On February 3, 2026, the Delaware Supreme Court, sitting en banc, issued an order in North American Fire Ultimate Holdings, LP v. Alan Doorly, reversing the Court of Chancery’s dismissal of claims to enforce restrictive covenants in an incentive unit grant agreement. As we previously reported, the Court of Chancery had held that the restrictive covenants were unenforceable because the incentive units — identified as the sole consideration for the covenants — had been forfeited upon the employee’s for-cause termination. The Supreme Court disagreed, holding that consideration is measured at the time of contract formation and is not reevaluated at the time of enforcement.

Background

As discussed in our prior article, defendant Alan Doorly (Doorly) was a long-time employee of Cross Fire & Security, Inc., which was acquired by North American Fire. In connection with a post-acquisition restructuring, Doorly exchanged his common units for 300,000 Class B units of North American Fire subject to time and performance vesting requirements under an Incentive Unit Grant Agreement. The agreement contained restrictive covenants — including restrictions on the use of confidential information, nonsolicitation of employees and customers, and noncompetition — and identified the incentive units as “adequate and sufficient consideration” for those covenants. When Doorly subsequently was terminated for cause after forming a competing entity, both his vested and unvested units were automatically forfeited, per the terms of the agreement. North American Fire then sued to enforce the restrictive covenants.

The Court of Chancery dismissed the claims, finding that the forfeiture of the units eliminated the consideration supporting the restrictive covenants, rendering the covenants unenforceable.

The Supreme Court’s Reversal

The Supreme Court reversed, applying the well-established principle that consideration is measured at the time the parties enter into a contract, and that a subsequent diminution — or even complete elimination — of the economic benefit conferred does not result in a failure of consideration. The court emphasized that neither party disputed that adequate consideration was exchanged at formation and that a valid contract existed at that point in time.

The court found the Court of Chancery’s decision in Newell Rubbermaid Inc. v. Storm instructive. In Newell, the Court of Chancery rejected a former employee’s argument that restricted stock unit (RSU) agreements lacked consideration because the RSUs were subject to vesting periods and automatic forfeiture upon termination. The Newell court held that, at the time of formation, the employee “was granted a benefit that held actual value,” and although the value was “somewhat contingent,” it was “not illusory.”

Applying the same reasoning, the Supreme Court held that the incentive units granted to Doorly held actual value at the time of contracting, notwithstanding the contingencies built into the agreement. The court rejected Doorly’s attempt to distinguish Newell on the basis that, unlike the RSU holder in Newell who had received dividend equivalents, Doorly’s forfeiture left him with no consideration. The court found the receipt of dividend equivalents in Newell was independent of the lower court’s holding and not material to the consideration analysis.

The Supreme Court also addressed the Court of Chancery’s reliance on NBTY, Inc. v. Vigliante, a New York case in which restrictive covenants were found unenforceable when tied to unexercised and expired stock options. The court noted that NBTY was not clearly inconsistent with the principle that consideration is measured at formation, as the holdings in that case appeared to support the view that no benefit was received at the time of formation.

The Supreme Court remanded the case to the Court of Chancery for further proceedings.

Takeaways

The Supreme Court’s decision is a significant win for employers — particularly sponsor-backed companies — who use equity incentive arrangements to support restrictive covenants. Key takeaways include:

• Consideration is measured at the time of formation, not enforcement. The decision reaffirms the fundamental contract law principle that adequacy of consideration is assessed when the parties enter into the agreement. A subsequent forfeiture or clawback of the equity does not retroactively eliminate consideration and render the covenants unenforceable.  
• Contingent equity can serve as valid consideration. Incentive units, RSUs, and other equity awards subject to time or performance vesting — and even automatic forfeiture provisions — constitute valid consideration for restrictive covenants at the time of grant, so long as the equity holds actual value at formation.  
• Forfeiture-for-cause provisions and restrictive covenants can coexist. The decision resolves a tension created by the Court of Chancery’s ruling, which had effectively allowed an employee who breached restrictive covenants to benefit from that breach by arguing the resulting forfeiture eliminated the consideration for those same covenants.  
• Drafting still matters. While the Supreme Court’s ruling is favorable for employers, careful drafting remains critical. Companies should continue to ensure that equity incentive agreements clearly identify the consideration supporting restrictive covenants, that the covenants are reasonable in scope, duration, and geographic reach, and that the consideration supporting the covenants has actual value at the time of contract formation.

The IRS and the Treasury Department issued proposed regulations on February 3, 2026 (Proposed Regulations), providing guidance on the clean fuel production credit under Section 45Z (Clean Fuel PTC).

The Proposed Regulations follow the passage of the Inflation Reduction Act of 2022 (IRA), publication of the initial Clean Fuel PTC guidance in Notices 2024-49, 2025-10, 2025-11, and passage of the One Big Beautiful Bill Act (OB3).

The Proposed Regulations would generally apply to qualified sales occurring in taxable years ending on or after the date the final regulations are published in the Federal Register, with an exception for the regulations related to the emissions rate table, which would apply to qualified sales occurring in taxable years ending on or after January 10, 2025. Taxpayers may rely on these Proposed Regulations until the final regulations are published in the Federal Register if they follow the Proposed Regulations in their entirety and in a consistent manner.

Background

The Clean Fuel PTC is available for low-emission transportation fuel produced domestically and sold between 2025 and 2029. The Clean Fuel PTC replaces an assortment of prior fuel incentives consisting of income tax credits, excise tax credits, and excise tax payment provisions for various biofuels and other alternative fuels sold for use as a fuel or used as a fuel, including biodiesel, renewable diesel, compressed natural gas, second generation biofuel, and sustainable aviation fuel (SAF).

To qualify for the Clean Fuel PTC, a taxpayer must: (i) produce a transportation fuel that meets requirements for suitability, emissions rate, coprocessing, and prevention of double crediting; (ii) produce the fuel at a qualified facility in the United States; (iii) be registered as a producer of clean fuel at the time of production; and (iv) sell the fuel to an unrelated person in a qualified sale during the taxable year.

Fuel produced after December 31, 2025, must be exclusively derived from a feedstock that was produced or grown in the United States, Mexico, or Canada. Like other tax credits after OB3, a taxpayer cannot be (i) a specified foreign entity, for taxable years beginning after July 4, 2025, or (ii) a foreign-influenced entity (other than a foreign-influenced entity as a result of effective-control), for taxable years beginning after July 4, 2027.

Producer of Transportation Fuel

The Proposed Regulations generally define the producer as the person that engages in the production of a transportation fuel. For renewable natural gas (RNG), producer means the person that processes untreated sources of alternative natural gas to remove water, carbon dioxide, and other impurities such that it is interchangeable with fossil natural gas. The Proposed Regulations provide as an example that a producer does not include a taxpayer that merely compresses the gas, such as a wholesaler that removes gas from a pipeline and further compresses it for use in buses or automobiles.

The Proposed Regulations define production as all steps and processes used to make a transportation fuel. Production begins with the processing of primary feedstock(s) and ends with transportation fuel ready to be sold in a qualified sale. Minimal processing such as blending or other activities that do not result in chemical transformation do not qualify as production.

Under the Proposed Regulations, a taxpayer is not required to own the qualified facility at which the taxpayer produces the transportation fuel in order for the Clean Fuel PTC to be determined with respect to that fuel.

Qualified Facility

The Proposed Regulations define qualified facility to mean a facility used to produce transportation fuel but excluding any facility for which the credit for production of clean hydrogen under section 45V, the energy credit determined under section 48 with respect to a clean hydrogen production facility, or the credit for carbon oxide sequestration under section 45Q is allowed.

