on Table A.
Registration on the International Register remains in force for a period of 10 years. The registration may be renewed for additional 10-year terms by payment of a base renewal fee (currently CHF 653) plus a country-specific fee for each country then designated under the international registration. Like the application fee, the renewal fee varies by country and the number of classes of goods covered by the registration.
The international registration and associated rights in designated countries are dependent upon the U.S. trademark registration or application upon which the international registration is based for a period of five years after registration of the mark on the International Register. If the U.S. application is denied or if the U.S. registration is cancelled within this five-year period, the international registration and all associated benefits in designated countries will be cancelled.
The owner of an international registration that has been cancelled due to termination of the underlying U.S. registration may file local trademark applications with each of the designated countries in which protection was previously afforded by the international registration. The trademark owner must pay all applicable application fees and complete the application process as provided for any other trademark application submitted under local law, but the trademark owner will receive the priority date of the cancelled international registration for all local trademark applications filed within three months after cancellation of the international registration.
After the five-year period has passed, the international registration ceases to be dependent upon the U.S. registration or application and will remain valid irrespective of the abandonment, cancellation or expiration of the underlying U.S. registration or application.
BENEFITS OF REGISTRATION THROUGH MADRID PROTOCOL
- Eliminates need to prepare and file separate trademark applications in each country in which protection is sought
- Necessary filings are handled through the U.S. Patent and Trademark Office
- Not necessary to retain local counsel at filing stage
- Local counsel need only be retained if trademark office of a designated country raises objections to the registration
- Streamlined process generally results in substantial application fee savings
- Simplifies administrative burden of registering in multiple countries
- Single registration, with one renewal date, replaces multiple registrations with varying renewal requirements
- Changes in ownership of international registration accomplished with single filing
- The 18-month deadline for local trademark offices to object to the extension of registration to a country designated in the international registration significantly accelerates the registration process in certain countries
DRAWBACKS OF REGISTRATION THROUGH MADRID PROTOCOL
Scope of Protection
- The scope of the trademark registration on International Register must be identical to (or narrower than) the scope of underlying U.S. application or registration
- Because the U.S. Patent and Trademark Office requires relatively specific descriptions of the goods and services, the description of goods and services in the extension of an international registration to a foreign country may be significantly narrower than the description of goods and services that would be permitted in an application filed directly in the foreign country
- Because U.S. trademark law generally requires the mark to be actually used on the goods or services within three years after publication of the U.S. trademark application, the scope of goods and services protected may be limited to goods and services sold in the United States during the relevant time frame, where an application filed directly in the foreign country may not be limited in this manner
Dependence on U.S. Registration/Application
- Registration on the International Register will depend on continued validity of the underlying U.S. trademark application or registration for a period of five years
- If underlying application or registration terminates, all fees and resources expended on international registration will be lost
- By filing in each local jurisdiction (in the event the underlying application of registration terminates) the trademark owner may preserve the priority date of the international registration but must essentially start from scratch and incur all of the costs it sought to avoid by using the Madrid Protocol procedure (i.e., retaining local counsel, etc.)
- Under these circumstances, it is often worthwhile to exercise any necessary rights of appeal to prevent cancellation of underlying registration or at least delay any cancellation until after the five-year period of dependence has expired
CONCLUSION
In determining whether to utilize the Madrid Protocol system for protecting their trademarks internationally, U.S. businesses will need to weigh the cost and time savings provided by the Madrid Protocol against the potential to obtain broader coverage under trademark registrations filed in foreign countries. For many trademarks, the advantages of the Madrid Protocol system will probably outweigh the slight reduction in the scope of protection afforded in certain foreign jurisdictions.
On the other hand, companies seeking to protect their marquee brands and house marks may elect to continue to file local applications under the laws of each foreign country in order to obtain the maximum protection afforded to trademarks under local laws. Moreover, it is possible to follow a hybrid approach and utilize the Madrid Protocol system to efficiently obtain protection in a number of countries, while also pursuing local trademark applications under the laws of the jurisdictions that are most important to the trademark owner.
