Political activities sit at the intersection of law, policy, and reputation. Companies operating in highly regulated industries cannot avoid political law issues, and it is frequently more complex than expected.
This quarterly newsletter highlights a few practical issues we are seeing with clients and a handful of developments worth keeping on the radar.
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What Is a Super PAC, Anyways?
Contrary to what its name may imply, a so-called “super PAC” is not a traditional political action committee (PAC) with extra fundraising or spending power. In fact, super PACs are often defined by their limitations. They cannot make direct political contributions to candidates or even coordinate with candidates or political parties. Despite these limitations, super PACs are increasingly common due to a key concept: independent expenditures.
An independent expenditure is a political communication, such as a paid TV ad, that supports or opposes a candidate and is made independently by super PACs (i.e., without any coordination with the candidate’s campaign or political party). Because the expenditures are made without coordination, they are considered a form of protected political speech. As a result, there are far fewer legal restrictions on how super PACs can raise money and how much they can spend advocating for or against candidates. For example, companies are often banned from making direct contributions to candidates from corporate treasury funds, but no such limitation exists for donations to super PACs.
Super PACs are “super” because the unlimited political funds they raise and spend are considered “political speech” and subject to less restrictions.
Compliance Checklist for the Quarter
A few practical reminders as the year begins.
- Review Contribution Policies
Many companies have political contribution policies on paper that are not consistently operationalized. Make sure procedures for pre-clearance and reporting are actually being followed. - Confirm PAC Reporting Calendars
Corporate PACs often operate on different reporting schedules depending on activity levels. Confirm that reporting calendars reflect current obligations. - Update Lobbying Registrations
Companies that lobby in multiple states should verify that registration renewals and reporting requirements are current across jurisdictions. - Evaluate Pay-to-Play Exposure
Companies with government contracts or investment adviser exposure should periodically review political contribution activity for potential pay-to-play implications.
Development to Watch: Expanding State Pay-to-Play Rules
More states are examining restrictions on political contributions tied to government contracting or financial relationships with public entities. While these rules vary widely, the overall trend is toward greater scrutiny.
For companies operating across multiple states, the practical challenge is not a single rule but the patchwork of overlapping regimes.
Where We See Problems Arise
Most compliance issues do not stem from intentional misconduct. They arise from structure.
Typically:
- Government affairs teams drive political activity.
- Legal departments manage regulatory risk.
- Political compliance frequently sits somewhere between those functions.
Without a centralized system, responsibilities can become fragmented and key tasks can slip through the cracks.
Common problem areas include:
- Missed registration renewals.
- Untracked executive political contributions.
- Inconsistent documentation of event sponsorships.
- Delayed reporting of lobbying activity.
A disciplined process, supported by clear policies and responsibilities, can prevent most of these issues from escalating into enforcement actions, negative press, or business disruptions.
A Final Thought
Political compliance is rarely an area where companies want to spend their time, but in regulated industries, it is part of the operating environment.
Handled well, it becomes routine infrastructure.
Handled poorly, it can quickly become a distraction.
If you have questions about any of the issues above, or if you would like to walk through your current compliance framework, feel free to reach out.
We’re always happy to talk and to partner with you on building a practical political compliance structure that works for your organization.
On March 5, 2026, the IRS issued proposed regulations (the Proposed Regulations) setting forth an alternative process for digital asset brokers to obtain consent from customers to receive Form 1099-DA statements electronically. This alternative process provided in the Proposed Regulations is meant to alleviate administrative tax compliance burdens for digital asset brokers. The IRS and Treasury also issued Notice 2026-4, requesting public comments on whether (i) less burdensome consent procedures should be implemented for other payee statements, including Form 1099-B, and (ii) the list of forms permitted on a Form 1099-B composite statement should include Form 1099-MISC for the purpose of reporting “staking rewards,” (i.e., additional units of cryptocurrency granted in exchange for holders locking up assets held in native cryptocurrency to help validate and secure the blockchain).
Generally, digital asset “brokers” must make a return of information regarding certain digital asset sale transactions to the IRS and furnish payee statements to the person whose tax identification number is shown on Form 1099-DA. In 2024, the Biden administration enacted regulations set to take effect in 2026 that would have treated “Defi brokers,” or trading front-end service providers that interface with users but do not take possession of the digital assets exchanged (e.g., Uniswap), as brokers for these purposes (the De-fi Regulations). However, in 2025, Congress and President Donald Trump ordered Treasury to repeal the De-fi Regulations, limiting Form 1099-DA information reporting to custodial brokers.
Under current law, digital asset brokers must first (i) obtain consent from their customers before satisfying their obligation to provide such customers with an electronically furnished payee statement and (ii) furnish payee statements on paper to any customer that (A) does not consent to receiving electronically furnished statements or (B) withdraws their prior consent.
Recognizing the potentially burdensome cost of printing and mailing paper 1099-DA statements and that those participating in transactions involving digital assets have the ability to receive 1099-DA statements electronically, the Proposed Regulations would not require brokers to furnish the 1099-DA statements on paper to customers that do not consent to receiving these statements electronically. Instead, brokers would alternatively be permitted to terminate their business relationship with such customers. Additionally, the Proposed Regulations would not require brokers to give their customers the ability to withdraw previously provided consent to receive electronic statements.
The Proposed Regulations are consistent with the Trump administration’s request for priority guidance from Treasury and the IRS to provide brokers with a less burdensome method of obtaining consent from customers to furnish Form 1099-DA in an electronic format.[1]
[1] See “STRENGTHENING AMERICAN LEADERSHIP IN DIGITAL FINANCIAL TECHNOLOGY” Third-Party Information Reporting: Priority Guidance, Electronic Furnishing of Digital Asset Payee Statements (Form 1099-DA), (July 2025).
This article was originally published on American Bar Association and is republished here with permission as it originally appeared on February 5, 2026.
JAMS and the American Arbitration Association (AAA)—the leading arbitral organizations in the United States—issued rule changes and updated fee schedules in 2024 to directly address mass arbitration and mitigate some of the cost and administrative burdens that mass filings impose on businesses.