• Troutman Pepper Locke Insight: Notably, neither the text of the Clean Fuel PTC nor the Proposed Regulations prohibit taxpayers from being allowed both the section 48 energy credit for qualified biogas property and the Clean Fuel PTC on the same facility.  

The Proposed Regulations provide special rules and examples for determining whether any such credit has been allowed with respect to a facility. The determination is made on an annual basis such that a facility may be qualified in one year but not in another. For example, if a taxpayer makes an election to treat a hydrogen production facility as energy property under section 48, that facility is permanently disqualified from the Clean Fuel PTC. However, a taxpayer producing hydrogen could be allowed the clean hydrogen production credit under section 45V in one year and the Clean Fuel PTC in another, as long as both credits are not allowed for the facility in the same year.

Qualified Sale

The Clean Fuel PTC requires that transportation fuel is sold by the taxpayer to an unrelated person (1) for use by such person in the production of a fuel mixture; (2) for use by such person in a trade or business; or (3) who sells such fuel at retail to another person and places such fuel in the fuel tank of such other person.

The Proposed Regulations clarify that sold for use in a trade or business includes fuel sold to an unrelated person that subsequently resells the fuel in its trade or business. As an example, the Proposed Regulations describe a producer that sells RNG to an unrelated taxpayer by injecting the RNG into a pipeline for resale and distribution. The subsequent resale of gas by the unrelated taxpayer qualifies as a use in a trade or business and satisfies the qualified sale requirement.

• Troutman Pepper Locke Insight: Previously issued draft guidance had proposed to narrowly define sold for use in a trade or business to mean sold for use as a fuel in a trade or business. Many stakeholders raised concerns that the proposed language would prohibit many fuel producers from claiming the Clean Fuel PTC since transportation fuel is generally delivered to consumers through intermediaries. The revised language is a welcome development.  

The Proposed Regulations provide that in the case of a corporation that is a member of an affiliated group of corporations filing a consolidated return, such corporation will be treated as selling fuel to an unrelated person if the fuel is sold to the unrelated person by another member of that consolidated group. Similarly, a taxpayer will be treated as selling fuel to an unrelated person if such fuel is sold to the unrelated person by a related person. The rule is similar to guidance for other renewable energy credits that requires sales to unrelated parties.

Transportation Fuel

The Proposed Regulations provide that transportation fuel means a fuel that (1) is suitable for use in a highway vehicle or aircraft; (2) has an emissions rate that is not greater than 50 kilograms of CO2e per mmBTU; (3) is not derived from coprocessing an applicable material (or materials derived from an applicable material) with a feedstock that is not biomass; and (4) is not produced from a fuel for which the Clean Fuel PTC is allowable.

The Proposed Regulations define fuel as any liquid or gaseous substance that can be consumed to supply heat or power. Therefore, for purposes of the Clean Fuel PTC, the term fuel does not include electricity.

Transportation fuel is suitable for use in a highway vehicle or aircraft if the fuel has practical and commercial fitness for use as a fuel in a highway vehicle or aircraft, or may be blended into a fuel mixture that has practical and commercial fitness for use as a fuel in a highway vehicle or aircraft. The Proposed Regulations provide a special rule for RNG, which is suitable for use once it is produced so that it is interchangeable with fossil natural gas and would require only minimal processing (for example, further compression or liquefaction) to meet industry specifications.

Amount and Timing of Credit

The Proposed Regulations provide that for any taxable year, with respect to a given transportation fuel, the Clean Fuel PTC is an amount equal to the product of (i) the applicable amount for such fuel; (ii) the total gallons or gallon equivalents of such fuel that were produced by the taxpayer at a qualified facility and sold by the taxpayer in a qualified sale during the taxable year; and (iii) the emissions factor for such fuel.

For non-SAF fuel produced prior to January 1, 2026, the base applicable amount is $0.20 and the alternative amount, if the prevailing wage and apprenticeship requirements are satisfied, is $1. For SAF fuel produced prior to January 1, 2026, the base applicable amount is $0.35 and the alternative amount, if the prevailing wage and apprenticeship requirements are satisfied, is $1.75. For fuel produced after December 31, 2025, OB3 lowered the credit amount for SAF fuel to match the credit available for non-SAF fuel.

The Proposed Regulations, like the previous draft guidance, define gallon equivalent to mean, with respect to any nonliquid fuel, the amount of such fuel that has the energy equivalent of a gallon of gasoline, which refers to the amount of such fuel that has a British thermal unit (Btu) content of 116,090 (lower heating value).

Emissions Factor

Under the Clean Fuel PTC, the emissions factor of a transportation fuel is equal to the quotient of 50 kilograms of CO₂e per mmBTU, minus the emissions rate for such fuel, divided by 50 kilograms of CO₂e per mmBTU.

The Proposed Regulations provide that to determine an emissions rate for a fuel, a taxpayer must either use the applicable emissions rate table published by the Secretary or, if the applicable emissions rate table does not establish an emissions rate for the taxpayer’s fuel, a provisional emissions rate determined by the Secretary.

If the applicable emissions rate table establishes the emissions rate for a non-SAF transportation fuel, a taxpayer producing such fuel determines the fuel’s emissions rate using the 45ZCF–GREET model, as directed by the applicable emissions rate table. If the applicable emissions rate table establishes the emissions rate for a SAF transportation fuel, a taxpayer producing such fuel determines the fuel’s emissions rate (using the most recent version of CORSIA Default or CORSIA Actual), or the 45ZCF–GREET model, as directed by the applicable emissions rate table.

OB3 modified the Clean Fuel PTC to generally disallow negative emissions rates, with an exception that the Secretary may provide an emissions rate that is less than zero for transportation fuel derived from animal manure feedstock such as dairy, swine, or poultry manure. The Proposed Regulations adopt such an exception, providing a significant advantage to animal manure RNG facilities.

45ZCF–GREET Model

The Proposed Regulations invoke the Secretary’s authority under the Clean Fuel PTC to designate the 45ZCF–GREET model as a successor model to the GREET model.

Provisional Emissions Rate (PER)

The Proposed Regulations provide that if a taxpayer produces either a type or category of fuel that is not included in the applicable emissions rate table, the taxpayer may file a petition with the Secretary for a determination of the emissions rate. Before submitting a PER, which is done through a taxpayer’s federal income tax return, the taxpayer must first submit an emissions value request (EVR) with the Department of Energy (DOE). The Proposed Regulations provide that DOE will publish specific guidance and procedures for submitting an EVR.

Substantiation Requirements

In addition to providing a list of records that taxpayers must maintain to substantiate the credits, the Proposed Regulations provide two safe harbor methods to substantiate the emissions rate and qualified sale requirements.

Emissions Rate Safe Harbor (Non‑SAF Fuels)

A producer of non‑SAF transportation fuel, such as RNG, can substantiate its lifecycle emissions rate by obtaining a written certification from an unrelated qualified certifier. If the certification is in substantially the prescribed form, signed under penalties of perjury, and based on all the data the taxpayer provides about feedstocks, production, metering, and modeling, the IRS will treat the emissions rate reported as adequately substantiated. In practice, this lets the taxpayer rely on an independent expert’s certification, rather than having to independently substantiate every aspect of the emissions calculation to the IRS.

A qualified certifier is an independent third party with recognized technical accreditation to verify lifecycle greenhouse gas emissions for transportation fuels, who has no financial or business stake in the taxpayer’s fuel activities. The certifier must have an active third‑party accreditation either from ANAB to perform validation/verification under ISO 14065 or as a CARB LCFS verifier, lead verifier, or verification body.