Please contact Sean Fifield or your Troutman Pepper Locke attorney if you have questions about the Madrid Protocol system or trademark registration generally.
TABLE A | JURISDICTIONS PARTY TO THE MADRID PROTOCOL, STATUS AS OF SEPTEMBER 1, 2025.
| Country | Jurisdiction Fee (CHF)* |
| Afghanistan | 100 + 100/class over 3 |
| African Intellectual Property Org.** | 572 + 119/additional class |
| Albania | 100 + 100/class over 3 |
| Algeria | 100 + 100/class over 3 |
| Antigua and Barbuda | 220/flat fee |
| Armenia | 187 + 19/additional class |
| Australia | 232/class |
| Austria | 100 + 100/class over 3 |
| Azerbaijan | 100 + 100/class over 3 |
| Bahrain | 1517/class |
| Belarus | 600 + 50/class over 3 |
| Belize | 189 + 40/additional class |
| Benelux*** | 224 + 75/additional class |
| Bhutan | 100 + 100/class over 3 |
| Bonaire, Saint Eustatius and Saba | 163 + 17/class over 3 |
| Bosnia and Herzegovina | 100 + 100/class over 3 |
| Botswana | 100 + 100/class over 3 |
| Brazil | 170/class |
| Brunei | 196 + 107/additional class |
| Bulgaria | 290 + 19/class over 3 |
| Cabo Verde | 169 + 62/additional class |
| Cambodia | 139/class |
| Canada | 299 + 91/additional class |
| Chile | 251/class |
| China | 249 + 125/additional class |
| Colombia | 260 + 130/additional class |
| Croatia | 100 + 100/class over 3 |
| Cuba | 356 + 92/additional class |
| Curaçao | 294 + 35/class over 3 |
| Cyprus | 100 + 100/class over 3 |
| Czech Republic | 100 + 100/class over 3 |
| Denmark | 257 + 77/additional class |
| Egypt | 100 + 100/class over 3 |
| Estonia | 151 + 47/additional class |
| European Union | 798 + 144/additional class |
| Finland | 222 + 93/additional class |
| France | 100 + 100/class over 3 |
| Gambia | 80/class |
| Georgia | 314 + 115/additional class |
| Germany | 100 + 100/class over 3 |
| Ghana | 318/class |
| Greece | 112 + 19/additional class |
| Guernsey | 226 + 23/additional class |
| Hungary | 100 + 100/class over 3 |
| Iceland | 247 + 53/additional class |
| India | 93/class |
| Indonesia | 110/class |
| Iran (Islamic Republic of) | 100 + 100/class over 3 |
| Ireland | 228 + 65/additional class |
| Israel | 459 + 345/additional class |
| Italy | 85 + 28/additional class |
| Jamaica | 157 + 21/additional class |
| Japan | 266 + 250/additional class |
| Kazakhstan | 266 + 75/class over 3 |
| Kenya | 312 + 223/additional class |
| Korea (DPR) | 100 + 100/class over 3 |
| Korea (Republic of) | 167/class |
| Kyrgyzstan | 340 + 160/additional class |
| Laos | 44 + 31/additional class |
| Latvia | 100 + 100/class over 3 |
| Lesotho | 100 + 100/class over 3 |
| Liberia | 100 + 100/class over 3 |
| Liechtenstein | 100 + 100/class over 3 |
| Lithuania | 100 + 100/class over 3 |
| Macedonia (Republic of) | 100 + 100/class over 3 |
| Madagascar | 100 + 100/class over 4 |
| Malawi | 100 + 100/class over 3 |
| Malaysia | 221/class |
| Mauritius | 105 + 35/additional class |
| Mexico | 132/class |
| Moldova | 223 + 47/additional class |
| Monaco | 100 + 100/class over 3 |
| Mongolia | 100 + 100/class over 3 |
| Montenegro | 100 + 100/class over 3 |
| Morocco | 219 + 44/additional class |
| Mozambique | 100 + 100/class over 3 |
| Namibia | 100 + 100/class over 3 |
| New Zealand | 55/class |
| Norway | 309 + 81/additional class |
| Oman | 484/class |
| Pakistan | 54/class |
| Philippines | 89/class |
| Poland | 100 + 100/class over 3 |
| Portugal | 100 + 100/class over 3 |
| Qatar | 1127/class |
| Romania | 100 + 100/class over 3 |
| Russian Federation | 100 + 100/class over 3 |
| Rwanda | 100 + 100/class over 3 |
