Winter 2025
A Promising Start to 2025:Setting the Stage for Meaningful SEC Reform
Dear ICAN Partners,
We are six weeks into the new year, and the growing ICAN team is already off to a busy start. In January, we released our 2025 SEC Action Plan for Reform, a comprehensive roadmap the new administration and lawmakers can use to expand investment opportunities, reduce regulatory uncertainty, and create appropriate checks on SEC power—all while maintaining necessary investor protections. We have an exciting batch of new direct representation cases in development that I look forward to telling you more about soon. We continue to see promising movement with our slate of existing cases, each representing another valuable opportunity to continue strengthening a growing precedent-based legal bulwark against SEC overreach and the accompanying uncertainty and risk that stifles market innovation and investor choice.
Our team is prepared to take good advantage of the anticipated positive shift in the regulatory landscape to accelerate SEC reform while being clear-eyed about the fact that such reform will require more than political change at the top. While ensuring incoming SEC Commissioners and lawmakers have a clear understanding of the reforms most urgently needed within the agency, ICAN will continue to vigorously defend those small investors and entrepreneurs unfairly impacted by SEC overreach – some of whom are dealing with the fallout from decisions made going all the way back to the Obama-era SEC. The SEC has averaged 400-500 new cases filed annually for years- many still slowly winding their way through the legal process. This long tail of the SEC’s ‘regulation through enforcement’ approach makes ICAN’s direct litigation efforts crucial, regardless of any reforms that occur in the new administration.
With the release of our inaugural Annual Report, we're proud to share the substantial progress we have made in establishing ICAN as a leading voice for market freedom and a powerful champion for small entrepreneurs and investors.
Of course none of this would be possible without you, ICAN’s growing network of partners. I hope you share my pride in all that we accomplished together in 2024 and my excitement about the enormous potential for meaningful impact in the months ahead.
I look forward to continuing to share this journey with you.
In gratitude, Nick Morgan
Founder and President of ICAN
Litigation Updates
Climate Rule Challenge: ICAN Congressional Amicus Brief Helps Secure Stay
Last summer, ICAN (and co-counsel Mike Piazza) filed an influential amicus brief co-signed by 35 members of Congress challenging the SEC’s public company climate disclosure rule. Last week, the SEC pressed pause on its defense of the agency’s climate disclosure rule, citing issues raised by ICAN’s amicus brief, and by numerous other parties. In a statement provided to the 8th Circuit Court of Appeals, acting SEC Chair Mark Uyeda noted that he and fellow Commissioner Hester Peirce question whether Congress had provided the SEC with the statutory authority to issue the rule.
ICAN’s Congressional amicus brief highlighted the precise serious concerns raised by acting Chair Uyeda about the lack of statutory authority, noting that in the view of the 35 members of the Senate and House joining the amicus brief, Congress had explicitly not provided the necessary statutory authority.
The SEC’s actions last week suggest growing recognition of these fundamental issues regarding the SEC's proper regulatory scope. ICAN will continue monitoring developments in this case as part of our ongoing efforts to ensure SEC rulemaking stays within appropriate bounds while maintaining robust, accessible capital markets.
As it happens, a year ago, ICAN highlighted the then-proposed rule’s statutory infirmity in an interview with Paul Atkins on SEC Roundup. As readers of this newsletter already know, Mr. Atkins has since been nominated to Chair the SEC. In his conversation with us, Mr. Atkins raised important questions about the rule's scope, materiality standard, and statutory authority - concerns that have since become central to ongoing litigation. Our interview provided early insights into the complex legal and policy considerations that continue to shape this significant regulatory debate.
SEC Requests Settlement Discussions in ICAN’s Accredited Investor Challenge
After more than two years of silence in response to ICAN's rule petition to reform the accredited investor restrictions, the incoming SEC had a refreshingly different response to ICAN's lawsuit. Without going into the details of our confidential settlement discussions, we are happy to report that we agreed to extend by 30 days the SEC's time to respond to our mandamus proceeding "to allow the parties time to negotiate a potential resolution." We look forward to working with the Commission on this important reform.
ICAN's litigation to reform outdated accredited investor restrictions received significant support through an amicus brief from Senator Kevin Cramer (R-ND), a member of the Senate Banking Committee and co-sponsor of the Empowering Main Street in America Act. Filed by attorney Mike Piazza, the brief powerfully argues that:
"The damage inflicted by this unreasonably strict and outdated rule extends beyond potential investors and includes the entrepreneurs and small business owners that are unable to access much-needed investment capital to seed, grow, and support their enterprises."
