Labor & Employment Alert

On May 21, 2026, California Governor Gavin Newsom signed Executive Order N-6-26 (the Order), directing several state departments and agencies to prepare California’s workforce, small businesses and communities for what he describes as “the economic disruption that artificial intelligence will bring to the workforce.” The Order, which focuses on anticipating and mitigating labor market impacts rather than regulating artificial intelligence (AI) systems directly, establishes policy review processes and deliverables extending into 2027.

The Order does not have the force of law, but it is further evidence of California’s intent to stake out a leadership position on AI policy. As in prior AI-related executive orders, Governor Newsom proclaimed here that “no state has taken more aggressive action to strengthen the safety, security, and consumer privacy of technology and online platforms, including AI.” The Order mobilizes state agencies, labor experts, universities and industry stakeholders to develop policy recommendations, gather data and identify early indicators of workforce disruption associated with AI adoption.

The Order’s Directives

• Within 90 days, the Labor and Workforce Development Agency (LWDA), the Governor’s Office of Business and Economic Development (GO-Biz), and the Department of Finance are to review academic research identifying the potential impact of “technological shifts” on the workforce, including “AI’s impact on California’s labor market and potential disproportionate impacts on demographic groups.” These agencies are to report on “best practices … on early economic warning signals of future labor disruptions.”
• Within 90 days, the Employment Development Department (EDD) is to launch a dashboard applying Unemployment Insurance data to measure AI’s impacts on employment across various sectors.
• Within 180 days, LWDA is to assess how California’s Worker Adjustment and Retraining Notification Act can serve as an early-warning mechanism for “emerging industry trends.”
• Within 180 days, LWDA is to review and provide recommendations to the Governor concerning:
• Policies and practices that “provide displaced workers with a safety net, including severance and other forms of compensation such as stock or other forms of equity”;
• “[E]xpanding awareness” of employment insurance programs, including the state’s Work Share program, which provides “employment stability payments”;
• Service opportunities for “those experiencing long-term unemployment and other potential employment disruptions”; and
• “[O]ptions for improving efforts to connect unemployed workers to opportunities for training and upskilling,” including through the Workforce Pell Grant Program.
• By October 15, 2026, LWDA is to review how the collective bargaining process is making use of new technologies like AI, including “how worker voice is incorporated in adoption of emerging technologies.”
• By October 15, 2026, LWDA is to review existing workforce training programs “to ensure programs are fit for purpose and targeted towards growing industries and professions” and the EDD shall “develop an AI playbook to expand dislocated worker strategies for occupations exposed to AI.”
• By October 15, 2026, in consultation with a variety of academics and experts, the Government Operations Agency is to suggest methods to “alter incentive structures and increase [the] likelihood of AI development and deployments that advance the public good and address critical problems and emerging opportunities facing society.” These recommendations may include “public-private partnerships, voluntary or mandatory programs that direct a portion of revenue generated by AI companies to support beneficial deployments of AI that otherwise would not be pursued based solely on market incentives, and securing dedicated access to computing power for research and development of AI that meets specified criteria for advancing the public good.”
• Twice yearly through the end of 2027, the EDD is to include, as part of the California Labor Market Review, “a summary of feedback from businesses about the role of technological adoption in determining hiring or workforce decisions.”
• The Jobs First Council is to work with “local leadership on opportunities to support regions facing systemically high unemployment.”
• GO-Biz and the Governor’s Office of the Small Business Advocate are to “evaluate and, where appropriate, support opportunities to expand and enhance worker ownership models to support broad-based capital growth and build wealth from productivity gain among workers.” These opportunities may include “exploring any existing regulatory barriers to employee-owned company structures, as well as best practices leveraged in other states to provide direct and indirect economic support for the formation of or conversion to employee-owned companies.”
• The Governor’s Office of Business and Economic Development is to engage in initiatives to facilitate business adoption of “opportunity AI,” a term left undefined in the Order. These initiatives may include education as to the use of “emerging technology, including AI, to support competition and broad-based economic growth while supporting workforce training and retention.”
• Higher education institutions, in coordination with the California Education Interagency Council, are to:
• Evaluate and build out “existing measures to support a workforce able to leverage the opportunities presented by technologies in the future while mitigating risks and potential harms”; and
• “Evaluate opportunities to include on-the-job training as part of their comprehensive academic offerings.”
• Several departments and agencies are to leverage the Office of Data and Innovation’s “single online platform to enable Californians to more easily navigate government services and, ultimately, help Californians identify all social services for which they may be eligible.”
• All California departments and agencies named in the Order are to incorporate, “to the extent practicable, the findings from Engaged California’s newly launched engagement around AI into all of the above work streams.”