| Saint Martin | 298 + 31/class over 3 |
| Samoa | 146/class |
| San Marino | 140 + 47/additional class |
| Sao Tome and Principe | 100 + 100/class over 3 |
| Serbia | 100 + 100/class over 3 |
| Sierra Leone | 100 + 100/class over 3 |
| Singapore | 265/class |
| Slovakia | 100 + 100/class over 3 |
| Slovenia | 100 + 100/class over 3 |
| Spain | 100 + 100/class over 3 |
| Sudan | 100 + 100/class over 3 |
| Swaziland | 100 + 100/class over 3 |
| Sweden | 194 + 76/additional class |
| Switzerland | 400 + 50/additional class |
| Syrian Arab Republic | 134/class |
| Tajikistan | 274 + 21/additional class |
| Thailand | 360/class |
| Trinidad and Tobago | 191 + 20/additional class |
| Tunisia | 180 + 36/additional class |
| Turkey | 164 + 52/additional class |
| Turkmenistan | 228 + 91/additional class |
| Ukraine | 429 + 86/class over 3 |
| United Arab Emirates | 1630/class |
| United Kingdom | 202 + 56/additional class |
| Uzbekistan | 272 + 111/additional class |
| Vietnam | 124/class |
| Zambia | 57 + 45/additional class |
| Zimbabwe | 80 + 48/additional class |
* Fee (in Swiss Francs) charged by designated jurisdiction, which is based upon number of international classes covered by registration. In most jurisdictions, the base fee covers the first 3 classes, with an additional fee for the fourth and each additional class. In other jurisdictions, the base fee covers the first class, with an additional fee for the second and each additional class. Additional fees may be due where the mark is a collective mark rather than a trademark.
** The African Intellectual Property Organization (OAPI) covers Benin, Burkina Faso, Cameroon, the Central African Replic, Chad, Comoros, Congo, Ivory Coast, Equatorial Guinea, Gbon Guinea, Ginea-Bissau, Mali, Mauritania, Niger, Senegal and Togo. However, local legislation has not been implemented, so registration in OAPI through the Madrid Protocol will not be effective until such legislation is adopted.
*** The Benelux Customs Union, consisting of Belgium, Luxembourg and Netherlands, is considered a single jurisdiction for trademark purposes.
This article was republished on EACCNY on September 11, 2025.
On September 5, President Trump signed an executive order introducing new exemptions (and removing other exemptions) to reciprocal tariffs, while also setting out a new framework that aims to promote the conclusion of more definitive trade and security agreements in exchange for additional forms of tariff relief.
The executive order, titled “Modifying the Scope of Reciprocal Tariffs and Establishing Procedures for Implementing Trade and Security Agreements” (the Order), builds on previous actions, notably Executive Order 14257 of April 2, 2025, as amended, which imposed reciprocal tariffs pursuant to emergency trade authority under the International Emergency Economic Powers Act (IEEPA) to rectify unfair trade practices (the Reciprocal Tariffs).
Executive Order 14257, as amended, has faced significant legal challenges. In particular, the U.S. Court of International Trade, with its decision later affirmed by the U.S. Court of Appeals for the Federal Circuit, determined that the Trump administration overstepped its statutory authority by imposing the Reciprocal Tariffs. In response to the legal challenges surrounding these tariffs, the administration has appealed the court’s decision to the U.S. Supreme Court, seeking an expedited review. Although the legality of the Reciprocal Tariffs remains under judicial review, the Order maintains reliance on the same authorities currently being examined by the courts.
