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- SEC Chairman Atkins Floats Safe Harbor from Liability for Disclosure Related to Events "Reasonably Likely to Affect Most Companies"
SEC Chairman Atkins Floats Safe Harbor from Liability for Disclosure Related to Events "Reasonably Likely to Affect Most Companies"
Plus the CFTC and the states prepare for intense battle regarding jurisdiction over prediction markets.
Bruce Carton
February 18, 2026
Good morning! Here’s what’s up.
Clips ✂️
Remarks at the Texas A&M School of Law Corporate Law Symposium
However, if the primary purpose of risk factors is litigation defense, then reforms should go straight to the heart of the issue—potentially offering a safe harbor from liability. The Commission could adopt a rule stating that failure to disclose impacts from publicized events that are reasonably likely to affect most companies will not constitute material omissions for purposes of some or all of the federal securities laws’ anti-fraud rules. Such a safe harbor could incentivize companies to include fewer generic risk factors by shielding them from liability for events related to those generic risks. After all, if companies are not compelled to catalogue nearly every conceivable contingency to guard against hindsight litigation, then they can focus on risks that are more distinctive to their business.
👉 Interesting “safe harbor from liability” proposal floated by SEC Chairman Paul Atkins in his speech yesterday at the Texas A&M School of Law Corporate Law Symposium.
CFTC’s Selig opens legal dispute against states getting in way of prediction markets
The legal challenges from state governments against certain aspects of prediction markets such as Polymarket and Kalshi received a sharp rebuke from U.S. Commodity Futures Trading Commission Chairman Mike Selig, who is arguing that his federal agency has jurisdiction — not the states.
“To those who seek to challenge our authority in this space, let me be clear, we will see you in court,” Selig said in a video statement posted Tuesday on social media site X. He said his agency filed a legal brief in court to back up the federal role as the leading regulator over this corner of the derivatives markets.
👉 CFTC Chairman Michael Selig’s “see you in court” video is below. The CFTC’s amicus brief in the litigation about whether states can “invade the CFTC’s exclusive jurisdiction” over prediction markets is here.
👉 Utah Governor Spencer Cox replied, “Mike, I appreciate you attempting this with a straight face, but I don’t remember the CFTC having authority over the ‘derivative market’ of LeBron James rebounds…. I will use every resource within my disposal as governor of the sovereign state of Utah, and under the Constitution of the United States to beat you in court.”
Others such as Robinhood CLO (and former SEC Commissioner) Dan Gallagher stated that “we support Chairman Selig’s comments defending the CFTC's exclusive authority to regulate prediction markets. The policy choices made now will determine whether prediction markets have the ability to thrive and remain accessible to all.”
If US regulators won’t hold auditors to account, will the courts?
Investor advocates have been dismayed by the Trump administration’s approach to regulation of auditing firms. It has slashed the budget of the Public Company Accounting Oversight Board, the main regulatory body, and installed a career auditor at its helm, prompting some to claim that foxes are now guarding the hen house.
The Securities and Exchange Commission, which oversees the PCAOB, counters that it is only returning the regulator to its core mission, with less of a fixation on paperwork errors by auditors and more time spent pursuing consequential wrongdoing and systemic flaws. In other words, the things that really matter to investors.
We will see which enforcement actions the new PCAOB decides to pursue, but audit firms, lawyers and investor groups are all pretty sure of one thing: there will be fewer of them. That puts a focus on what is happening in the US courts, where investors and accounting firms tussle over when and how auditors can be held legally responsible for fraud and errors in the financial statements they certify.
👉 The article by the FT’s Stephen Foley adds that one key hurdle is “whether investors even have standing to sue, given the auditor is engaged not by them but by the company itself. Investors might need to prove ‘privity’, a relationship equivalent to a contract, which can be tough if they never communicate directly with the auditor. A trio of cases in recent months has touched on the issue….”
The Rise of the Celebrity “Prison-fluencer”
It’s not uncommon for prisoners to plead their cases from the slammer (Barbara Walters built a career out of that)…. […]
But these jailbirds aren’t using their own fingers to fire off missives or create clones. While civilians surf the world wide web like an information superhighway, one prominent lawyer compared inmates’ internet access to a one-lane dirt road. Since their computer privileges are highly restrictive, experts believe Holmes and others hand over social media management to advisers outside of prison.
“The reality is they have teams and people. They’re trying to keep their voices alive,” alleges ex-Congressman George Santos, whose seven-year sentence was commuted by President Trump. “I had nine people delegated to my account.”
👉 “Prison-fluencer” 👍
This article seems to confirm Ted Frank’s comment here that inmates such as Sam Bankman-Fried and Elizabeth Holmes are not tweeting themselves, but have hired people to tweet from their accounts.
The latest approach by SBF (and his tweet-team?) appears to be to get on President Trump’s good side for a pardon, which I saw someone on X refer to as a “Jail Mary.” 🤣
Wall Street Wants to Bring Election Bets Into Brokerage Accounts
Roundhill Investments has asked the US Securities and Exchange Commission for permission to launch six ETFs that would let investors wager on US election outcomes through standard brokerage accounts — the most ambitious attempt yet to bring prediction markets into mainstream finance.[…]
Each fund would hold event contracts, a class of derivatives that settle at either $1 or $0. Pick the winning party and the contract pays out. Pick wrong and the contracts settle at zero, but the fund rolls into the next election cycle and resets — presidential ETFs from 2028 into 2032, congressional funds from 2026 midterms into 2028.