Procedural Developments: JAMS and AAA Rule Changes
The AAA’s recent revisions to its Consumer Arbitration Rules, effective May 1, 2025, illustrate that point. These rule changes have material implications for mass proceedings because they give the AAA greater flexibility to manage large volumes of cases. For example, a new consolidation provision allows the AAA, in its discretion, to treat multiple claims by the same party under the same contract as a single administered case. AAA Consumer Arb. R. & Mediation Procs. R-4 (2025). The rules also make hearings virtual by default, reducing logistical barriers when hundreds or thousands of matters must be heard.
Other rule changes, however, may significantly increase a company’s expense in defending against mass filings. Under revised Rule R-31, an arbitrator must “consider the time and cost associated with the briefing of a dispositive motion in deciding whether to allow any such motion.” AAA Consumer Arb. R. & Mediation Procs. R-31 (2025). Dispositive motions are a critical tool for early dismissal of claims that fail threshold tests—for example, time-barred claims or claims outside the scope of the arbitration agreement. This additional constraint may make arbitrators more hesitant to permit such motions, potentially limiting a company’s ability to efficiently cull non-meritorious claims across a large docket of related arbitrations.
Judicial Scrutiny and Uncertainty
Around the same time, courts have begun to scrutinize mass arbitration procedures and how provider protocols function in practice. For example, in Heckman v. Live Nation Entertainment, Inc., the Ninth Circuit held that a provider’s mass-arbitration protocol was unconscionable. 120 F.4th 670, 685-86 (9th Cir. 2024). In contrast, more recent decisions have rejected unconscionability challenges to JAMS and AAA rules affecting the coordination of mass filings within those frameworks. See, e.g., Carolus v. Coinbase Glob., Inc., No. 25-cv-03089-CRB, 2025 WL 3033736 (N.D. Cal. Oct. 7, 2025); Jones v. Starz Entm’t, LLC, 129 F.4th 1176 (9th Cir. 2025).
Against the backdrop of active litigation over mass-arbitration protocols, providers may be cautious about rolling out additional mass-arbitration rules until existing frameworks are fully tested in the courts. In the meantime, businesses should closely monitor changes to other arbitral rules—particularly those governing case management and motion practice—that can significantly influence how mass arbitrations proceed.
Implications for Businesses
Mass arbitration is now a prominent feature of the litigation landscape that companies must factor into their litigation and risk-management strategies. When drafting consumer arbitration agreements and advising on the selection of alternative dispute resolution (ADR) providers, counsel should look beyond a provider’s mass-arbitration rules and evaluate how broader rule changes—such as consolidation authority, default hearing formats, and limits on dispositive motions—interact with existing contract terms and shape a company’s strategy for responding to mass arbitrations.
Published by the American Bar Association on February 5, 2026. © Copyright 2026. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.
This article was originally published on American Bar Association and is republished here with permission as it originally appeared on February 15, 2024.
In McGill v. Citibank, N.A., the California Supreme Court held that an arbitration provision is invalid and unenforceable if it purports to waive a plaintiff’s statutory right to seek public injunctive relief in all forums. 393 P.3d 85 (Cal. 2017). Following that decision, plaintiffs often invoke the so-called McGil/rule to invalidate arbitration agreements on the ground that the injunction they seek is public in nature. These disputes often involve claims under California’s Unfair Competition Law (UCL), which features injunctions as the primary form of relief and which allows plaintiffs to seek both private and public injunctions.
To help clarify the distinction between private and public injunctive relief, the McGill court reiterated that public injunctive relief is “primarily ‘for the benefit of the general public’” and only benefits the plaintiff incidentally or as a member of the general public. Id. at 94. By contrast, private injunctive relief primarily resolves a private dispute between the parties; rectifies individual wrongs; and benefits the public only incidentally, if at all. Thus, injunctive relief that has the “primary purpose or effect of redressing or preventing injury to an individual plaintiff—or to a group of individuals similarly situated to the plaintiff—does not constitute public injunctive relief.” Id. at 90.
California Appellate Decisions: Generally Broad Interpretations of “Public”
State intermediate appellate courts applying the McGill rule consistently cite the definitions of “public injunction” and “private injunction” set forth in McGill, but they have made inconsistent determinations regarding whether the relief sought is primarily for the benefit of the general public.
For instance, in Clifford v. Quest Software Inc., the plaintiff asserted wage and hour claims arising from his employer’s alleged misclassification of him as an exempt employee and sought an injunction to prevent his employer from committing “further violations of the Labor Code and the unfair business practices alleged herein.” 251 Cal. Rptr. 3d 269, 745 (Cal. Ct. App. 2019). California’s Fourth Appellate District held that this prospective injunctive relief was not “public” because the primary beneficiaries were a defined group of similarly situated persons.
The same appellate district then reached the opposite conclusion in both Maldonado v. Fast Auto Loans, Inc. and Mejia v. DACM Inc. In Maldonado, a customer alleged that a lender charged unconscionable interest rates on auto title loans and requested an injunction to prevent “future violations of the aforementioned unlawful and unfair practices.” 275 Cal. Rptr. 3d 82, 86 (Cal. Ct. App. 2021). The court found that the injunction requested in that case did seek public injunctive relief because it encompassed “all consumers and members of the public.” Id. at 90. In Mejia, a motorcycle dealership allegedly failed to provide proper notice for the financing terms of its sales to purchasers. 268 Cal. Rptr. 3d 642 (Cal. Ct. App. 2020). The plaintiff sought an injunction enjoining the dealership from selling motor vehicles without providing the required disclosure, which the court also found fit the definition of “public injunctive relief” under McGill.
Ninth Circuit: Narrower Definition of Public Injunctive Relief
In 2021, the U.S. Court of Appeals for the Ninth Circuit expressly rejected Mejia and Maldonado in Hodges v. Comcast Cable Communications, LLC. 21 F.4th 535 (9th Cir. 2021). The Hodges court observed that the injunction in Mejia would primarily benefit the class of persons who actually purchase motorcycles, and that the injunction in Maldonado would primarily benefit the class of persons who actually signlending agreements, rather than the public more generally. Thus, like in Clifford, the primary beneficiaries were a defined group of similarly situated persons, and the requested relief did not “primarily benefit the general public as a more diffuse whole.” Id. at 549 (emphasis in original). Moreover, the Ninth Circuit noted that Mejia substantially broadened the McGill rule and effectively defined public injunctive relief as“any forward-looking injunction that restrains any unlawful conduct.” Id. at 544 (emphasis in original).