Qualified Sale Safe Harbor (Purchaser Certificate)

To substantiate that fuel was sold in a qualified sale, the producer can rely on a purchaser certificate from an unrelated buyer. The certificate, signed under penalties of perjury and in substantially the model form, identifies the parties, the fuel, and how the purchaser will use it (for a mixture, in its trade or business, or for retail sale into fuel tanks). It may cover a single sale or a series of sales for up to one year. If obtained timely and if the taxpayer has no reason to doubt its accuracy, the certificate serves to substantiate that the sales qualify for the credit.

SAF Certification

The Proposed Regulations provide detailed procedures for the certification of SAF requirements. A producer must obtain an annual certification from an unrelated qualified certifier for each qualified facility and submit it with Form 7218. The certificate is a signed statement, under penalties of perjury, in which the certifier attests to the quantity of SAF produced at the facility during the taxable year and the lifecycle greenhouse gas (GHG) emissions rate that will be used to claim the section 45Z credit. It must confirm that the gallons and emissions data are consistent with the approved methodology (for example, CORSIA or 45Z‑GREET, or an approved PER) and that the calculated emissions rate is accurate within the higher of ±5 percent or 2 kg CO₂e per mmBTU.

The certifier must be properly accredited for the methodology used and must be independent: not related to or employed by the taxpayer, not involved in buying or selling the fuel or its feedstocks, and not compensated under any fee arrangement tied to the amount of credit claimed. In the certificate, the certifier provides identifying information, describes its accreditation, and gives facility‑level details — such as the production process, the types and amounts of primary feedstocks, their sourcing locations, and the metering and QA/QC systems used to generate the underlying data, including confirmation that meters were appropriately calibrated and tested.

The certificate must be signed and dated no later than the due date (including extensions) of the return for the year in which the SAF is sold in a qualified sale, or, if the credit is first claimed on an amended return or AAR, by the date such filing occurs. The taxpayer must attach the certificate to Form 7218 for that facility and retain both the certificate and all supporting documentation in its records to substantiate the credit on examination.

Filing a Claim for the Clean Fuel PTC

The Proposed Regulations provide that to claim the clean fuel production credit, a taxpayer must file a completed Form 7218, Clean Fuel Production Credit, with its timely filed federal income tax return or information return for the year the credit is determined. A separate Form 7218 is required for each qualified facility at which the taxpayer produces transportation fuel for which it is claiming the credit. Where SAF is involved, the taxpayer must also attach the required annual certification from an unrelated qualified certifier for each such facility, and, where a PER is used, the taxpayer must attach the DOE calculated emissions value letter(s) as part of its PER petition with Form 7218 for the first year it claims the credit for that fuel.

Only a taxpayer that is treated as a registered producer of transportation fuel at the time of production may claim the credit. As a baseline, this means the producing entity must be registered under section 4101 with the appropriate activity letter for non‑SAF or SAF fuel. However, the regulations include look‑through rules: if a disregarded entity is the registered producer, its owner is treated as the registered producer for purposes of claiming the credit, and if a member of a consolidated group is registered, the common parent (as group agent) is treated as the producer and claims the credit on the consolidated return. In each case, the claimant must satisfy the Clean Fuel PTC recordkeeping and substantiation requirements, and its registration status (or that of its disregarded/consolidated‑group member) must be in place at the time the fuel is produced.

Registration

The Clean Fuel PTC requires registration with the IRS prior to the production of transportation fuel. Under the Proposed Regulations, registration is done at the EIN level, so the actual producing entity (including a single‑member LLC with its own EIN) should apply in its own name, even if it is disregarded for income tax purposes or part of a consolidated group. Registration is requested on Form 637, and a producer is treated as registered only when the IRS issues a formal Letter of Registration.

The IRS may revoke or suspend registration if the producer no longer meets the registration tests, misuses its registration (for example, to facilitate improper claims), or fails to follow the terms and conditions. Loss of registration generally means new fuel produced while unregistered will not be eligible for the Clean Fuel PTC. Finally, the Letter of Registration is expressly not a substantive blessing of the producer’s Clean Fuel PTC computations or credit entitlement; it is simply a prerequisite license to participate in the Clean Fuel PTC regime, and all substantive Clean Fuel PTC eligibility and recordkeeping requirements must still be independently satisfied.

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Gibson Oddderstol also contributed to this article. He is not licensed to practice law in any jurisdiction; bar admission pending.

At the Securities Enforcement Forum New York 2026, held on February 5, U.S. Attorney for the Southern District of New York (SDNY) Jay Clayton outlined enforcement priorities that should capture the attention of prediction market operators, crypto market participants, and public companies. As reported by Law360, Clayton made clear that the SDNY is actively considering how existing laws apply to prediction markets and that he fully expects fraud cases to be brought in that space. He also stressed that crypto markets are not exempt from traditional fraud scrutiny and described an enforcement approach that encourages companies to self-report misconduct and cooperate in exchange for potential nonprosecution agreements.

Prediction Markets: Innovation Without Immunity

Clayton’s most striking comments concerned prediction markets, i.e., online platforms that allow users to trade on the outcome of future events, including sports, elections, and financial benchmarks. In response to an audience question at the conference about whether he anticipates prosecutions involving prediction markets, Clayton’s answer was a direct “Yes.” He emphasized that simply labeling a venue as a prediction market does not shield it from the reach of antifraud laws.

According to Law360‘s report, Clayton used a hypothetical about fixing a golf game through prediction markets to illustrate this point. If individuals conspire to influence the outcome of an event in order to profit from related prediction market positions, that conduct, in his view, is plainly criminal. “Because it’s a prediction market doesn’t insulate you from fraud,” he said. The message is that familiar concepts like manipulation, deceit, and collusion will still trigger traditional fraud theories, even when they occur on novel platforms.

Crypto Markets: No “Leave Us Alone” Zone

Clayton also addressed how the SDNY views the crypto industry. He acknowledged that crypto markets are “important,” but rejected what he described as an “absolutist” approach among some in the crypto community who argue that regulators and prosecutors should largely stand aside and let caveat emptor govern. He did not mince words in responding to that view, calling it “absurd.”

This framing underscores that, in the SDNY’s view, crypto markets are subject to the same core fraud and market integrity principles that have long applied to more traditional financial markets. Misrepresentations to investors, manipulative trading practices, undisclosed conflicts, and schemes to defraud will continue to draw enforcement interest, regardless of whether the underlying instruments are tokens, stablecoins, or other digital assets.

Corporate Cooperation and NPAs: “Get the Bad People Out”

Clayton also offered insight into his office’s expectations for corporate cooperation. He expressed a desire to move away from past models in which there was uncertainty about how companies’ cooperation would translate into tangible benefits when dealing with the Department of Justice.

Clayton indicated that his aim is to secure nonprosecution agreements (NPAs) that require continuous cooperation and that are structured to remove “bad people” from otherwise “good companies.” He described his goal as getting “the bad people out of, hopefully, the good companies, and to do that as quickly as possible.” He linked this approach directly to shareholder interests, stating that corporate leaders should investigate alleged misconduct sufficiently to feel comfortable signing an NPA and committing to cooperation, and that, in exchange, the government can signal to the market that the company is fundamentally sound and working to address the problem.

Practical Implications

Taken together, Clayton’s comments at the Securities Enforcement Forum New York 2026 send a consistent message: innovation does not create immunity from the application of existing fraud and securities laws. Prediction markets, whether focused on sports, financial outcomes, or other events, should be treated as serious legal environments where traditional fraud concepts apply.

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.