Legislative and Regulatory Context

The Order arrives amid a rapidly evolving AI regulatory landscape at both the state and federal levels. A growing patchwork of state AI laws and executive orders—including measures in California, Connecticut, Illinois, Colorado, New York City, and Texas—now differ in enforcement, scope, and notice and audit obligations, creating a complex compliance matrix for multi-state employers. For more detailed coverage of state-specific AI developments in 2026, please refer here.

California Legislative Activity

In California, legislators continue to advance proposals focused on the use of AI in the workplace. On May 19, the California Senate approved SB 947 (the “No Robo Bosses Act”), which would impose guardrails on employer use of automated decision systems (ADS). This iteration of the No Robo Bosses Act revises the 2025 No Robo Bosses Act (SB 7), which Governor Newsom vetoed out of concern that the bill was “overly broad” and “unfocused.” As revised, the bill defines an ADS as “any computational process derived from machine learning, statistical modeling, data analytics, or artificial intelligence that issues simplified output, including a score, classification, or recommendation, that is used to assist or replace human discretionary decision-making and materially impacts natural persons.” If enacted, the bill would generally:

• Prohibit employers from relying solely on ADS to make disciplinary, termination, or deactivation decisions, and require human review with independent corroboration before taking adverse employment actions based on ADS outputs;
• Require employers to provide affected workers with written notice when the employer primarily relied on an ADS to make a disciplinary, termination, or deactivation decision, including contact information for a human reviewer and information about the worker’s right to access their data;
• Provide workers with the right to request a copy of their own data used by an ADS to make disciplinary, termination, or deactivation decisions (limited to one request every 12 months);
• Prohibit employers from using ADS to infer a worker’s protected status or conduct predictive behavior analysis with the intention of using the analysis to make an employment-related decision; and
• Prohibit employers from predicting or taking adverse action against a worker for exercising their legal rights.

At the time of writing, the No Robo Bosses Act remains pending in the California Assembly.

Federal-State Dynamics

The patchwork of state-level developments expands the distinctions between state and federal approaches to AI policy. Together, these developments leave businesses to navigate an increasingly fragmented and evolving AI regulatory landscape.

While federal direction remains uncertain, the regulation of AI is currently largely happening at the state level. At present, there is no federal statute specifically governing the use of AI in employment, and the federal government has not yet significantly pushed forward its previously stated plans for AI deregulation. As covered by Akin previously, a December 2025 White House executive order directed the Department of Justice (DOJ) to challenge “burdensome” state AI laws, and a March 2026 federal framework recommended preemption of such laws, but the DOJ has challenged just one such law to date, and no preemption legislation has yet been enacted.

At the same time, the White House’s most recent executive order on AI, titled “Promoting Advanced Artificial Intelligence Innovation and Security,” suggests the federal government is warming to the regulation of AI in certain arenas. In its June 2, 2026, order, the White House affirmed that it “refuse[s] to stifle” American AI innovation “with overly burdensome regulation” while also establishing a framework for the developers of “frontier models” (i.e., the most advanced AI models) to interface with the federal government prior to public release regarding potential cybersecurity risks. In keeping with the Trump Administration’s stated practice of “slashing the bureaucratic constraints” on American AI developers and researchers, this framework is voluntary. Nevertheless, this order marks a pivot in the administration’s decidedly deregulatory approach to date.

For further coverage on AI developments at both the state level and the White House, please see our prior alert here.

Takeaway for Employers

• Workforce-focused AI policy is accelerating in California, while the federal government has continued its noninterventionist stance. Governor Newsom’s Order signals California’s increasing focus on the effects of AI on the labor market. The Order builds on other recent California employment legislation, including revised California Consumer Privacy Act regulations regarding the use of ADS for “significant” employment decisions (covered by Akin here) and the No Robo Bosses Act, reflecting the state’s continued focus on worker protections in the context of technological change.

