Podcast Summary: "What’s Going On at the SEC"

Shareholder Primacy | Free Float Media Inc.
Hosts: Mike Levin (activist investor) & Ann Lipton (Colorado Law Professor)
Date: April 1, 2026

Episode Overview

This episode centers on recent developments and overarching trends at the U.S. Securities and Exchange Commission (SEC). The hosts examine major policy changes—most notably those relating to shareholder proposals under Rule 14a-8, new litigation and lawsuits, evolving disclosure requirements, and shifting priorities regarding shareholder power and corporate governance. Their discussion is informed by both their expertise and recent news, with an emphasis on the real-world implications for investors and companies.

Key Discussion Points & Insights

1. Host Updates & Teaching (00:05 - 03:06)

• Mike Levin shares his new role as a guest lecturer at the University of Chicago Law School, teaching a seminar on activist investing.
• The class culminates in teams presenting real-life activist situations, potentially surfacing noteworthy cases for discussion.
• Quote:
  • “There may be a company or two we could talk about.” — Mike Levin (02:42)

2. SEC Rule 14a-8: Policy Shift & Impact (03:08 - 21:49)

Background of Rule 14a-8 (04:11 - 06:43)

• Traditionally, companies could seek the SEC’s input on whether to exclude a shareholder proposal; the SEC would respond with “no action” or “agree/disagree” letters.
• If the SEC sided with exclusion, companies felt safe; rarely would shareholders sue.

New SEC Stance: Hands-Off, “No Objection” (06:44 - 09:41)

• The SEC now largely declines to adjudicate exclusion matters, effectively stepping back from enforcement (“no objection” policy).
• Shareholders wishing to challenge exclusions must now sue companies directly.
• Memorable Quote:
  • “What it comes down to is the SEC’s just not going to get involved anymore.” — Ann Lipton (07:10)

Company & Shareholder Responses—Litigation (09:43 - 16:44)

• Companies are testing boundaries; some are being cautious, while others exclude proposals, leading to lawsuits.
• Four to five lawsuits have arisen—most settle quickly once filed.
  • AT&T Case (11:30): NYC pension funds demanded EE01 diversity data disclosure. AT&T argued “ordinary business,” lawsuit filed, and swiftly settled (AT&T agreed to disclose).
  • PepsiCo Case (12:54): PETA sought supply chain animal welfare compliance; lawsuit led to immediate settlement and inclusion on the ballot.
  • Axon Case (13:45): Nathan Cummings Foundation asked about political spending disclosure. When pushed to explain why it was too burdensome, Axon reversed course: “As soon as they got that order, Axon said, nevermind, we’ll include the proposal.” — Ann Lipton (14:45)
  • Pending cases: BJ’s Wholesale Club (deforestation), Chubb Insurance (climate claim recovery; procedural objections re: Swiss legal status).

Lawsuit Against the SEC’s Policy (17:01 - 21:49)

• Groups such as As You Sow and ICCR have sued the SEC, alleging their informal non-enforcement constitutes unlawful rulemaking, bypassing the Administrative Procedure Act (APA).
• Ann admits her expertise is more on substance than administrative procedure, but observes: “If you are a shareholder, this has been a very huge and impactful change.” (18:51)

3. SEC Policy Changes Beyond Shareholder Proposals (21:55 - 44:25)

Exempt Solicitation Changes & Shareholder Communication (21:55 - 28:50)

• SEC will no longer allow voluntary filings of proxy exempt solicitation materials unless the filer meets the $5 million threshold.
• This narrows a previously low-cost, effective communication avenue, which studies show influenced voting behavior.
• Ann’s critical take: “It was being abused, but I don’t think this was entirely just about the abuse.” (28:50)

Mandatory Arbitration in IPOs & Push from SEC Chair Paul Atkins (30:03 - 36:53)

• SEC no longer objects to IPO companies requiring arbitration of securities claims, and Atkins encourages such clauses even post-IPO.
• Significant legal and insurance uncertainties exist; companies hesitating, with only one example (Zion Oil & Gas, Texas) trying (and bungling) it so far.
• The real goal: preclude class actions, limiting shareholder legal recourse.
• Memorable Moment:
  • Ann describes Zion’s approach: “They forgot to include the part about individualized claims. So under their arbitration clause, theoretically, you could still bring a class action.” (35:13)

Other SEC Hot Topics (37:38 - 43:57)

• Registered Investment Advisors (RIAs): SEC now signals they don’t have to vote every proxy, referring to “rational apathy.”
• Quarterly Reporting: Potential shift to semiannual reporting (from quarterly), triggering mixed reactions—investors expected to push back.
• Executive Compensation Disclosure: SEC chair hints at reducing required disclosures, arguing burden outweighs utility. Ann and Mike argue disclosures are key to shareholder engagement, especially say-on-pay and performance monitoring.
  • Quote:
    • “If we’re going to have a lot less to work with… that’s a big problem.” — Mike Levin (47:58)

4. Overarching Theme: Empowering Boards, Disempowering Shareholders (44:25 - End)

• Ann's argument: All recent SEC moves point in a single direction—consolidating power in company boards and insulating them from shareholder influence and accountability.
  • “Everything is moving in exactly one direction. There is no proposal anywhere to increase shareholder power … eliminating the levers of influence that shareholders have.” (44:38)
• Mike’s nuanced response: While boards should represent shareholders, these changes diminish shareholders’ tangible ability to hold boards accountable.
• Evidence cited: Rising obstacles to shareholder lawsuits, proposal submissions, communications, and voting; declining engagement from major index funds due to regulatory pressure.

Notable Quotes & Memorable Moments

• “That is awesome.” — Ann Lipton, regarding Mike’s new teaching gig (01:42)
• “The company gets to decide and shareholders have to bring a lawsuit.” — Ann Lipton (20:58)
• “They forgot to include the part about individualized claims. So under their arbitration clause, theoretically, you could still bring a class action.” — Ann Lipton on Zion Oil & Gas (35:13)
• “Every single lever is being pushed in one direction.” — Ann Lipton (46:07)
• “If we’re going to have a lot less to work with… that’s a big problem.” — Mike Levin (47:58)

Key Timestamps

• 00:05 — Host welcome & teaching updates
• 03:08 — Introduction to SEC, mailbag question prompt
• 05:05 — Explanation of Rule 14a-8 tradition
• 07:10 — Shift to “no objection” policy by SEC
• 11:30 — AT&T/NYC Pension Fund case discussed
• 12:54 — PepsiCo/PETA lawsuit overview
• 14:45 — Axon’s court-avoidant response
• 17:01 — Lawsuit against the SEC's policy change
• 21:55 — Exempt solicitation communication crackdown
• 28:50 — Ann’s critique on motivations behind the change
• 30:03 — Mandatory arbitration and SEC’s push
• 37:38 — RIA proxy voting “rational apathy”
• 39:21 — Move toward semiannual reporting
• 41:44 — Exec comp disclosure: investor vs. regulatory perspective
• 44:25 — Conclusion: all moves aim to concentrate power in boards

Summary & Flow

This episode offers a sophisticated, accessible, and at times wryly humorous overview of complex but pivotal SEC regulatory shifts. Through detailed case examples, legal explanations, and clear-eyed commentary, Ann and Mike reveal a consistent pattern: recent SEC policies cumulatively disempower shareholders, concentrating authority in boards and management. While policy specifics span shareholder proposals, disclosures, communications, and litigation, the big picture is unambiguous. The episode serves as both a primer on current regulatory battlegrounds and a warning to investors about diminishing influence—making it a must-listen for anyone interested in corporate governance and securities law.