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Troutman Pepper Locke Spotlight

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. Drawing on Keith’s extensive regulatory experience, they explain what prediction markets are, why these contracts are treated as swaps rather than securities, and how that distinction affects insider trading issues. Stephen and Keith then address the growing tension between federal regulators and state attorneys general over whether these products are trading or unlicensed sports betting, the CFTC chair’s recent criticism of “regulation by enforcement,” and the NCAA’s push to pause college sports contracts. They close by examining what this means for banks, payment processors, and other service providers navigating know-your-customer and “lawful transaction” obligations while the law remains in flux.

Read more

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.

Read more

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Single State AG News

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.

Read more

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AG of the Week

Austin Knudsen, Montana

Austin Knudsen is the attorney general (AG) of Montana, first elected in 2020 and reelected in 2024. A fifth-generation Montanan, Knudsen grew up on his family’s farm and ranch near Bainville. He earned bachelor’s degrees in sociology and political science from Montana State University and later received his law degree from the University of Montana.

Knudsen began his legal career in private practice and served as Roosevelt County attorney before being elected to the Montana House of Representatives in 2010. He rose to leadership positions, serving as speaker pro tempore and then as speaker of the House for two terms, making him one of the youngest to hold that position in state history.

As AG, Knudsen has focused on public safety and legal issues affecting Montana. In December 2025, he was elected by his peers to serve as chairman of the Republican Attorneys General Association (RAGA) for the 2026 election cycle.

Knudsen and his wife, Christie, have three young children.

Montana AG in the News:

• Knudsen joined a 22-state coalition urging House and Senate Judiciary Committee leaders to expand their investigation into alleged improper influence on federal proceedings to include the Federal Judicial Center, arguing that its new climate change chapter in the Reference Manual on Scientific Evidence improperly promotes biased, pro-plaintiff climate science to influence judges and fossil fuel litigation outcomes.  
• Knudsen is urging Montanans to remain vigilant against increasingly sophisticated scams after the Office of Consumer Protection handled nearly 2,000 complaints in 2025 and prevented or recovered millions in potential losses.

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Upcoming AG Events

• February: DAGA | Policy Conference | San Francisco, CA  
• February: AGA | Chair’s Initiative | Santa Fe, NM  
• March: RAGA | Spring Meeting | New Orleans, LA  

For more on upcoming AG Events, click here.

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.

As part of the continuing debate about how to best protect minors on internet platforms, the way apps reach users in Texas, Utah, and Louisiana is set to change this year, with California to follow in 2027. These states have shifted from statutorily prescribing standards for Internet platforms to the adoption of “App Store Accountability” laws that shift responsibility for children’s online safety to both app store owners and app developers.

For years, policymakers have argued over who should keep kids away from harmful online content. While some proposals put age assurance duties directly on every platform or website, industry warned that separate systems for each service would be unworkable and pushed to move age checks to a centralized layer, such as the device or app store. The new state laws reflect that shift, and California pushes it further by involving operating systems themselves.

Under these laws, app stores and operating systems must verify users’ ages and track parental consent, while developers must plug into those systems, assign age ratings, and enforce new restrictions for minors inside their apps. The result: new engineering work, new legal exposure, and uncertainty up and down the technology stack.

Read the full article on Bloomberg Law.

This article was originally published in The Legal Intelligencer and is republished here with permission as it originally appeared on February 10, 2026.

The U.S. District Court for the Southern District of Texas, in Wesco Aircraft Holdings v. SSD Investments, No. 4:25-CV-202, 2025 U.S. Dist. LEXIS 252576 (S.D. Tex. Dec. 8, 2025), reminds parties that it is critical to use precise language in debt documents rather than assuming the existence of implied rights, particularly where such rights are considered sacred.

A recent district court decision provides key lessons in the latest on liability management exercises. The U.S. District Court for the Southern District of Texas, in Wesco Aircraft Holdings v. SSD Investments, No. 4:25-CV-202, 2025 U.S. Dist. LEXIS 252576 (S.D. Tex. Dec. 8, 2025), reminds parties that it is critical to use precise language in debt documents rather than assuming the existence of implied rights, particularly where such rights are considered sacred. The Wesco liability management transaction also highlights that voting rights can be varied through the incurrence of additional indebtedness and must be considered when building a blocking position. Finally, the decision also illustrates that the use of “effect of” language is limited and should be interpreted to apply to the instrument it relates to rather than applying to a series of transactions or amendments.
     
Wesco Aircraft Holdings, Inc. provided distribution and supply-chain services in the civilian and military aerospace industry. In 2020, Wesco financed an acquisition through the issuance of bonds under three indenture agreements, which were set to mature in 2024, 2026 and 2027, respectively. Soon after Wesco entered into the indenture agreements, the COVID-19 pandemic struck. Wesco quickly saw a decline in demand and supply chain disruptions, which led to a shortfall in its liquidity. Wesco began to discuss funding options with its noteholders and eventually negotiated rescue financing terms with a majority group of noteholders (the majority group) under the existing indentures. The rescue financing provided for $250 million in new money, extended maturities and reduced cash interest and the exchange of the Majority Group’s 2024 and 2026 notes for super-senior first-lien notes (the 2022 transactions).

Meanwhile, a minority group of 2024 and 2026 noteholders (the minority group) also proposed a rescue financing solution but offered less new money and required the collateralization of letters of credit. Among other reasons, Wesco’s board of directors accepted the majority group’s proposal, finding it provided more needed liquidity on superior terms.

The majority group initially believed it held the requisite two-thirds of the outstanding 2026 notes to release the collateral as to the 2026 notes. Interestingly, the minority group sought to block the 2022 transactions by purchasing a blocking position in the 2026 notes.To counter the blocking position, the first step of the majority group’s liability management transaction was an amendment that allowed for the issuance of $250 million in additional 2026 notes to the majority group. Notably, the amendment to issue additional notes only required the approval of a majority of the holders of the 2024, 2026, and 2027 notes. Next, Wesco and the majority group entered into a purchase agreement, under which the majority group invested $250 million of new money into Wesco in exchange for the newly issued additional 2026 notes. As a result, the majority group’s total share of the then-outstanding 2026 notes grew to more than two-thirds. This allowed Wesco to take its third step, which was to release the liens securing the 2024 and 2026 notes with the requisite two-thirds approval.

In October 2022, the minority group sued Wesco in New York state court, seeking an order avoiding the 2022 transactions between Wesco and the majority group. But in June 2023, while that state court litigation was pending, Wesco and its related entities filed voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of Texas. Wesco immediately initiated an adversary proceeding against the minority group and sought a declaration that it did not breach its indentures by entering into the 2022 transactions. The bankruptcy court ruled that Wesco’s 2022 transactions breached the 2026 indenture by failing to obtain consent from two-thirds of the then-outstanding 2026 noteholders for the release of liens on the 2024 and 2026 notes. The bankruptcy court recommended unwinding the 2022 transactions, reinstating the liens of the 2026 noteholders and leaving the majority group with an unsecured claim for its $250 million new money investment. The parties objected to the bankruptcy court’s ruling, and the matter was appealed by the U.S. District Court for the Southern District of Texas.

In its de novo review of the bankruptcy court’s ruling, the U.S. District Court for the Southern District of Texas concluded that Wesco’s uptier 2022 transactions were lawful and refused to find any “implied sacred rights.” The district court was not persuaded by the minority group’s arguments that the 2022 transactions should be collapsed into a single transaction, the effect of which caused the release of liens on collateral, thus requiring consent from at least two-thirds of existing noteholders. Instead, the court found that Wesco was permitted to amend the 2026 indenture to allow for the issuance of additional notes by only a simple-majority consent, and in a separate, yet coordinated, amendment, release the collateral for the 2026 notes by a two-thirds vote, which included the votes of the holders of the newly issued notes.