Key Modifications to Reciprocal Tariffs
The Order adds new exemptions (in some areas expanding existing exemptions) for certain goods under the Reciprocal Tariffs, such as bullion-related articles and additional critical minerals and pharmaceutical products under pending Section 232 investigations, under Annex II of Executive Order 14257. At the same time, the Order removes exemptions for other goods, including certain aluminum hydroxide, resin, and silicone products, under Annex II, meaning they are now subject to Reciprocal Tariffs.
Framework for Trade and Security Agreements
The Order introduces Annex III, titled “Potential Tariff Adjustments for Aligned Partners” (PTAAP), which lists more than 1,900 products eligible for country-based tariff exemptions or reductions (potentially to zero) if trading partners negotiate trade agreements aligning with U.S. priorities. These products include items not sufficiently produced in the U.S., certain agricultural goods, aircraft and related components, and non-patented pharmaceutical inputs. Annex III functions as an incentive for trade partners to align with U.S. policies.
The Order aims to provide clearer motivation for trading partners to finalize trade agreements by offering reduced Reciprocal Tariff rates, potentially eliminating them entirely for certain imported goods. To take advantage of the possibility of reduced or eliminated tariffs, a trading partner is required to take substantial steps to correct non-reciprocal trade practices and align with U.S. economic and national security priorities.
Additionally, the Order considers the possibility of applying future trade agreements retroactively, potentially allowing U.S. Customs and Border Protection to refund previously paid duties. The potential for future refunds underscores the administration’s interest in formalizing agreements with trade partners in exchange for extending this benefit.
Effective Date
The Order took effect on September 8, 2025, at 12:01 a.m. ET, applying to all goods entered for consumption or withdrawn from a warehouse for consumption thereafter.
Conclusion
While the Order represents a continuation of President Trump’s commitment to trade policy to address longstanding economic imbalances and protect national security, it also reflects an ongoing strategic recalibration of U.S. tariff policy. It continues the shift away from blanket, across-the-board tariffs, toward a more varied and conditional approach that leverages tariffs as bargaining chips in trade and security negotiations.
As the U.S. navigates complex trade relationships, companies must be prepared for shifting compliance requirements and evolving market dynamics, while also recognizing that ongoing litigation challenging the President’s authority to impose these tariffs under IEEPA leaves the legal framework for Reciprocal Tariffs unsettled, creating both risks and opportunities.
Three nearly simultaneous actions of the Federal Trade Commission (FTC) confirmed its intentions with respect to employee noncompetes. In the first two related actions, the FTC indicated it will not defend its 2024 rule banning virtually all worker noncompetes and will instead focus on efforts to rein in the use of “unfair and anticompetitive” noncompetes. The FTC’s third action notified the public of its intent to accomplish its goals, at least in part, through a wide-ranging request for the public to identify employers using noncompetes, followed by targeted enforcement actions.
Specifically, on September 4, 2025, the FTC voted 3-1 along party lines to approve a complaint against the largest pet crematorium in the U.S. and a settlement of that action that bans the company from using noncompete clauses in many of its employment agreements. The complaint alleges that, in 2019, the pet cremation company and its subsidiary adopted a policy requiring noncompete agreements for all newly hired employees, which typically barred the employees from working in the pet cremation industry anywhere in the U.S. for one year after their departure. According to the FTC’s complaint, the only employees not subject to noncompetes are those working in California, which has a statutory prohibition on such restrictions.
The complaint emphasized the fact that the noncompetes were imposed on employees regardless of (1) their responsibilities, compensation levels, or skills, and (2) even in the absence of a nearby operational facility. The FTC also pointed out that, in one instance, employees were required to enter into noncompetes only to have the facility at which they worked closed and their employment terminated within weeks. Commissioner Slaughter, who was briefly reseated pursuant to a court order, dissented: “one-off enforcement is no substitute for the FTC’s meaningful, market-wide noncompete rule that will protect workers across the country.”