Looking Ahead

• We expect California agency recommendations and reports in connection with this Order to arrive between August and November of this year. 
• The California Legislature has until August 31, 2026, to pass the No Robo Bosses Act and Governor Newsom has until September 30, 2026, to sign or veto it if passed.
• We will report on these developments as they become available.
• If you have questions as to how any of these developments may affect your business, we welcome you to reach out to a member of Akin’s Labor & Employment team.

Akin partner-in-charge of the firm’s London office Ezra Zahabi has been named to the “Fifty Most Influential Lawyers 2026” list by Financial News. 

The annual list recognizes leaders of the UK’s largest firms, London and European heads of US legal powerhouses and finance lawyers leading top practices. Honorees are selected based on the strength of their teams, the caliber of their client work, and their broader influence on the legal sector. 

A new entry to this year’s list, Ezra is noted as a financial regulation specialist, advising some of the world’s largest asset managers on UK and EU legislation, including the FCA Handbook, MiFID II and the Alternative Investment Fund Managers Directive. 

Ezra’s profile highlights her recent work including providing regulatory advice to a group of Class A creditors in the restructuring of Thames Water, as well as advising Carlyle in its role as lender to the holding company of The Very Group during its administration sale.

EU Policy Alert

On June 3, 2026, the European Commission released the EU Tech Sovereignty Package. Taken together, its constituent measures represent an effort to reduce reliance on US and other non-EU technology and digital services and to ensure the development of a domestic, low-carbon lifecycle for cutting-edge digital technology. Currently, the EU is heavily reliant on non-EU digital products, services, infrastructure and intellectual property. Among other things, the package aims to further onshore semiconductor manufacturing in the EU, incentivize the development of a domestic European AI industry, provide incentives, including on the demand side, for chips and other technology, and reduce reliance on foreign countries for critical infrastructure and technologies. The package is composed of two legislative proposals (the Chips Act 2.0 and the Cloud and AI Development Act) and two initiatives (the EU Open Source Strategy and Strategic Roadmap for Digitalisation and AI in Energy).

Key Provisions

Chips Act 2.0

The original EU Chips Act of 2023 focused on expanding semiconductor manufacturing and research capacity in the EU. However, the EU still reportedly produces only 10% of global semiconductors and almost none of the world’s leading AI chips. Chips Act 2.0 represents a robust supplement to the 2023 Act and aims to address three key concerns: overdependence on third countries for semiconductor design and manufacturing, insufficient crisis preparedness capabilities and the lack of EU-based downstream industries to absorb chip production. Its central goal is to facilitate new strategic projects along the advanced technology value chain through increased private and public investment and a simplified, accelerated approval procedure. Among other things, the bill includes the following proposals:

• A shift of existing EU policy towards ensuring that chips made in the EU are produced at a greater scale and are also deployed within EU AI and cloud infrastructure.
• Creating alignment with other EU cloud and AI leadership initiatives, including support for AI-optimized servers, accelerators and cloud infrastructure built on EU-designed chips.
• Establishing new EU-level initiatives covering AI chips, cloud stacks and data center technologies, including targets for energy efficiency.
• Stimulating demand for and supply of domestic European chips. The bill would establish Demand Accelerators that align new production with industry needs. It would also boost funding for "strategic" projects that fill gaps across the semiconductor value chain.
• Providing support for research, innovation and skills development in the semiconductor industry.
• Accelerating permitting procedures with a target of maximum one-year approvals for new chip manufacturing facilities.

Cloud and AI Development Act (CADA)

CADA responds to the unprecedented demand for computing capacity driven by AI and digital services. As noted by the European Commission, data center capacity in the EU has not kept pace with growing demand, and the capacity that does exist is concentrated in a few European hubs. For example, Frankfurt, Paris, Amsterdam and Dublin account for 65% of the EU data center market. This has led to dependence on foreign cloud and AI providers throughout the EU. Linked to Chips Act 2.0 from the demand side, CADA attempts to stimulate demand for advanced chips and address this shortage by incentivizing the construction of data centers. The legislation aims to achieve this goal by streamlining and simplifying permitting, integrating data centers with electricity systems and creating designated data center acceleration zones, while at the same time laying down requirements for EU-origin content in public procurement for AI and cloud services. The bill’s three primary objectives are to support research and development, accelerate the deployment of data center capacity and support EU data center autonomy.