The district court noted that its conclusion was “confirmed” by the Fifth Circuit’s decision in In re Serta Simmons Bedding, 125 F.4th 555 (5th Cir. 2025), in which the Fifth Circuit held that Serta failed to obtain the unanimous consent required in an express “sacred right of pro-rata sharing.” The district court noted that there was no similar sacred right provision in Wesco’s indenture agreements and that the parties understood that the lack of such a sacred right allowed Wesco to “dilute a minority group’s voting power by issuing new bonds with majority consent and to then rely on consent from those additional bonds to issue senior debt over the minority noteholders’ objection.”

Indeed, the district court made clear that parties cannot rely on alleged implied sacred rights and the court will not find implied rights. “The indentures were negotiated by sophisticated parties who chose their language carefully; if the parties had wanted to bargain for additional sacred rights that would have allowed minority holders to prevent the 2022 transactions, they could have done so, but they did not. This court refuses to find any implied sacred rights.”

The district court also limited how far downstream an amendment may be read to “effect.” The minority group argued that the amendment, when combined with the other steps of the 2022 transactions, had the “effect of” releasing collateral, and thus, the Majority Group failed to obtain the requisite supermajority consent. The district court rejected this argument. Instead, it held that the focus must be on “the immediate effect of the amendment itself—without regard to subsequent actions that may follow—in order to determine in real time whether a supermajority vote is required.” Any other reading of the amendment would “flout the ordinary meaning of ‘effect’” and lead to practical difficulties in contract interpretation and execution.

Ultimately, by declaring that the 2022 transactions did not breach Wesco’s obligations under the indentures, the district court imparted three key liability management lessons. First, use precise language to expressly provide for sacred rights, as a court may not agree that an “implied” sacred right exists. Second, carefully consider the ramifications of a simple-majority’s power to amend provisions, especially when the simple majority has the ability to vary voting rights. Third, the “effect of” an instrument is limited, so its effects cannot be traced downstream through a series of transactions. Any other interpretation of “effect of” would be unwieldy and lead to confusion among courts and practitioners alike.

Alex R. Rovira is a partner in Troutman Pepper Locke’s New York office and Sarah L. Hautzinger Loumeau is an associate at the firm in the New York office.

Reprinted with permission from the February 10, 2026, edition of The Legal Intelligencer© 2025 ALM Global Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or asset-and-logo-licensing@alm.com.

For the past several years, investors and regulators at the Securities and Exchange Commission have focused on fee and expense issues in private markets.

With attempts to shed light on these issues and provide GPs with a benchmark, Private Funds CFO has again partnered with Troutman Pepper Locke for this year’s edition of the Private Funds CFO Fees and Expenses Survey. Troutman has helped spearhead this survey since its inception in 2014.

The survey should take approximately 10 to 15 minutes. In return for your time, PEI will send you a complimentary copy of the Private Funds CFO Fees and Expenses Report 2026, to be published in June.

Your submission will remain entirely confidential, and all submitted data is anonymized.

Click here for a copy of the 2024 report.

Click here if you are interested in participating in this year’s survey.

Reprinted with permission from the February 9, 2026 edition of The Legal Intelligencer. © 2026 ALM Global Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For permission to reprint or license this article, please contact 877-256-2472 or asset-and-logo-licensing@alm.com.

Investigations led by counsel, triggered by legal risk, and designed to elicit legal advice remain protected, even if their findings later inform business decisions. For cyber incidents, FirstEnergy outlines how to structure IR investigations to maximize privilege and work product protection while supporting an effective technical and business response.

The U.S. Court of Appeals for the Sixth Circuit’s decision in In re FirstEnergy Corporation (FirstEnergy), is a roadmap for best practices in preserving attorney–client privilege and work product protection in cyber incident investigations, with direct implications for incident response (IR).

The question in FirstEnergy was whether a company that faces legal exposure and retains outside counsel for an internal investigation must turn over investigation materials to civil plaintiffs. The Sixth Circuit held no.

Investigations led by counsel, triggered by legal risk, and designed to elicit legal advice remain protected, even if their findings later inform business decisions. For cyber incidents, FirstEnergy outlines how to structure IR investigations to maximize privilege and work product protection while supporting an effective technical and business response.

Background: The FirstEnergy Investigation and Deluge of Litigation

More than five years ago, FirstEnergy was drawn into a political corruption scandal involving an alleged bribery scheme with Larry Householder, then Speaker of the Ohio House of Representatives, to secure favorable legislation. In July 2020, the U.S. Department of Justice (DOJ) filed a criminal complaint against Householder and served subpoenas on FirstEnergy. When the complaint became public, FirstEnergy’s stock price fell sharply, and the company anticipated legal exposure, shareholder suits and regulatory proceedings.

The board formed a committee and retained Squire Patton Boggs, while the company retained Jones Day. Both firms investigated, assessed potential liability, advised on subpoenas and government inquiries, and recommended governance and compliance reforms.

The DOJ action triggered shareholder suits and investigations by regulators. In one securities case, shareholders sought “all previously withheld documents” related to the investigations. A special master recommended, and the district court ordered, production of those materials, finding no privilege or work product protection. FirstEnergy sought relief, and the Sixth Circuit granted mandamus and vacated the order, clarifying when internal investigations are protected—and when they are not.

The Sixth Circuit’s Decision

The Sixth Circuit held that investigations by outside counsel, designed to assess legal exposure and provide advice, are classic attorney–client communications.

Investigations conducted “to secure legal advice” fall within the attorney–client privilege. The key question is whether the company sought legal advice, not whether the advice later informed business decisions. Using legal advice to guide business choices does not strip it of privilege.

Second, the court held that the investigation materials were protected work product because they were created “because of” actual and anticipated litigation and regulatory actions. Even where documents have both legal and business purposes, they can qualify as work product if reasonably anticipated litigation is a driving force behind their creation.

Third, sharing high‑level conclusions or factual summaries with third parties (including auditors) does not automatically waive privilege or work product protection over underlying communications, analyses, or mental impressions. Disclosing factual findings is not the same as revealing counsel’s thought process.

Although FirstEnergy arose from a bribery and securities context, its reasoning maps well onto cyber incidents, where companies face immediate legal risk and must investigate quickly while communicating with regulators, insurers, auditors, and customers.

Key Lessons From ‘FirstEnergy’ for IR Investigations

Cyber incidents regularly result in regulatory investigations, class actions, contract and indemnity claims, and securities and disclosure issues. In that sense, they present the same kind of “very significant legal risk” that drove FirstEnergy’s response.

FirstEnergy shows that, if structured thoughtfully and properly, an IR investigation can be treated as a legal investigation: directed by counsel, initiated because of real or reasonably anticipated legal exposure, and therefore eligible for attorney–client privilege and work‑product protection. FirstEnergy, however, does not guarantee this. Instead, it offers practical guidance on how to perform IR investigations to maximize protection of attorney-client privilege and work product protection.

• Engage Outside Counsel at the Outset of the Incident

The court stressed timing of retention of counsel as a factor in preserving privilege. FirstEnergy brought in outside counsel “as soon as” the DOJ complaint was unsealed, and subpoenas were issued. (No. 24‑3654, slip op. at 4–5 (internal citations omitted).)) Jones Day was retained to investigate the allegations and advise on the response to the criminal investigation; within a week, the board retained Squire to conduct its own investigation and advise on potential exposure. That swift, parallel engagement signaled that both management and the board viewed the situation as a legal event requiring specialized legal guidance.

Serious cyber incidents often present similar legal risk from day one, particularly when personal data is implicated, critical operations are disrupted, or contractual notification obligations are in play. In that context, organizations should involve outside IR counsel at or near the outset, not at the end, of the investigation. Engagement terms should make clear that counsel is retained to advise on legal risk, regulatory obligations, and litigation exposure, and to direct the investigation in light of those risks. Board and executive communications should reflect that the incident is being treated as a legal, not merely operational, event.