The settlement with the FTC bars noncompete agreements except in limited circumstances. Specifically excluded from the noncompete prohibition are those entered into by directors, officers, or senior employees, in conjunction with the grant of equity or equity interests. Further, the settlement does not prohibit noncompete agreements in conjunction with the sale of a business, provided that individuals subject to restriction have a pre-existing equity interest in the business being sold. Notably, the settlement also bars employee agreements restricting employees from soliciting customers, except those current or prospective customers with whom the employee had “direct contact or personally provided service” in the last 12 months.
FTC’s second action was to issue a Request for Information Regarding Employer Noncompete Agreements in an effort to identify “which specific employers continue to impose noncompete agreements.” The request is not aimed at studying the use of worker restrictions and does not seek information from employers wanting to justify their use of noncompetes; instead, it is focused solely on gathering information about employers that are currently using noncompete agreements. For example, it seeks the employer names, job functions, and salaries of those workers covered, scope of restrictions (e.g., geography, duration), enforcement practices, harm to employee mobility (e.g., moving and legal costs, lost higher wages, etc.), lost opportunity to start new businesses, harm to rival employers, and loss of innovation. The request specifically calls for information about instances where noncompetes have harmed health care workers. Among the most interesting is a request for the names of employers that use nonsolicitation or nonrecruitment agreements limiting former workers from working with former customers or former employees.
The third action, filed the following day, was the FTC’s unopposed motions to dismiss both its Fifth and Eleventh Circuit appeals of the two district decisions holding that the agency’s rule banning worker noncompetes exceeded the FTC’s authority.[1] By dismissing these appeals, the agency has acceded to the vacatur of the final Non-Compete Clause Rule. The vote to abandon the defense of the rule was 3-1 along party lines. Commissioner Slaughter dissented on the basis that the rule received overwhelming support in the form of 25,000 supportive comments out of the approximately 26,000 total comments received. She was also critical of the majority’s decision to simply drop the defense of the rule instead of allowing for a public notice and comment period:
- The law does not permit the agency to void this popular rule under cover of darkness by simply withdrawing from litigations. The law requires that we hear from the American people. In absence of that legally required process, the action the commission takes today should not hamper the agency in the future.
Whether or not the FTC followed the correct process, this administration will not defend the 2024 noncompete ban. This means the Northern District of Texas decision, which universally vacated the FTC’s noncompete rule, and the Middle District of Florida decision, which preliminarily enjoined the FTC’s enforcement of its rule against the named plaintiff there, as well as the conflicting Eastern District of Pennsylvania decision, which refused to enjoin the FTC rule, all remain on the books without appellate court review.
Although the FTC acknowledges that noncompetes can serve “valid purposes in some circumstances,” it is also concerned with the impact on workers of the often knee-jerk reliance on the clauses. These FTC actions and the agency leadership’s statements make clear that the agency intends to discourage the blanket use of worker noncompetes, hopes to use the public to relatively quickly identify such employers, and intends to take action against “the worst offenders [to] restore fairness to the American labor market.” The FTC could issue cease-and-desist letters or it could go so far as to launch burdensome investigations and pursue administrative or federal court lawsuits under the FTC Act. However, the FTC has been consistent in its stance that the validity of noncompetes in the context of sale of business agreements are subjected to substantially less scrutiny.
Employers considering use or the continued use of noncompetes should evaluate all potentially applicable state laws. These state laws have changed rapidly and may include minimum compensation thresholds, notice periods, garden leave requirements, maximum time limitations, and other similar requirements. In addition, to mitigate the FTC Act risks, firms should, at a minimum:
- Document the justifications for their noncompetes;
- Limit their use to employees with job responsibilities relevant to those justifications;
- Narrow the restrictions in terms of geography, timeframe, and types of later employment;
- Consider the use of less restrictive options, such as nondisclosure and nonsolicitation agreements and, where possible, use less restrictive alternatives; and
- Where less restrictive alternatives are not sufficient, document why they are not adequate.
Firms should also be aware that the Department of Justice and the FTC remain concerned with agreements among companies not to solicit or poach each other’s employees. Companies using no-poach agreements should consider the same factors above.