Noting the limitations on public injunctive relief that were emphasized in McGill, the Hodges court reasoned that public injunctive relief “is limited to forward-looking injunctions that seek to prevent future violations of law for the benefit of the general public as a whole, as opposed to a particular class of persons, and that do so without the need to consider the individual claims of any non-party.” id. at 542. Although the plaintiff in Hodges expressly sought “public injunctive relief,” the Ninth Circuit determined that the relief requested was for the benefit of Comcast cable subscribers only. As a result, the relief was not sufficiently public in nature because it would only benefit a “group of individuals similarly situated to the plaintiff”—namely, those who subscribed to Comcast’s cable service.
Applying the Ninth Circuit’s reasoning in Hodges, a hypothetical benefit to persons outside a putative class or group of similarly situated persons would be considered “incidental” and therefore constitute private injunctive relief. However, if the broader reading of Mejia and Maldonado is applied, the same hypothetical benefit might constitute public injunctive relief, even if there is an ascertainable group of similarly situated individuals that would more directly benefit from the injunction.
The Ninth Circuit’s guidance in Hodges provides district courts a more circumscribed framework for determining whether an injunction primarily benefits the general public. Moreover, by following this framework, district courts are not forced to reconcile any inconsistencies between the various California state appellate decisions that apply the McGill rule.
Continuing Applications of Mejia and Maldonado Holdings
Despite the Ninth Circuit’s holding in Hodges, decisions from the California courts of appeal continue to rely on Maldonado in finding that claims for injunctive relief are public in nature. For instance, in Vaughn v. Tesla, Inc., the First Appellate District recently rejected the argument that a public injunction is available only to acts “directed to the entire public,” which it found was inconsistent with the reasoning in Maldonado. 303 Cal. Rptr. 3d 457, 474 (Cal. Ct. App. 2023). The Vaughn court acknowledged that the Ninth Circuit’s majority opinion in Hodges declined to follow Maldonado but noted that it was not bound by that decision. Rather, the Vaughn court observed—without elaborating—that “the analysis of the [Hodges] dissent is more consistent with McGill.” Id. at 475 n.16.
On December 29, 2023, the Sixth Appellate District issued an unpublished opinion in Ramsey v. Comcast Cable Communications, LLC that likewise declined to follow the Ninth Circuit’s reasoning in Hodges. No. 21CV384867, 2023 WL 9468916 (Cal. Ct. App. 2023). There, the plaintiff alleged violations of the UCL and the California Consumers Legal Remedies Act and sought to enjoin Comcast from, among other things, issuing allegedly secret discounts and engaging in deceptive practices relating to pricing models. Opposing those allegations, Comcast argued that the relief sought was private—rather than public—in nature because the injunction would primarily benefit a “limited group of existing Comcast subscribers whose promotional terms are coming to an end.” Id. at *5. The court disagreed, despite noting that the injunction might not benefit the entire public as a “diffuse whole.” Id. at *8. Relying on Mejia and Maldonado, it found that the injunction still qualified as a public injunction because it benefited “any member of the public who considers signing up with Comcast.” Id. at *6.
California Supreme Court: Need for Input
To date, the California Supreme Court has declined to weigh in on the divergent applications of the McGill rule, including in its recent opinion in California Medical Ass’n v. Aetna Health of California Inc. 532 P.3d 250 (Cal. 2023). In that case, the California Medical Association argued that it sought injunctive relief that would “primarily benefit the public rather than [its] membership,” id. at 262 n.6, and the parties raised the disparate holdings in Hodges and Maldonado in their briefs. However, the California Supreme Court reasoned that it did not need to resolve the dispute and expressed no opinion on the issue. The court also declined to consider a petition for review filed in Vaughn, as well as a petition for review filed in Dixon v. Fast Auto Loans, Inc., a case in which the Second Appellate District applied the reasoning in Maldonado and found that the plaintiffs request for an injunction was public in nature. No. 20STCV04632 (Cal. Ct. App. 2022).
Although the California Supreme Court appears reluctant to provide additional guidance on the McGil/rule at this time, appeals currently pending before the California courts of appeal may present additional opportunities to demarcate the Mejia and Maldonado holdings or create a split in authority from these published Fourth Appellate District opinions. The several pending and recently decided appeals underscore the need for an opinion from the California Supreme Court that provides more clarity on how to determine whether a claim for injunctive relief provides a “primary” or an “incidental” benefit to the general public.
Published by the American Bar Association on February 15. 2024. © Copyright 2026. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.
At a public hearing held February 26, 2026, the California Air Resources Board (CARB) approved a resolution to adopt initial regulations implementing California’s landmark climate reporting and disclosure laws, the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261), which will require private and public companies whose revenues exceed certain thresholds to report greenhouse gas (GHG) emissions and disclose climate-related financial risks, respectively. In its resolution, CARB largely adopted the regulations proposed by staff in December 2025.
The approved “initial” regulations establish a fee collection framework for SB 253 and SB 261, define key terms under both laws, provide for enforcement of failure to pay fees, and set the first GHG emissions reporting deadline of August 10, 2026. CARB announced at the hearing that it will begin another rulemaking to implement SB 253 that will apply to GHG emissions reporting in 2027 and beyond and will address requirements that are statutorily mandated, but unaddressed in the initial regulations, such as potential assurance standards.
The Adopted Regulations
CARB’s action concludes a somewhat chaotic initial rulemaking process that took place in a highly compressed time frame (compared to CARB’s average rulemaking timelines). While the initial regulations clarify some key elements of California’s climate disclosure laws, they leave several critical details unknown, despite a GHG emissions reporting deadline that is a little over five months away.