• Counsel Must Meaningfully Direct the Investigation

Timing alone is not enough. The court also focused on the substance of counsel’s role. FirstEnergy and its board asked outside counsel for analysis and legal advice on how to respond to the significant legal risk they faced. Squire Patton Boggs met frequently with directors to discuss investigative findings, legal analyses, and assessments of potential criminal and civil liability. Jones Day conducted its own investigation and examined relevant records in connection with responding to the DOJ and “analyzing what acts occurred, whether those acts were illegal, and what criminal and civil consequences might ensue.”

In other words, outside counsel did not simply receive copies of reports or rubber stamp business decisions; they ran the investigations, interpreted the facts and provided legal guidance.

In the IR context, a privileged, FirstEnergy-style investigation should involve counsel defining the scope of the forensic work and the questions to be answered, with the forensic firm engaged by or through counsel and its deliverables directed to counsel. Counsel should review forensic reports and underlying data and translate those findings into legal analysis—liability, regulatory obligations, notification decisions, and litigation strategy. Throughout the process, counsel should participate in briefings with the IR team and senior leadership, presenting investigative findings, explaining their legal implications, and advising on next steps.

If the technical team runs the investigation independently and counsel’s involvement is limited to reviewing a completed technical report, a court may conclude the investigation was business led, not legally driven, weakening privilege and work product arguments across the incident lifecycle.

• Dual Legal and Business Purposes Do Not Defeat Privilege or Work Product Protection

The district court concluded privilege did not apply because FirstEnergy used the investigations and associated legal advice to subsequently inform business decisions. The Sixth Circuit rejected that rationale as inconsistent with how companies function. The question is whether the company sought legal advice; the fact that it later used that advice for business purposes does not destroy privilege. Companies routinely consult attorneys about problems that arise in the course of business, and that fact alone does not strip communications of their fundamentally legal character.

On work product, the court reaffirmed the “because of litigation” standard: materials are protected if they are created because of or reasonably anticipated litigation, even if they also serve business objectives. In FirstEnergy, the shareholder lawsuits and DOJ investigations supported the assertion that FirstEnergy’s internal investigations were driven by actual and reasonably anticipated litigation.

In the IR context, investigative findings almost always serve dual purposes. Legally, findings are used to evaluate breach-notification obligations, defend potential claims, determine contractual requirements, and guide potential resolution options. Operationally, organizations use the same findings to fix affected systems, safely restore operations, improve security, and coordinate with potentially affected customers and vendors on their response.

FirstEnergy confirms that this dual use is not disqualifying. An IR investigation can remain privileged and be protected work product even if its findings are used to inform business decisions—for example, whether to shut systems down, what to tell customers, or how to address vendor relationships. What matters is that the investigation is undertaken because of legal and regulatory risk, and that counsel is engaged to provide legal advice on that risk.

Practically, engagement letters and statements of work should clearly state the legal purpose of the investigation, make explicit that outside counsel is directing and supervising the work, and provide that key written work product and communications are routed through counsel. This structure reinforces that legal advice and anticipated litigation are the driving forces behind the investigation, even though the same findings support business decisions.

• Sharing Information With ‘Friendly’ Third Parties Is Not Automatically a Waiver

The Sixth Circuit’s discussion of disclosures to FirstEnergy’s auditor is particularly relevant to IR investigations, which often involve multiple third parties—auditors, cyber insurers, managed security service providers, forensic vendors, and customers or partners. The court held that sharing non privileged information with an auditor does not waive privilege; waiver occurs only as to privileged communications actually disclosed. It also emphasized that work product protection is not automatically waived by disclosure to a third party and is typically waived only by disclosure to an adversary or someone likely to become one. An independent auditor is not an adversary, particularly where ethical rules and professional obligations require confidentiality and withdrawal in the face of litigation against the client.

Applied to IR matters, FirstEnergy supports several practical distinctions. Organizations may be able to share factual summaries—timelines, high level descriptions, remediation status—with third parties without necessarily waiving privilege over counsel’s underlying analysis or mental impressions. Work product protection is more likely preserved where the recipient is not an adversary, is contractually or ethically bound to maintain confidentiality (like the auditor in FirstEnergy), and is aligned with the company’s interests. Care is required when dealing with third parties in the IR context, which can include customers, vendors, or other stakeholders who might become adverse; in those situations, limiting what is shared to factual descriptions and omitting counsel’s legal analysis can help preserve privilege and work product protection even if relationships later deteriorate.

Outside counsel plays a central role in identifying which third parties can appropriately receive information, determining what can be shared as factual, non-privileged content, and ensuring that privileged communications and legal strategy remain within a tightly controlled circle.

Putting FirstEnergy Into Practice for Incident Response

Taken together, FirstEnergy supports an IR model in which:

• Counsel is engaged early, as soon as a cyber incident is identified;
• Counsel initiates, directs and supervises the investigation, including the work of forensic vendors;
• The investigation is undertaken because of legal and regulatory risk, even though it may also serve subsequent business needs and inform related decision making; and
• Information is carefully shared only with limited and aligned third parties, focusing on factual content while preserving privileged legal analysis and work product.

While that framework may appear straightforward, the reality is that many security and IT teams operate in silos and are not always aware of the proper, legally informed protocols for privileged investigations. Legal involvement remains crucial to preserving privilege and protections—and that involvement must occur at the outset of an incident, not after key decisions have already been made.

Businesses should also be talking about these issues now, before an incident occurs, so they understand the right protocol to follow when an event does happen. An effective way to have these conversations is through tailored tabletop exercises that simulate realistic incidents, surface gaps in coordination or escalation, and create concrete, written plans to address those gaps. Those exercises help build a culture of cybersecurity across the organization by reinforcing that cyber risk is an enterprise-wide issue—not just a security or IT concern—and by transforming incident response from a last-minute scramble into a disciplined, defensible process that protects the business when it matters most, while maintaining the types of privileges that allow a full and candid assessment of the cyber incident and the path forward.

Sadia Mirza, a partner with the Troutman Pepper Locke, leads the firm’s incidents + investigations team, advising clients on all aspects of data security and privacy issues. She is the first point of contact when a security incident or data breach is suspected, and plays a central role in her clients’ cybersecurity strategies.

Tim St. George,a partner with the firm, defends institutions nationwide facing class actions and individual lawsuits. He has particular experience litigating consumer class actions, including industry-leading expertise in cases arising under the Fair Credit Reporting Act and its state law counterparts, as well as litigation arising from data breaches.

Kaitlin Clemens, an associate based in the firm’s Philadelphia office, handles ransomware and data extortion cases, and advises on compliance with state and federal laws, including HIPAA, FERPA, and GLBA, as well as development of privacy programs and pre-incident response strategies, as well as creating and delivering comprehensive training for attorneys who are new to cybersecurity.

Overview

On January 8, NYSE American LLC filed a rule proposal with the Securities and Exchange Commission (SEC) that would materially tighten its initial listing standards in Sections 101 and 102 of the NYSE American Company Guide. If approved, the changes would bring NYSE American’s criteria much closer to the initial listing framework for Nasdaq listings, particularly around liquidity, public float composition, and minimum price requirements.

This alert summarizes the proposal and highlights practical implications for companies considering a NYSE American listing.