We will continue to monitor closely the enforcement and other actions of the federal and state authorities.
[1] Ryan, LLC v. FTC, No. 24-10951 (5th Cir.), and Properties of the Villages v. FTC, No. 24-13102 (11th Cir.).
Over the last several years, companies plagued with massive toxic tort liabilities have attempted to utilize a statutory process known as the “Texas Two Step,” created under Texas’ Business Organizations Code Section 1.002(55)(A), to effectively divide into two separate legal entities, one of which contains most of the healthy, profitable operations and the other assumes the legacy liabilities while being funded with what some argue are insufficient assets. In 2017, Georgia Pacific faced approximately 64,000 asbestos claims. To address the problem, it effectuated a divisional merger under the Texas statute and split into two separate entities, with Bestwall LLC assuming responsibility for the personal injury claims. In connection with the merger, the new entity entered into a funding agreement with Bestwall to fund its Chapter 11 case and establish a trust to handle asbestos liabilities.
Click here to read the full article in The Legal Intelligencer.
In This Update
Covering legal developments and regulatory news for funds, their advisers, and industry participants for the quarter ended June 30.
Rulemaking and Guidance
- SEC Extends Effective and Compliance Dates for Amendments to Investment Company Reporting Requirements
- SEC Withdraws 14 Rule Proposals
- FINRA Launches Broad Review to Modernize Rules Regarding Member Firms and Associated Persons
- FINRA Requests Comment on a Proposal to Reduce Unnecessary Burdens and Simplify Requirements Regarding Associated Persons’ Outside Activities
SEC and SRO News
- Paul S. Atkins Sworn in as SEC Chairman
- Impact of SEC Buyouts on Key Divisions
- Natasha Vij Greiner to Conclude Her Tenure as SEC Director of Investment Management
- Brian Daly Named Director of Division of Investment Management
Click here to read this issue.
Troutman Pepper Locke’s Investment Management Group serves a wide range of businesses in the investment management community. Our practice involves three general areas: representation of registered investment companies and registered investment advisers, representation of alternative investment funds and investors in alternative products, and counseling regarding securities regulation, enforcement and litigation. Contact any of our professionals if you have questions about this update or any other investment management issues.
With the rise of content creation in the digital age, it is easy to think that the market has surpassed a saturation point for creative works. After all, each of these creative works does hold its own copyright automatically upon creation. Truthfully, it is impractical to register the copyrights of all of these works. Even so, creators must understand the importance of providing the best protection available for valuable works. This is where registering your copyright is essential.
Registering your copyright is not only a crucial step toward securing robust legal protections but also a relatively straightforward process. It requires basic information about the work, details about the author, and submission of copies of the work being registered. But what else can a copyright registration afford you?
- Statutory Damages and Attorneys’ Fees: Registering your copyright before an infringement occurs, or within three months of publication, can provide significant legal and financial advantages in the event of a lawsuit. When your copyright is timely registered, you become eligible for statutory damages and attorneys’ fees if you successfully prove infringement. Statutory damages allow you to recover a predetermined amount set by law, which can be awarded without the need to prove the actual financial loss caused by the infringement. This is particularly beneficial in cases where actual damages are difficult to quantify or may be minimal.
- Ability to Sue for Infringement: Registration is a prerequisite for filing a lawsuit for copyright infringement in the U.S. Without registration, you cannot enforce your rights through litigation. Before threatening or bringing forth a lawsuit, early registration of your copyright is a worthwhile endeavor. Should concerns of others taking your creative content arise, the registration process is the best place to begin.
- Licensing and Commercial Opportunities: Registering your copyright can enhance your ability to license and commercially exploit your work by providing a clear record of ownership, which reassures potential licensees or partners. This formal registration establishes public notice of your rights, reducing uncertainty and expediting negotiations. It signals professionalism and credibility, building trust with potential collaborators who may be more willing to enter agreements knowing your rights are clearly established.
