United States: Securities

Under SEC-Chairman Paul Atkins, the Securities and Exchange Commission has proposed a new set of rules that would permit electronic delivery as the default method of delivery for all required disclosures under the federal securities laws. [1] If adopted, this would mark a foundational and very welcome shift in how registered investment advisers, investment companies, business development companies, broker-dealers, transfer agents, and other regulated entities may deliver required disclosures to investors, clients, and other market participants.

The SEC has issued guidance on how federal securities laws apply to crypto vaults and onchain lending strategies, emphasizing that moving activities onchain does not exempt them from regulatory oversight. Market participants must carefully analyze vault structures, lending protocols, and management functions to determine whether they trigger investment contract, investment company, or investment adviser requirements.

This weekly digest from Lowenstein Crypto examines critical developments in digital asset regulation, including new ethics provisions in the CLARITY Act that would prohibit federal officials from issuing cryptocurrencies, SEC Commissioner Hester Peirce's guidance on crypto vaults and lending strategies, and a legal challenge to Illinois' controversial digital asset tax. The brief also covers BitMEX's planned shutdown and Russia's new retail crypto trading framework.

FINRA published an independent external review recommending significant changes to its enforcement program, with leadership committing to implement reforms that will fundamentally alter how member firms interact with enforcement proceedings. The recommendations introduce new opportunities for early advocacy, enhanced transparency in Wells procedures, more disciplined Rule 8210 requests, expanded cooperation credit, and greater negotiability in sanctions and settlement language. These changes create a roadma

On June 26, 2026, in Huey v. Anavex Life Sciences Corporation, No. 25-1752, the United States Court of Appeals for the Second Circuit affirmed the district court’s dismissal of a putative class action asserting securities fraud claims where the plaintiff-shareholder failed to plead a plausible causal link between the alleged misrepresentations and the loss in share price, as was necessary to plead loss causation.

Federal securities class action filings rose to 118 cases in the first half of 2026, with AI-related litigation reaching a five-year high and average settlement values climbing to $54 million—the highest in a decade. Market manipulation cases, including pump-and-dump schemes, surged dramatically while cryptocurrency-related filings fell to their lowest level in five years.

The SEC has proposed Regulation E-Delivery to make electronic delivery the default method for communicating with investors, while Chairman Atkins signals major changes to shareholder proposal rules and quarterly reporting requirements. New initiatives include a Retail Fraud Working Group and ongoing discussions about modernizing the IPO process to stimulate public market participation.

The Senate's FY2027 defense authorization bill contains a provision that would fundamentally alter how defense contractors manage capital distributions to shareholders. Section 815 would prohibit stock buybacks and dividend payments for virtually all Department of Defense contractors unless they secure a waiver tied to approved defense investment plans, raising critical questions about corporate governance, private equity participation, and the future attractiveness of the defense market.

The Supreme Court's unanimous decision in Sripetch v. SEC resolves a critical circuit split, allowing the Commission to impose disgorgement without proving investors suffered actual financial losses. While this preserves a key enforcement tool, Justice Thomas's pointed concurrence signals potential future challenges regarding defendants' Seventh Amendment jury trial rights that could reshape how the SEC pursues monetary remedies.