For SB 253, the regulations require reporting entities to report Scope 1 and Scope 2 GHG emissions for the “applicable preceding fiscal year” by August 10, 2026. For entities whose fiscal year ends after February 1, the preceding fiscal year is defined as the fiscal year ending in the prior calendar year, and for entities with a fiscal year ending after February 1, it is the current calendar year. Thus, companies with fiscal years ending on December 31 will have significantly less time than other entities to collect and report GHG emission data.
The initial regulations define “doing business in California” and “revenues,” key terms for determining applicability of SB 253 and SB 261, which apply to U.S. entities “doing business in California” with more than $1 billion (SB 253) or $500 million in revenues (SB 261). Both terms are defined by reference to the California Revenue and Taxation Code. “Doing business in California” is defined by reference to Sec. 23101(a) and (b) to mean actively engaging in any transaction for the purpose of financial or pecuniary gain or profit and either organized in or commercially domiciled in California or having sales in excess of $757,070 (adjusted for 2026). “Revenue” is given the same meaning as “gross receipts” in Sec. 25120(f)(2).
The regulations also establish how the state will assess fees to cover implementation of SB 253 and SB 261, as required by the statutes. Under the initial regulations, the fee for each law will be calculated by taking CARB’s total expected program costs and dividing it by the number of entities the state estimates must comply with the law. CARB will send the first fee invoices to each entity it believes is subject to the laws by September 10, 2026.
Despite providing clarity on critical elements of the new climate disclosure regime, the initial regulations do not directly address how revenues and sales should be determined for parents and subsidiaries with unified tax filings. Nor do the rules indicate how CARB intends to identify the entities that will receive fee invoices or how companies can dispute invoices if they believe they are not subject to disclosure requirements. This is especially problematic because the initial regulations provide for penalties for failure to pay fees, even though fee-related enforcement does not appear to be contemplated under either SB 253 or SB 261.
CARB must now prepare the final regulatory package, including its responses to the public comments on the rulemaking proposal and its final statement of reasons, for submission to the California Office of Administrative Law (OAL). OAL then has 30 days to review the regulation for compliance with the Administrative Procedure Act. If approved, OAL will file the regulation with the secretary of state for formal adoption. The regulation will go into effect on July 1, presuming CARB sends the regulatory package to OAL between March 1 and May 31.
SB 253 Exemption for Insurance Companies Uncertain; Other Proposed Exemptions Adopted
CARB’s December 2025 proposed regulation contained an exemption from SB 253 for entities regulated by the California Department of Insurance (DOI) or in the business of insurance in another state, mirroring the statutory exemption for insurers contained in SB 261. However, at the public meeting, several commenters, including both of the state legislators who sponsored the laws, raised concerns about the proposed exemption, given that SB 253 did not direct CARB to exempt insurers. These comments prompted CARB to revise its resolution adopting the proposed rule at the last minute. While the final resolution has not been released as of the time of this publication, based on the dialogue at the meeting, the resolution directed CARB staff to work with the DOI to evaluate whether insurers are already obligated to disclose their GHG emissions under current DOI requirements.
Neither the CARB Board nor the legislative sponsors raised concerns during the hearing regarding the other exemptions in the proposed rule for nonprofits and charitable organizations that are federally tax-exempt, business entities whose only activity in California consists of wholesale electricity transactions, and business entities whose only business in California is employee compensation or payroll expenses, including teleworking employees.
CARB Emphasizes Enforcement Discretion
At the hearing, CARB staff reiterated that it will not penalize entities that do not submit SB 253 disclosures in reliance on CARB’s December 5, 2024 enforcement notice for entities that were not collecting GHG data, or planning to collect GHG data as of the date of the notice. CARB also indicated it will exercise enforcement discretion for entities who do not provide assurance for their 2026 GHG emissions reports. (Under SB 253, GHG reporting in 2026 must be made with limited assurance, but it has been widely recognized throughout the rulemaking process that companies have faced challenges in finding providers willing to provide the limited assurance required by the statute). Finally, CARB reminded stakeholders that, consistent with its December 1, 2025, enforcement advisory, it will not enforce SB 261 until a currently pending appeal in the U.S. Court of Appeals for the Ninth Circuit is resolved. The Ninth Circuit issued a preliminary injunction against SB 261 in November 2025 and heard oral argument in January 2026, but has not yet issued an opinion resolving the appeal.
Copycat Laws Continue to Be Introduced
While SB 253 and SB 261 may be the nation’s first broadly applicable climate-related disclosure laws for private and public companies, similar laws could follow in other states. While the federal government has backed away from climate reporting, other states have followed California’s lead by introducing climate-related disclosure bills. Though none have yet become law, the New York Senate passed a copycat GHG reporting bill on February 10, 2026, that is currently pending in the New York Assembly.
SEC Grants Relief Within Days of Filing Deadline
On March 5, 2026, the Securities and Exchange Commission (SEC) issued a final order exempting officers and directors of foreign private issuers (FPIs) incorporated or organized in certain qualifying jurisdictions with substantially similar qualifying regulations from pending Section 16 reporting obligations. The exemption will come as welcome relief to officers and directors of FPIs from the exempted jurisdictions, which were facing a fast-approaching Section 16 reporting deadline on March 18, 2026.
The following jurisdictions are “qualifying jurisdictions” under the order (with their associated qualifying regulations):
- Canada: Canada’s National Instrument 55-104 – Insider Reporting Requirements and Exemptions, supported by National Instrument 55-102 – System for Electronic Disclosure by Insiders (SEDI) and companion policies.
- Chile: Articles 12, 17, and 20 of the Chilean Securities Market Law and General Rule No. 269.
- The European Economic Area: Article 19 of the European Union Market Abuse Regulation (including, as applicable, implementing legislation and regulations adopted by the EU’s member states) and as incorporated into the domestic law of each European Economic Area state.
- The Republic of Korea: Article 173 of the Republic of Korea Financial Investment Services and Capital Markets Act and Article 200 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act.
- Switzerland: Article 56 of the Listing Rules and implementing directives of SIX Swiss Exchange as approved by the Swiss Financial Market Supervisory Authority.
- The United Kingdom: Article 19 of the United Kingdom Market Abuse Regulation (Regulation (EU) No. 596/2014), as it forms part of UK domestic law pursuant to the EU (Withdrawal) Act 2018.