- Legal Presumptions: While copyright protection is automatic upon creation, registration provides a public record of your ownership. This can be crucial in defensive legal disputes, as it establishes a presumption of validity and ownership in court. A copyright registration serves as evidence of the validity of the copyright unless proven otherwise in court. The registration also provides evidence of the date of creation, which can be pivotal in determining originality of the work should a dispute arise.
- International Protection: While copyright registration is primarily a national process, it plays a crucial role in asserting your rights internationally, particularly in countries that are signatories to international copyright treaties such as the Berne Convention and the Universal Copyright Convention. These treaties establish a framework for mutual recognition of copyright protection across member countries, meaning that once your copyright is registered in one country, it can facilitate the enforcement of your rights in other treaty countries.
Registering your copyright is a strategic move that offers numerous advantages for protecting and managing your intellectual property. Registration helps maintain a formal record of your creations, which is invaluable for cataloging and managing your intellectual property portfolio. We take a comprehensive approach to copyright protection so your creative efforts are well-defended and optimally positioned for commercial exploitation. If you are considering copyright registration, consulting with a legal professional can provide valuable guidance tailored to your specific needs. Our team of intellectual property attorneys at Troutman Pepper Locke is prepared to help you meet your goals.
Published in Law360 on September 5, 2025. © Copyright 2025, Portfolio Media, Inc., publisher of Law360. Reprinted here with permission.
This year has seen a record percentage of whistleblower claim denials by the U.S. Securities and Exchange Commission.[1] This rising trend of award denials is a departure from the SEC’s previous track record and may reflect a more conservative approach to whistleblower award determinations under the current administration.
Background of the SEC Whistleblower Program
The SEC’s whistleblower program was launched in 2011 to incentivize whistleblowers to report credible information about possible federal securities law violations. The program authorizes the SEC to provide monetary awards to eligible individuals who provide original, credible information leading to an SEC enforcement action in which over $1 million in sanctions is ordered. Eligible whistleblowers receive between 10% and 30% of the monetary sanctions collected.
The whistleblower program has led to numerous enforcement actions and significant award amounts paid to eligible whistleblowers. The largest awards issued under this program range between $37 million and $279 million.
In fiscal year 2024, the commission awarded over $255 million to 47 individual whistleblowers, the third-highest annual amount in the program’s history.[2] Since the program’s inception, the SEC has awarded more than $2.2 billion to individual whistleblowers.[3]
The program is administered by the Office of the Whistleblower, an office within the SEC’s Division of Enforcement. The Office of the Whistleblower is responsible for assessing and resolving claims for whistleblower awards, protecting the ability of individuals to report potential violations to the SEC, fielding tips from the public, and promoting the whistleblower program through education and public engagements.
Historically, the SEC has gone to great lengths to protect whistleblowers and promote the awards in order to continue receiving high-quality whistleblower tips. To ensure that whistleblowers can report potential securities law violations without fear of interference or retaliation, the SEC has brought a number of enforcement actions against entities and individuals who took actions to impede whistleblowers from reporting.
In doing so, “[t]he Commission sent a strong message that agreements and conduct that impede communication with the SEC will not be tolerated,” the Office of the Whistleblower wrote in its annual report to Congress for fiscal year 2024.[4] Many of these enforcement actions were brought when there was only the possibility of impeding reporting and no actual impediment had occurred. These enforcement actions underscore the SEC’s commitment to the whistleblower program’s success.
In line with this commitment, the SEC devotes significant resources to reviewing and assessing whistleblower claims through a robust, multitiered review process. This includes review by Office of the Whistleblower attorneys and staff, as well as attorneys in the Division of Enforcement’s Office of Chief Counsel and the SEC’s Office of the General Counsel.
Denial Trends in Recent Years
Despite the SEC’s substantial investment in the whistleblower program, award determinations for 2025 demonstrate a clear upward trend in the number of denials of whistleblower claims for awards.