The amicus brief reinforces ICAN's position that the SEC's rigid accredited investor definition creates unnecessary barriers to capital market participation, particularly impacting underrepresented communities and emerging businesses.
To discuss the need for reforming the accredited investor restrictions (and ICAN’s lawsuit), ICAN President Nick Morgan recently joined ICAN advisory board member Jennifer Schulp on the CATO Daily Podcast. You can listen here:
ICAN Highlights SEC "Shadow Rulemaking" at PIPEs Conference
ICAN President Nick Morgan joined industry experts Marc Indeglia, Christina Zaroulis Milnor, and Kevin Timken at the PIPEs (Private Investment in Public Equity) Conference to examine the SEC's continued expansion of dealer registration requirements through enforcement actions. The panel, "What You Need to Know About the SEC's Enforcement Campaign Against Convertible Debt PIPE Investors," explored how the SEC continues to pursue case-by-case "dealer" enforcement despite a recent federal court ruling striking down the agency's dealer rule for exceeding its statutory authority. The discussion highlighted how the SEC's "shadow rulemaking" through targeted enforcement actions attempts to require dealer registration from market participants who lack traditional customer relationships - precisely the overreach that led to the court's rejection of the formal rule.
Earlier, ICAN filed an amicus brief in the 11th Circuit Court of Appeals challenging the SEC’s attempt to expand its jurisdiction (here), and, more recently, now-acting SEC Chair Uyeda issued a statement (here) calling into question related (and problematic) SEC rulemaking under the prior administration. Needless to say, the SEC’s “dealer” mission creep is on ICAN’s radar for future litigation.
The SEC's recent decision to abandon its appeal of the dealer rule's invalidation vindicates ICAN's position, though the agency's continued pursuit of expansive dealer registration requirements through enforcement actions underscores the importance of ongoing vigilance. See our press release on this here.
Strategic Focus for Meaningful Change
With momentum building and a growing network of elite legal partners, ICAN is poised to significantly expand our litigation and advocacy efforts in 2025. Our team has identified critical opportunities to challenge SEC overreach and advance meaningful reform through strategically selected cases that align with four key pathways. Each of these focus areas represents a vital front in our ongoing mission to protect market freedom and expand access to wealth-building opportunities for all Americans.
Building on the framework outlined in our recently released 2025 Action Plan, we are actively developing new cases and initiatives across these interconnected priorities:
End Excessive Punishments:
ICAN is committed to halting the SEC's practice of imposing severe penalties for technical, unintentional violations. We will ensure enforcement actions remain fair, balanced, and within limits established by the courts.
Restore Due Process:
We will advocate for fundamental fairness and transparency in SEC proceedings by championing constitutional protections that uphold the fundamental American values of justice, transparency, and due process.
Expand Market Access & Wealth Building Opportunities:
ICAN will challenge paternalistic restrictions that stifle investor opportunities. Our efforts will focus on modernizing crowdfunding regulations, reforming arbitrary wealth-based rules, and reducing unnecessary regulatory burdens for small businesses seeking capital.
Halt SEC Mission Creep:
We will oppose the SEC's expansive interpretation of terms like "dealer," "security," and "broker." Additionally, we will push back against privacy intrusions, such as the Consolidated Audit Trail database, to establish clear boundaries that foster market stability and protect innovation.
Wrapping Up
While changes in SEC leadership may generate headlines, ICAN remains focused on our core mission: defending small investors and entrepreneurs while establishing lasting precedents that protect market freedom. The cases highlighted in this newsletter demonstrate why our bottom-up litigation strategy is crucial for achieving meaningful reform that transcends political shifts.
Our work would not be possible without ICAN's growing network of supporters and pro bono partners. As the only national organization solely focused on tackling SEC overreach, your continued support enables us to take on critical cases that can create systemic change in how the agency operates.
If you'd like to support our efforts, please consider:
Making a tax-deductible donation to help us take on more cases
Sharing this newsletter with others interested in SEC reform
Connecting us with potential clients facing SEC overreach
Together, we can build a financial system that works for everyone and advances the American economy. Thank you for your partnership in this vital work.
Comments