Corporate Proposal Detail

1. New “Unrestricted Publicly Held Shares” Concept

The filing would amend Section 101 to adopt four defined terms, modeled on Nasdaq’s rules:

• Publicly held shares: Issued and outstanding shares excluding those held by directors, officers, their immediate families, and holders of 10% or more of the outstanding shares.
• Restricted securities: Securities subject to resale limitations for any reason (e.g., securities issued in private placements and Regulation D offerings, compensatory issuances of securities, Regulation S offerings of securities by domestic issuers, securities subject to lockups or other contractual restrictions, and restricted securities under Rule 144).
• Unrestricted securities: Securities that are not restricted securities.
• Unrestricted publicly held shares: The subset of publicly held shares that are also unrestricted securities (i.e., both widely held and freely tradable at listing).

Under the proposal:

• In order to better reflect the liquidity of an issuer’s shares, all market value of publicly held shares tests in Section 101 would be recalibrated so they can be satisfied only with unrestricted publicly held shares.
• Restricted securities (including those not held by insiders or 10% holders) would no longer count toward initial listing float requirements.

2. Higher Float Requirements Across All Initial Listing Standards

Each of the four initial listing standards in Section 101 would require a minimum market value of unrestricted publicly held shares as follows:

• Standard 1 (earnings-based): Increase float requirement from $3 million to $15 million, now measured as the value of unrestricted publicly held shares.
• Standard 2 (equity/operating history): Retain the existing $15 million float requirement but require that it be met solely with unrestricted publicly held shares.
• Standard 3 (market cap-based): Retain the existing $15 million float requirement, again measured as the value of unrestricted publicly held shares.
• Standard 4 (market cap/assets and revenue): Retain the $20 million float requirement again measured as the value of unrestricted publicly held shares.

Practically, this:

• Raises the bar most sharply for Standard 1 issuers (from $3 million to $15 million of qualifying, freely tradable float).
• For Standards 2–4, tightens the quality of float (unrestricted and widely held), even where nominal dollar thresholds do not change.

3. Minimum Offering Size for IPO/Underwritten Listings

For any company seeking to list in connection with an initial public offering (IPO), including American depositary receipts (ADRs), or another underwritten public offering, the company would be required to:

• Have at least $15 million in market value of unrestricted publicly held shares, and
• Satisfy this requirement entirely from offering proceeds.

In other words:

• The offering itself must generate at least $15 million of freely tradable public float based on the IPO pricing (in practice, typically tested against the low end of the price range).
• Issuers can no longer rely on previously issued shares (even if not held by insiders) to “top up” public float to meet the initial listing threshold if those shares are restricted.

This change is particularly significant for:

• Smaller deals or “mini-IPO” structures,
• Listings that historically relied on a mix of old and new shares to meet float tests, and
• Companies with a meaningful percentage of pre-IPO shareholders subject to lock-up or other restrictions.

4. Uniform $4 Minimum Initial Listing Price and 90-Day Track Record

Section 102 currently permits minimum initial listing prices of $2 or $3 per share depending on the listing standard. The proposal would:

• Replace those thresholds with a single $4 minimum initial listing price applicable to all initial listings.
• For Standards 3 and 4 for companies that are already publicly traded on the over-the-counter markets or those transferring from another national securities exchange, require that:
  • The issuer’s total market capitalization be at or above the applicable threshold, for at least 90 consecutive trading days prior to the listing application, and
  • The issuer’s share price be at or above $4, for at least 90 consecutive trading days prior to the listing application.

This change is intended to be both a market quality measure and a means of aligning NYSE American–listed securities with the federal penny stock regulatory framework, and

• Aligns NYSE American with the $4 minimum price widely used by Nasdaq and others, and
• Introduces a seasoning requirement that makes it harder to rely on short-lived price spikes or recent uplifts immediately before listing.

Practical Implications for Issuers and Sponsors

For pre-IPO companies and sponsors:

• Reassess listing feasibility and timing
  • Companies that previously targeted NYSE American because of comparatively flexible float and price requirements will need to revisit these assumptions.
  • Capital raising plans, lock-up arrangements, and pre-IPO shareholder structures may need adjustment to deliver sufficient unrestricted publicly held shares.
• Plan for larger primary offerings
  • To meet the $15 million IPO/underwritten listing requirement, many issuers will need to consider increasing deal size or price range, or reconsider concurrent/secondary components that do not contribute to qualifying float.
• Scrutinize lock-ups and resale restrictions
  • Any shares subject to contractual lock-up, registration rights timing constraints, or other restrictions are unlikely to qualify as unrestricted publicly held shares at listing.
  • Early structuring of pre-IPO rounds, PIPEs, and sponsor investments will be more important to avoid inadvertently shrinking qualifying float.

For companies targeting Standards 3 and 4:

• Start the 90-day clock early
  • Issuers will need to maintain both the required market cap and the $4 price for 90 trading days, which may affect when they can realistically file to list.
  • Volatile issuers may need to build in a buffer beyond the minimum thresholds.

For currently listed companies:

• The proposal primarily addresses initial listing; it does not directly amend continued listing standards. However, it is part of a broader regulatory trend at NYSE American to:
  • Tighten both initial and continued listing criteria, and
  • Address concerns about micro-cap and low-float securities.

Regulatory Status and Next Steps

• The proposal was filed as SR-NYSEAMER-2026-02 on January 8, 2026.
• The SEC will issue a formal notice, solicit public comments, and decide whether to approve, disapprove, or require modifications.
• No effective date will be set until the SEC acts; however, issuers with near-term NYSE American listing plans should assume these standards could be in place in the relatively near term and plan accordingly.

How Troutman Pepper Locke Can Help

Our Capital Markets and Securities team can:

• Evaluate how the proposed standards would apply to your specific capital structure and shareholder base.
• Help structure or resize offerings to satisfy the unrestricted publicly held shares and minimum price requirements.
• Advise boards and sponsors on alternative listing venues, timing strategies, and contingency planning if NYSE American listing becomes more challenging.

The U.S. Trade Representative (USTR) recently announced three major trade and economic initiatives that the administration describes as part of a broader strategy to address large and persistent U.S. trade deficits, concerns about reciprocity in bilateral trade relationships, and other unfair trade practices, while deepening economic and national security cooperation and reinforcing Western Hemisphere supply chains. On January 29, a U.S.-El Salvador Framework for an Agreement on Reciprocal Trade was announced, which includes commitments to improve market access, regulatory alignment, and supply chain resilience. The next day, the USTR announced a U.S.-Guatemala Framework for an Agreement on Reciprocal Trade, aimed at reducing nontariff barriers and rolling back reciprocal tariffs for qualifying Guatemalan exports. On February 4, the U.S. announced a U.S.-Mexico Action Plan on Critical Minerals, focused on coordinated trade policies and exploring potential border‑adjusted price floors, further advancing U.S. efforts to enhance resilience and coordination in critical minerals supply chains with key allies.

US-Mexico Critical Minerals Action Plan

The newly announced U.S.-Mexico Action Plan on Critical Minerals is a framework under which the U.S. and Mexico will address critical mineral supply chain vulnerabilities and nonmarket distortions. The two governments will identify specific critical minerals of interest and develop coordinated trade policies and mechanisms, including possible border‑adjusted price floors on imports of those minerals. They will also consider how such measures could be incorporated into a future plurilateral trade agreement on critical minerals with other like‑minded countries. The framework includes regulatory, technical, and investment cooperation, such as information sharing between the U.S. Geological Survey and the Mexican Geological Survey, identification of priority mining, processing, and manufacturing projects in both countries (and potentially in third countries), and support for projects that follow internationally recognized responsible business conduct and environmental, social and governance standards. Depending on how it is implemented, this initiative could affect long‑term contracts, sourcing strategies, and risk management across critical minerals supply chains, including for sectors such as electric vehicles, batteries, electronics, and defense.