Any director or officer seeking to rely on the exemption is subject to the following conditions:
- The director or officer is required to report their transactions in the issuer’s securities as set forth under the qualifying regulation to which they are subject; and
- Any report filed pursuant to a qualifying regulation must be made available in English to the general public within no more than two business days of its public posting.
As we have previously discussed, recent new requirements subject officers and directors of FPIs with a class of equity securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the Exchange Act) to the insider reporting requirements of Section 16(a) of the Exchange Act. Just last week, on February 27, the SEC issued the final rules outlining the expected reporting requirements for directors and officers covered under these new requirements.
However, the SEC has authority to exempt any person, security, or transaction from Section 16(a) insider reporting if the SEC determines that the laws of a foreign jurisdiction apply “substantially similar requirements” to that person, security, or transaction. The SEC’s March 5 order exercises this authority and recognizes the reporting frameworks in the qualifying jurisdictions above.
Those FPIs within a qualifying jurisdiction should review their reporting practices and the referenced qualifying regulations to confirm that their directors and officers will be able to rely on the exemption. These FPIs should also assist their exempt directors and officers with satisfying the two conditions set forth above.
Those FPIs not within a current qualifying jurisdiction should continue preparing for Section 16 compliance and assist their officers and directors with insider reporting, including, but not limited to, confirming or obtaining EDGAR Next enrollment, and EDGAR codes, for officers and directors subject to insider reporting and coordinating with counsel and administrators to prepare timely Section 16 filings beginning March 18, 2026.
On March 4, the U.S. Court of International Trade (CIT) issued an order (the CIT Order) directing U.S. Customs and Border Protection (CBP) to disregard tariffs imposed under the International Emergency Economic Powers Act (IEEPA). The CIT Order is the first concrete step toward operationalizing refunds of IEEPA tariffs following the U.S. Supreme Court’s February 20 decision in Learning Resources, Inc. v. Trump and V.O.S. Selections v. Trump (the Supreme Court IEEPA Tariff Decision), which held the IEEPA-related tariffs unlawful (discussed in our prior alerts here and here). The CIT’s ruling is notable not only for what it requires CBP to do, but also for its expressly non-plaintiff-specific reach and what it says about “universal” relief in the trade context: the court indicated that all importers of record who paid IEEPA-related tariffs — not just the named plaintiffs — should benefit from the Supreme Court IEEPA Tariff Decision and the CIT Order. In particular, the CIT Order imposes specific obligations on CBP covering both unliquidated and liquidated IEEPA-related tariffs that reduce the administrative steps typically required of importers seeking duty refunds, and is aimed at obviating the requirement for importers to file lawsuits before the CIT seeking refunds.
Unliquidated Entries – Liquidate Without IEEPA-Related Tariffs
For all unliquidated entries that were subject to IEEPA-related tariffs, the CIT ordered CBP to liquidate those entries without regard to IEEPA-related tariffs. Ordinarily, importers seeking to adjust duties on unliquidated entries must file post‑summary corrections (PSCs) to amend duty, value, classification, or other elements before pursuing judicial relief. The CIT Order removes the need for PSCs as a precondition for refund claims on unliquidated IEEPA-related tariffs. CBP must liquidate affected entries net of IEEPA-related duties, thereby preserving refund rights without additional importer action at this stage.
Liquidated‑But‑Not‑Final Entries – Reliquidate Without IEEPA-Related Tariffs
For liquidated entries that are not yet final, the CIT directed CBP to reliquidate those entries without regard to the IEEPA-related tariffs. Under the standard customs framework, a liquidation becomes final unless a protest is filed within 180 days of liquidation. If no timely protest is filed, the liquidation becomes “final and conclusive,” and judicial review is generally foreclosed. The CIT Order effectively bypasses the usual requirement to file a protest for these nonfinal liquidations. CBP must reliquidate the entries net of IEEPA-related duties, so refund‑seekers do not need to file protests solely to undo the IEEPA-related component.
Entries That Are Both Liquidated and Final
The CIT Order does not expressly address entries for which (i) liquidation has occurred and (ii) the 180‑day protest period has expired. The practical importance of this gap may be limited. The first IEEPA-related tariffs took effect in April 2025, and the first entries subject to those tariffs began liquidating on or about December 16, 2025. For those entries, the protest deadline would fall around June 13, 2026. As of the CIT Order, it is therefore unlikely that a substantial number of IEEPA-related tariff entries have both liquidated and passed the protest deadline. That said, importers with potentially affected entries should confirm liquidation and protest timelines to avoid falling into any final‑and‑unreviewable category.
The Legal Foundation: From the Supreme Court to a Refund Mandate
The CIT Order is grounded in the Supreme Court IEEPA Tariff Decision, which held the IEEPA-related tariffs unlawful. The CIT’s ruling converts the Supreme Court’s holding into a concrete operational mandate for CBP; the federal agency must establish and implement a mechanism to refund IEEPA‑related tariffs. The decision makes clear that, once the tariffs have been declared unlawful, the timing of refunds is no longer a matter of executive discretion. CBP is now under a court‑imposed obligation to commence the refund process, even though the CIT did not specify a deadline for compliance.
Universal Relief: Why This Order Reaches All Importers
A central legal feature of the CIT Order is its nationwide, importer‑wide scope. In 2025, the U.S. Supreme Court sharply limited “universal injunctions” that extend relief to non‑parties, emphasizing that federal courts ordinarily may not issue remedies benefitting individuals who are not before the court (the Supreme Court Universal Injunction Decision). The CIT, however, concluded that the Supreme Court Universal Injunction Decision does not prevent it from granting broad relief in the IEEPA-related tariff context, for several reasons: (1) the CIT is not a typical district court created under the Judiciary Act of 1789 and is a specialized Article III court created by the Customs Courts Act of 1980, with nationwide geographic jurisdiction, and exclusive subject‑matter jurisdiction over customs and trade disputes; (2) the court emphasized that the Uniformity Clause of the Constitution requires that tariffs be applied uniformly across the United States, which extends naturally to the removal and refund of unlawful tariffs: similarly situated importers must be treated alike; and (3) the Chief Judge of the CIT has designated a single judge to hear all IEEPA-related duty refund cases, minimizing the risk of conflicting interpretations within the court itself.