Through Sept. 4, the SEC has issued 17 award orders and 84 denial orders for whistleblower claims, reflecting a denial rate of just over 83%.[5] Notably, in May and June of this year, the SEC issued 34 denial orders and 0 awards. The award determination data so far this year alone reflects a significant increase in the percentage of denials compared to the last few years.
In 2024, approximately 67% of the final orders issued by the SEC were denial orders. In 2023, the percentage of denial orders was approximately 75%, and in 2022, roughly 58%.
Possible Rationale for Increased Denials
Although the annual rate of whistleblower claim denials for 2025 is yet to be determined, the current trend suggests that the percentage of denials for 2025 could be significant. This trend may be attributed to a more conservative approach to issuing whistleblower awards under the current SEC leadership. The rise in denials may also indicate that the SEC is more closely scrutinizing whistleblower claims and employing a stricter application of the eligibility criteria.
The increase in denials could also reflect efforts to discourage frivolous and duplicative claims — the SEC’s fiscal year 2024 annual report to Congress revealed that over 14,000 of the 24,980 whistleblower tips received in 2024 could be attributed to two individuals.[6] And of the 18,354 whistleblower tips submitted in 2023, nearly 7,000 could be attributed to those same two individuals.[7]
Implications
Looking at the last few years of whistleblower award determinations, the most recent year is a clear departure from the relatively consistent rate of awards. If the rate of decline in whistleblower awards continues, this shift could have a chilling impact on whistleblowers coming forward. This may be by design. Such a chilling effect would ultimately undermine the goals of the whistleblower program.
Although the SEC’s rationale for the upward trend of award denials may be difficult to discern at present, prospective whistleblowers and their attorneys should be careful when preparing their award claim submissions to make sure that they comply with the stringent requirements of the whistleblower tip process. These requirements include formal procedures for whistleblower applications, as well as specific eligibility requirements for awards.
Procedural noncompliance by award claimants could be one explanation for the recent denials, which can be avoided by strict adherence to the award procedure. Award denials on this basis may reflect a shift to more rigorous enforcement of the reporting and application requirements, contrary to the SEC’s prior practice of waiving requirements in certain circumstances.
This departure is reflected in a May 5 order, in which the SEC disavowed its prior “information-focused approach” in favor of a “submission-focused interpretation” of the relevant whistleblower rules.[8]
This SEC order involved a covered action in which joint claimants submitted information regarding securities law violations to the press prior to submitting that information directly to the SEC. The commission found that their belated submission did not satisfy the whistleblower eligibility rules and declined to exercise discretionary authority to waive the eligibility requirement.
The analysis set forth in this order signals the SEC’s interest in ensuring that claims are interpreted consistently and in line with statutory intent.
Looking Ahead
The SEC’s award determinations for the rest of 2025 will reveal whether the current pattern of award denials is a strategic and intentional shift from prior years. If the increasing trend of denials continues, this may indicate that current SEC leadership is taking a more conservative approach to granting whistleblower awards, applying stricter enforcement of the eligibility requirements or trying to tamp down the whistleblower program entirely.
[1] Holland, John, “Whistleblower Awards Slow to Trickle as SEC Raises Bar on Claims,” Bloomberg Law, July 22, 2025, https://news.bloomberglaw.com/securities-law/whistleblower-awards-slow-to-trickle-as-sec-raises-bar-on-claims.
[2] Securities and Exchange Commission Office of the Whistleblower Annual Report to Congress for Fiscal Year 2024, https://www.sec.gov/files/fy24-annual-whistleblower-report.pdf.
[3] Id.
[4] Id.
[5] https://www.sec.gov/enforcement-litigation/whistleblower-program/final-orders-whistleblower-award-determinations.
[6] Securities and Exchange Commission Office of the Whistleblower Annual Report to Congress for Fiscal Year 2024, https://www.sec.gov/files/fy24-annual-whistleblower-report.pdf.
[7] Id.
[8] Order Determining Whistleblower Award Claim, Exchange Act Release No. 102987, File No. 2025-27 (May 5, 2025), https://www.sec.gov/files/denial-orders-5525.pdf.