US-Guatemala Framework for an Agreement on Reciprocal Trade

The U.S.-Guatemala Framework for an Agreement on Reciprocal Trade (the Guatemala Framework) builds on the Dominican Republic-Central America-U.S. Free Trade Agreement and is intended to expand U.S. access to the Guatemalan market while advancing stated U.S. economic and security objectives. In return for Guatemala’s commitments under the Guatemala Framework, the U.S. will remove reciprocal tariffs on certain qualifying Guatemalan exports, including products that cannot be grown, mined, or produced in sufficient quantities in the U.S., as well as specified textile and apparel goods qualifying under the CAFTA‑DR.

A core element of the Guatemala Framework is reduction of nontariff barriers to U.S. industrial and agricultural exports. Guatemala has agreed to streamline regulatory requirements and approvals by accepting vehicles and parts built to U.S. motor vehicle safety and emissions standards; recognizing U.S. Food and Drug Administration certificates and prior marketing authorizations for medical devices and pharmaceuticals; accepting remanufactured goods from the U.S.; using electronic certificates; simplifying certificate‑of‑free‑sale requirements; removing apostille and similar formalities; and expediting product registration.

For agriculture, Guatemala will base measures on science and risk, rely on U.S. regulatory oversight, and accept agreed U.S. certificates for imports. Guatemala has further committed that use of common cheese and meat terms (e.g., parmesan, gruyere, mozzarella, feta, asiago, salami, and prosciutto) will not, by itself, be used to restrict market access for U.S. exporters.

The Guatemala Framework also covers services, digital trade, and intellectual property. Guatemala will work to avoid barriers to services and digital trade with the U.S. and will refrain from imposing discriminatory digital services taxes. Guatemala supports a permanent World Trade Organization (WTO) moratorium on customs duties on electronic transmissions. On IP, Guatemala will strengthen protection and enforcement by moving toward key international intellectual property (IP) treaties and addressing issues identified in the 2025 Special 301 Report, including more effective enforcement cooperation, increased criminal prosecutions, and clearer rules and procedures for geographical indications (GIs).

On regulatory governance, Guatemala has committed to “good regulatory practices,” including publication of proposed measures and draft text, public consultations, and publication of regulatory priorities under development, amendment, or repeal.

The Guatemala Framework also includes labor, environmental, and security‑related provisions. Guatemala has committed to protect internationally recognized labor rights and to prohibit imports of goods made with forced or compulsory labor, supported by improved labor inspections and enforcement. Environmentally, Guatemala will maintain and enforce its environmental laws and take measures to improve forest governance and combat illegal logging, strengthen fisheries enforcement, address illegal wildlife trade and illegal mining, and fully implement the WTO Agreement on Fisheries Subsidies.

From an economic security perspective, the U.S. and Guatemala will cooperate to enhance supply chain resilience, address nonmarket policies of other countries, combat duty evasion, and coordinate on investment security and export controls. Guatemala will also take steps to limit access to central‑government procurement covered by its FTA commitments for suppliers from non‑FTA partners, in a manner similar to U.S. procurement restrictions, and will address potentially distortive conduct by state‑owned enterprises and industrial subsidies.

US-El Salvador Framework for an Agreement on Reciprocal Trade

The U.S.-El Salvador Framework for an Agreement on Reciprocal Trade (El Salvador Framework) incorporates many of the same elements as the Guatemala Framework and also builds on the CAFTA‑DR. It is intended to expand U.S. access to the Salvadoran market and support identified U.S. economic and national security policies. In light of El Salvador’s announced commitments, the U.S. will remove reciprocal tariffs on certain qualifying Salvadoran exports that cannot be grown, mined, or produced in sufficient quantities in the U.S. and will provide preferential treatment for specified textiles and apparel originating under the CAFTA‑DR.

El Salvador has agreed to reduce nontariff barriers affecting U.S. exports by streamlining regulatory requirements and approvals, including for pharmaceuticals and medical devices; accepting vehicles and parts built to U.S. motor vehicle safety and emissions standards; removing import restrictions on remanufactured goods; accepting electronic certificates and simplified certificate‑of‑free‑sale procedures; eliminating apostille requirements; and expediting product registration for U.S. exports.

In agriculture, El Salvador will address and prevent barriers related to fumigation, facility registration, and product registration, and will rely on U.S. regulatory oversight and certificates. As with Guatemala, El Salvador has committed that market access for U.S. agricultural exporters will not be restricted solely due to the use of common cheese and meat terms (e.g., parmesan, gruyere, mozzarella, feta, asiago, salami, and prosciutto) and will apply transparent and fair processes to GIs.

On digital trade and services, El Salvador has committed to avoid barriers to services and digital trade with the U.S. and to refrain from imposing discriminatory digital services taxes. The U.S. and El Salvador support a permanent WTO moratorium on customs duties on electronic transmissions. El Salvador will also enhance IP protection and enforcement, including progress on key international IP treaties and clearer standards for GI protection, and will continue to implement good regulatory practices through publication of proposed measures, consultations, and transparency regarding future regulatory plans.

The El Salvador Framework includes commitments on labor and the environment. El Salvador has committed to protect internationally recognized labor rights and to prohibit imports produced by forced or compulsory labor. Environmentally, it will maintain and enforce environmental laws, improve forest governance and combat illegal logging, strengthen fisheries enforcement, address illegal wildlife trade and illegal mining, and work toward accepting and implementing the WTO Agreement on Fisheries Subsidies.

From a security standpoint, the U.S. and El Salvador will cooperate on supply chain resilience, responses to nonmarket policies of other countries, enforcement against duty evasion, and coordination on government procurement, investment screening, and export controls. El Salvador will address potentially distortive actions by state‑owned enterprises and industrial subsidies. The U.S. may take El Salvador’s implementation of the El Salvador Framework into account when considering national security‑based trade actions (e.g., under Section 232 of the Trade Expansion Act of 1962).

Cross‑Cutting Themes and Next Steps

Across these recent economic and trade initiatives, several common elements are relevant to companies:

• Reciprocal trade and tariffs: Guatemala and El Salvador will receive relief from new reciprocal tariffs and expanded preferential treatment (especially for textiles and apparel) in exchange for commitments on regulation, labor, environment, and security.
• Nontariff barrier reduction: Each of these arrangements emphasizes reliance on U.S. standards and decisions, reduced duplicative testing and approvals, and greater use of electronic documentation, including for automotive products, medical devices, pharmaceuticals, agricultural goods, and remanufactured products.
• Geographical indications and IP: The Guatemala Framework and El Salvador Framework address GI‑related concerns and protect the use of commonly used cheese and meat terms, while strengthening IP enforcement and treaty alignment.
• Labor, environment, and forced labor: Each agreement includes labor‑rights and environmental obligations, including express prohibitions on imports made with forced or compulsory labor and commitments on forestry, fisheries, mining, and wildlife.
• National security and supply chains: The initiatives link trade cooperation to supply chain resilience and national security, including coordination on export controls, investment screening, government procurement, and enforcement against duty evasion and nonmarket practices.

For U.S. exporters to Guatemala and El Salvador, companies should identify which of their products may qualify for tariff relief or streamlined procedures, verify that those products satisfy CAFTA‑DR’s rules of origin, update compliance processes to use electronic certificates and reduced apostille/registration requirements, and monitor (and where useful, comment on) implementing regulations. For companies involved in critical minerals and advanced manufacturing supply chains, the U.S.-Mexico Action Plan indicates movement toward more coordinated critical minerals policies, including possible price‑based measures. These companies should review their exposure to covered minerals, assess how border‑adjusted pricing or similar tools could affect their contracts and sourcing, and consider whether existing or planned projects are positioned to receive policy or financing support.