The CIT expressly indicated that all importers of record who paid IEEPA-related tariffs (not just the plaintiffs in the case) should benefit from the Supreme Court IEEPA Tariff Decision and the CIT Order. The CIT Order is not plaintiff‑specific; it is intended to ensure uniform treatment for all similarly situated importers.
Who Is Covered Under the CIT Order?
The CIT Order is significant for refund‑seekers because it is not limited to: (1) importers who filed PSCs; (2) importers who filed protests; or (3) importers who filed lawsuits in the CIT. Instead, the CIT’s reasoning indicates that all importers of record that paid IEEPA-related tariffs may seek refunds, whether or not they previously took steps to preserve their rights through administrative filings or litigation. This opens the door for “latecomers” (importers who did not act earlier) to still pursue relief.
Refund Mechanics: What the Order Does Not Yet Do
While the CIT Order is a major step forward, it leaves several operational questions unanswered.
- The Order directs CBP to liquidate and reliquidate entries without IEEPA-related duties, but it does not expressly compel CBP to issue payments or detail how refunds will be processed.
- It is unclear whether CBP will issue refunds automatically based on liquidation and reliquidation actions, or whether importers will need to: (1) file specific claims; (2) participate in test programs or processes established by CBP; or (3) seek individual judicial relief to secure payment.
Unless these issues are addressed, companies may ultimately be better off seeking relief, including through litigation in the CIT, to ensure timely and complete refunds.
What to Expect Next
Two near‑term developments are highly likely:
- Government Appeal and Possible Stay. The government is expected to appeal the CIT Order and will likely seek a stay of the refund obligations while appellate review proceeds. A stay would not eliminate an importer’s entitlement to a refund, but it could delay the timing of payment.
- CBP Implementation Efforts. Regardless of appeal, CBP must now begin designing a refund process consistent with the CIT Order. Importers should watch for CBP guidance on how affected entries will be identified, how liquidation/reliquidation will be handled, and what documentation, if any, importers will be expected to provide.
Practical Steps for Importers Now
In light of the CIT Order, the Supreme Court’s recent decision on IEEPA‑related tariffs, and the Administration’s swift move to impose a 15% global surcharge under Proclamation 11012 pursuant to Section 122 of the Trade Act of 1974 (the Section 122 Surcharge), importers that have paid IEEPA‑related tariffs should act now both to preserve potential refund claims and to manage forward‑looking tariff risk.
- Map Your Exposure and Refund Potential. Identify all imports subject to IEEPA-related tariffs (by time period, Harmonized Tariff Schedule of the United States classification, and country of origin) and quantify duties paid to estimate your potential refund.
- Review Liquidation and Protest Status. Determine whether each relevant entry is unliquidated, liquidated but still within the 180-day protest window, or final, and confirm what PSCs or protests have already been filed and what administrative options remain.
- Preserve Documentation. Collect and organize entry documentation, customs filings, duty payment records, internal tariff analyses, and communications with brokers, suppliers, and customers regarding tariff-related charges.
- Evaluate Contractual and Commercial Impacts. Review supply, sales, logistics, and other commercial contracts to confirm who bore the economic burden of the IEEPA-related tariffs, ensure tariff allocation clauses remain appropriate in light of potential refunds and the Section 122 Surcharge, and consider whether amendments or renegotiations are warranted.
- Pursue Appropriate Legal and Commercial Remedies. Consider judicial relief in the CIT, potential claims against counterparties that received tariff-related surcharges or pass-throughs, and negotiated solutions with suppliers, customers, and logistics partners to recover or reallocate tariff-related costs and refunds.
SEC Adopts Final Rules for the Holding Foreign Insiders Accountable Act
Effective March 18, 2026, officers and directors of foreign private issuers that have securities listed on a U.S. securities exchange or registered with the Securities and Exchange Commission (SEC) (for purposes of this alert, reporting FPIs) will be subject to insider reporting under Section 16(a) of the Securities Exchange Act of 1934. Officers and directors of reporting FPIs will be required to report their holdings of, and transactions in, company equity securities, beginning March 18, 2026. For further details, please see our prior alerts dated December 23, 2025, and February 2, 2026, regarding these new requirements.
The SEC has authority to exempt any person, security, or transaction from Section 16(a) insider reporting if the SEC determines that the laws of a foreign jurisdiction apply “substantially similar requirements” to that person, security, or transaction. Although the SEC stated that it may consider granting such exemptive relief in a separate rulemaking or order, as of the date of this alert, the SEC has not provided any exemptive relief.
On February 27, 2026, the SEC adopted final amendments to rules and forms to reflect the requirements of the Holding Foreign Insiders Accountable Act (HFIAA). The SEC’s final amendments revise the following rules and forms to reflect the changes made by the HFIAA:
- Rule 3a12-3(b) now exempts reporting FPIs’ insiders from the Section 16(b) short-swing profit rules and the Section 16(c) short selling prohibition only. Reporting FPI insiders are no longer exempt from Section 16 in its entirety.
- Rule 16a-2 now excludes only 10% holders of reporting FPIs’ equity securities from the insider reporting requirements of Section 16(a).
- The Section 16 reports now reflect the changes made by the HFIAA, including the requirement for directors and officers of reporting FPIs to file forms, as well as certain updates to the instructions and an optional field for a foreign trading symbol, a postal code, and a country code as part of the address of the reporting person.
With the effective date quickly approaching, reporting FPIs should continue preparing to assist their officers and directors with insider reporting, including, but not limited to, coordinating with counsel and administrators to prepare timely Section 16 filings beginning March 18, 2026. If you have not already done so, we recommend that reporting FPIs confirm or obtain EDGAR Next enrollment, and EDGAR codes, for officers and directors subject to insider reporting as soon as possible, as that process of obtaining these codes can take up to a few weeks.
