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Just a few days after the comment period closed on the SEC’s concept release exploring potential further regulation of U.S.-listed non-U.S. issuers, SEC Chair Paul Atkins has warned that the SEC may engage in a “retrospective review” of its 2007 decision to eliminate the reconciliation requirement to U.S. GAAP for IFRS issuers if the IASB does not receive “full, stable funding” due to the IFRS Foundation's other commitments such as funding of the International Sustainability Standards Board (ISSB).
Atkins’ remarks were made during his keynote address at the Inaugural OECD Roundtable on Global Financial Markets. He first addressed the SEC’s recent foreign private issuer eligibility concept release, which sought public comment on whether non-U.S. companies with U.S. listings should be subject to additional conditions – such as a minimum non-U.S. trading volume or listing on a major non-U.S. exchange – in order to receive accommodations not available to U.S. domestic companies. These accommodations include, among other things, allowing foreign private issuers to use IFRS (as issued by the IASB) without a reconciliation to U.S. GAAP and generally follow home country rather than U.S. corporate governance rules. The comment letter Linklaters submitted to the SEC in response to the concept release is available here. We also spoke to the SEC about the release in August 2025.
Atkins said that the concept release is “not a signal that the SEC intends to disincentivize such firms from listing on U.S. exchanges.” However, he also noted that when the SEC eliminated the reconciliation requirement in 2007, the IASB’s sustainability, governance and continued operation in a stand-alone manner – including obtaining “stable funding” – were significant considerations in eliminating the reconciliation requirement. Atkins expressed concern that the IFRS Foundation now has to secure funding for both the IASB and ISSB and encouraged the IFRS Foundation to meet its goal for funding that “prioritizes the IASB and its focus on standards for financial accounting, rather than specious and speculative issues.” If the IASB does not receive full, stable funding, he said, “then one of the underlying premises for the SEC’s elimination of the reconciliation requirement for foreign companies in 2007 may no longer be valid, and we may need to engage in a retrospective review of that decision.”
In his remarks, Atkins also took aim at the EU’s Corporate Sustainability Reporting Directive and Corporate Sustainability Due Diligence Directive, in particular their focus on double materiality instead of financial materiality. He noted that these laws impact U.S. companies with operations in the EU, saying that he has “significant concerns with the prescriptive nature of these laws and their burdens on U.S. companies, the costs of which are potentially passed on to American investors and customers.”
The remarks also came the week after the SEC announced the formation of a task force targeting, at least initially, potential U.S. federal securities law violations related to non-U.S. companies, including market manipulation, such as “pump-and-dump" and "ramp-and-dump" schemes. The task force will also examine potential securities law violations related to companies from non-U.S. jurisdictions, such as China, where governmental control and other factors pose unique investor risks. It also will focus enforcement efforts on gatekeepers, particularly auditors and underwriters, which help these companies access the U.S. capital markets.
These developments indicate potentially challenging times ahead for non-U.S. participants in the U.S. capital markets, as the SEC advances administration priorities targeting China, pushing back on ESG initiatives, and in general ensuring that U.S. companies are not disadvantaged.