Our team published new content and podcasts to the Consumer Financial Services Law Monitor throughout the month of February. To catch up on posts and podcasts you may have missed, click on the links below:
Auto Finance
Colorado Bill Would Reshape Auto Repossessions and Create 3‑Day Return Right for Certain Vehicles
Consumer Finance Litigation
2025 Consumer Litigation Filings: Everything Up Compared to 2024
Consumer Financial Protection Bureau
GAO Details CFPB Reorganization, Funding Cuts, and Litigation
Cryptocurrency
Digital Commodity Intermediaries Act Clears Senate AG Committee
SEC Staff Issues Guidance on Tokenized Securities
Financial Services Industry 2025 Digital Assets Year in Review
CFTC and SEC Signal New Era of Crypto Harmonization at Joint Project Crypto Event
Health Care
Ninth Circuit Upholds Administrator’s Denial of Residential Mental Health Benefits Under ERISA
CMS’s 2027 Medicare Advantage Proposal: “Flat” Rates with Tighter Risk Adjustment
Mortgage Lending and Servicing
Regulatory Enforcement + Compliance
New York Proposes Sweeping Licensing and Consumer Protection Regime for BNPL Lenders
Telephone Consumer Protection Act
Fifth Circuit Holds TCPA Does Not Require Prior Express Written Consent for Telemarketing Calls
Podcasts
The Consumer Finance Podcast – Signs of Life at the CFPB
FCRA Focus – California DFPI’s Next Target: Credit Reporting Industry
Newsletters
Weekly Consumer Financial Newsletter – Week of February 23, 2026
Weekly Consumer Financial Newsletter – Week of February 16, 2026
Weekly Consumer Financial Newsletter – Week of February 9, 2026
Weekly Consumer Financial Newsletter – Week of February 2, 2026
Regulatory Oversight Blog
Make sure to visit Troutman Pepper Locke’s Regulatory Oversight blog to receive the most up-to-date information on regulatory actions and subscribe to our mailing list to receive a monthly digest.
Regulatory Oversight will provide in-depth analysis into regulatory actions by various state and federal authorities, including state attorneys general and other state administrative agencies, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC). Contributors to the blog will include attorneys with multiple specialties, including regulatory enforcement, litigation, and compliance.
In This Issue:
Troutman Pepper Locke Spotlight
Troutman Pepper Locke Expands Virginia Appellate and State Enforcement Capabilities
By Troutman Pepper Locke State Attorneys General Team
Graham K. Bryant, former Principal Deputy Solicitor General and Director of Virginia Appellate Litigation in the Office of the Attorney General of Virginia, has joined Troutman Pepper Locke’s Regulatory Investigations, Strategy + Enforcement (RISE) practice group and Virginia Appellate team. In addition, Leah DeFazio has rejoined the RISE practice group after serving as an Assistant Solicitor General in the Virginia Attorney General’s Office, further strengthening the firm’s Virginia appellate and state enforcement capabilities.
Methods For Challenging State Civil Investigative Demands
By Ashley L. Taylor, Jr., Michael Lafleur, and Sydney Goldberg
When a client receives a civil investigative demand, or CID, or equivalent subpoena from a state attorney general, the first question is always some version of “how can we move to quash this subpoena?”
States Use App Store Controls to Keep Online Content From Minors
By Chris Carlson, Lauren Fincher, and Jessica Birdsong
New state age verification and parental consent laws are slated to take effect in 2026 to shield children from harmful online content, creating significant compliance obligations and heightened enforcement risk for both app developers and app stores.
Your Guides to State Attorney General Investigations: Troutman Pepper Locke AG Attorneys Share Their Approach
By Troutman Pepper Locke State Attorneys General Team
State AG investigations are different. The lawyers in Troutman Pepper Locke’s State Attorneys General practice know this because many of us worked in those offices over a period of 30+ years. We understand how AGs prioritize cases, how they advise other regulators in their states, what triggers multistate actions or private litigation, and how to resolve issues before they escalate. Whether you’re facing questions about consumer protection, insurance, pharmaceutical regulation, AI compliance, or other high-stakes regulatory and enforcement issues — often across a patchwork of state regulatory frameworks — we help you navigate AG scrutiny while keeping your business running.
Podcast Updates
Regulatory Oversight
California DFPI’s Next Target: Credit Reporting Industry
By Stephen C. Piepgrass, Kim Phan, and Michael Yaghi
In this special crossover episode of Regulatory Oversight and FCRA Focus, Kim Phan is joined by Michael Yaghi, partner in Troutman Pepper Locke’s Regulatory Investigations, Strategy + Enforcement practice group, to unpack the California Department of Financial Protection and Innovation’s (DFPI) latest effort to require registration for the credit reporting industry.
Trading, Gambling, or Something Else? Prediction Markets and the Payments Puzzle
By Stephen C. Piepgrass and Keith J. Barnett
In this crossover episode, Regulatory Oversight host Stephen Piepgrass teams up with Payments Pros host Keith Barnett to unpack how prediction markets, gaming, and payments intersect in a rapidly evolving and legally uncertain landscape.
Payments Pros
Payments Year in Review 2025: Federal and State Developments – Part 2
By Keith J. Barnett, Jason Cover, and Carlin McCrory
In the second installment of the two-part Payments Year in Review series, hosts Keith Barnett, Carlin McCrory, and Jason Cover focus on the state-level developments that shaped the 2025 payments landscape and will influence 2026.
Financial Services Updates
New York Proposes Sweeping Licensing and Consumer Protection Regime for BNPL Lenders
By Matthew Berns, Jason Cover, Mark Furletti, Stefanie Jackman, Chris Willis, Taylor Gess, and Jeremy Sairsingh
On February 23, the New York Department of Financial Services (DFS) issued a proposed new Part 423 to Title 3 of the NYCRR to implement New York Banking Law Article 14‑B for Buy-Now-Pay-Later (BNPL) lenders. The proposal would move BNPL firmly into New York’s credit system, imposing licensing, supervision, disclosure, data privacy, and underwriting requirements on both interest‑free and interest‑bearing BNPL products offered to New York consumers. If adopted, the rule would take effect 180 days after the notice of adoption is published in the State Register, with a short transitional period for existing BNPL providers. DFS is accepting pre-proposal comments through March 5, 2026, after which the proposed rule will be published in the New York state register for a formal 60-day comment period.
Colony Ridge Settlement With Texas and US Department of Justice Reflects Shift in Enforcement Priorities
By Troutman Pepper Locke State Attorneys General Team and McKayla Riter
On March 6, 2026, a U.S. district court will consider whether to approve a settlement agreement resolving parallel lawsuits by the Texas attorney general (AG) and the federal government against Houston-area developer Colony Ridge Development, LLC and related companies. The complaints in both suits — which were filed during the Biden administration — claim that Colony Ridge discriminatorily targeted Hispanic consumers with predatory financing to purchase land for residences in areas that were in fact uninhabitable.
SEC Updates
SEC Enforcement Manual Updates Signal Renewed Focus on Fairness, Transparency, and Efficiency
By Jay Dubow and Ghillaine Reid
Today, the Securities and Exchange Commission’s (SEC) Division of Enforcement announced significant updates to its Enforcement Manual, the first comprehensive revision since 2017. These changes, which will now be reviewed annually, are designed to promote greater fairness, transparency, and efficiency in SEC investigations and enforcement actions.
FDA Updates
After FDA’s Policy Shift on Artificial Colors, State Enforcement and Private Litigation Risks Linger
By Matthew Berns and Namrata Kang
On February 5, the Food and Drug Administration (FDA) announced a major change in how the agency will regulate claims about artificial colors in foods.
Cannabis Updates
Third Circuit Ruling Highlights Unique Dynamics for Cannabis-Related Contract Disputes
By Agustin Rodriguez, Matthew Berns, and Zie Alere
A recent decision of the U.S. Court of Appeals for the Third Circuit serves as a stark reminder to companies and individuals in the state-legal cannabis industry that the federal illegality of cannabis can jeopardize their ability to enforce contracts in federal court.
Circuit Split Emerges on State Marijuana Residency Rules, With Ninth Circuit Finding Dormant Commerce Clause Inapplicable
By Agustin Rodriguez and Zie Alere
In January, the U.S. Court of Appeals for the Ninth Circuit ruled 3-0 that the Dormant Commerce Clause does not prohibit states from imposing residency requirements for obtaining marijuana business licenses. The court found that the federal illegality of marijuana renders Dormant Commerce Clause protections inapplicable, cementing a circuit split on the constitutionality of state residency rules for marijuana licenses.
Environmental Updates
Court Enjoins Oregon’s Extended Producer Responsibility Law for Some Companies, but Others Face Continued Compliance Obligations
By Shawn Zovod, Karlie Webb, Melissa Horne, Bryan Haynes, Liz Glusman, Chelsey Noble, and Natalie Crane
On February 6, 2026, an Oregon district court issued a decision barring the Oregon Department of Environmental Quality (DEQ) from enforcing the nation’s first extended producer responsibility (EPR) law for packaging, food serviceware, and paper products (referred to as “covered products” under Oregon’s law). The very brief order enjoins DEQ from enforcing the state’s Plastic Pollution and Recycling Modernization Act (RMA) against the National Association of Wholesaler-Distributors (NAW) and its members, who filed their suit in July 2025, challenging the law and claiming it violated the Oregon and U.S. Constitutions.
Health Sciences and Pharmaceuticals Updates
Virginia’s EpiPen Settlement and What It Signals for Pharma Under AG Scrutiny
By Troutman Pepper Locke State Attorneys General Team
On January 16, Attorney General (AG) Jason Miyares’ last day in office, the Virginia AG reached a settlement with Viatris, Mylan’s corporate successor, over EpiPen pricing and related practices. The settlement was filed and approved by the Circuit Court for the City of Richmond without issuance of a press release by the Virginia AG.
Single State AG News
New Jersey AG Is Unanimously Confirmed as Enforcement Agenda Takes Shape
By Troutman Pepper Locke State Attorneys General Team
On February 24, the New Jersey State Senate unanimously confirmed the appointment of Jennifer Davenport to serve as New Jersey’s attorney general (AG). Davenport (whose nomination we covered here) has been serving in an acting capacity since Governor Mikie Sherrill took office in January.
Connecticut AG Initiates Investigation Into Private Equity Group Over Conditions at Apartment Complex
By Troutman Pepper Locke State Attorneys General Team
On February 9, Connecticut Attorney General (AG) William Tong announced an investigation into the owners and managers of the Concierge Apartments in Rocky Hill, CT, for potential violations of the Connecticut Unfair Trade Practices Act after frozen pipes burst and tenants were displaced.
Texas and Florida AGs Issue Opinions Ratifying Trump Administration’s Executive Orders Dismantling DEI Policies and Programs
By Troutman Pepper Locke State Attorneys General Team
Recent opinions by the Texas attorney general (AG) and the Florida AG assert that their states’ race- and sex-conscious laws and policies are unconstitutional. The opinions align with President Donald Trump’s 2025 Executive Orders 14151 and 14173 (collectively, the executive orders), which seek to end gender- and race-based contracting practices and dismantle diversity, equity, and inclusion (DEI) initiatives. Like the executive orders, the AG opinions target DEI-related policies affecting state contracting, appointments, and employment; the Texas AG also specifically asserts that private employers’ applicable DEI policies (as described within the opinion) violate Texas and federal law, thereby targeting both the private and public sectors. Although not legally binding on courts, such opinions provide a guide for the likely contours of future enforcement action by these state attorneys general.
California AG Resolves Litigation Alleging Elevated Levels of Cadmium and Lead in Seafood Products
By Troutman Pepper Locke State Attorneys General Team
California Attorney General (AG) Rob Bonta recently announced a consent judgment resolving allegations that the Pacific American Fish Company, Inc. (PAFCO), a seafood distributor and processor, had sold frozen seafood products with elevated levels of lead and cadmium in California without the warnings required by state law.
Stephanie Kozol, Senior Government Relations Manager – State Attorneys General, also contributed to this newsletter.
Our Cannabis Practice provides advice on issues related to applicable federal and state law. Marijuana remains an illegal controlled substance under federal law.