EU Open Source Strategy

This strategy moves beyond open source as a cost-saving tool and frames it as strategic infrastructure. It requires public sector bodies to consider open-source solutions and share reusable software, while also establishing EU-level tools to support reuse. As with other measures in the package, this strategy is driven by concern that the EU digital economy is overly dependent on a small group of foreign technology companies and producers. It aims to increase transparency, reduce dependence on specific vendors and companies and create an overarching framework for Europe’s digital infrastructure.

Strategic Roadmap for Digitalisation and AI in Energy

This measure is the EU's effort to modernize its energy system by embedding digital technologies, data sharing and AI into electricity networks, renewable energy systems, buildings and industrial energy use. The EU hopes that the rollout of European sovereign AI solutions will facilitate and improve the decarbonization process, which in turn supports data centers. The roadmap also explores locating data centers next to renewable energy generation plants and other measures to mitigate environmental risks posed by enormous data center energy consumption. The roadmap aims to avoid greenwashing by tying data center expansion to measurable efficiency metrics.

Next Steps

Chips Act 2.0 and CADA will now move into the ordinary legislative process. Both the Council (EU member states) and the European Parliament will negotiate amendments and eventually a final version through a process that will take months. The timing of final adoption will depend on the legislative process, but current planning assumptions suggest adoption in 2027.

Impact on Businesses

The EU Tech Sovereignty Package represents an acceleration in Europe’s decoupling from US technology and digital services. While the package could support a budding EU chip manufacturing and data industry, it could also disrupt current supply chains and impose burdensome new regulations on businesses. This creates both opportunities and risks across a wide range of companies and sectors in the transatlantic market, and stakeholders should carefully monitor and purposefully engage as the draft legislation is negotiated.

Akin national security & global investigations partner Ryan Fayhee appeared on CBS Evening News to discuss the case of wrongfully detained Iranian-American journalist Reza Valizadeh. Watch the clip here. 

Ryan is also quoted by CBS News in an article titled, “From inside Iran's Evin Prison, journalist Reza Valizadeh pleads for medical help for him and other American captives.” The article examines Valizadeh’s recent plea to the U.S. government to obtain medical help for him and other Americans detained in Iran's Evin Prison. 

Ryan emphasizes the need for the U.S. government to acknowledge that Iran is holding U.S. citizens and to ensure their release is being discussed as part of negotiations between the U.S. and Iran. 

“I'm hopeful that they'll begin to share with the public what steps they're taking to recover Reza,” he said. 

Ryan has worked pro bono on behalf of Reza, who has been wrongfully detained in Iran since September 2024. 

The Supreme Court unanimously held that for a complaint of induced infringement, a patent owner must allege that the accused infringer took affirmative, not passive, steps to encourage direct infringement. Thus, where a generic drug has a skinny label, to induce infringement of the carved-out patented use of the drug, the generic company must have taken steps that were designed to cause others to perform the patented use, not just steps that could cause such conduct.

In Hikma v. Amarin, branded-drug company Amarin initially received approval for Vascepa^® to treat severe hypertriglyceridemia. The original label disclosed that the drug’s effect on cardiovascular mortality and morbidity in patients with severe hypertriglyceridemia had not been determined (“CV Limitation of Use”).  The FDA later approved Vascepa^® for reducing cardiovascular risk in certain patients already taking statins (“CV indication”). Amarin revised Vascepa^®’s label to remove the CV Limitation of Use. Generic-drug company Hikma sought and obtained FDA approval for a generic version of Vascepa^®, but only for the unpatented indication to treat severe hypertriglyceridemia, i.e., Hikma had carved out the patented CV indication from its proposed generic drug and had a skinny label.

Amarin filed a complaint in the District of Delaware, alleging that Hikma had induced infringement of the patented CV indication notwithstanding the skinny label. Specifically, Amarin alleged that Hikma induced infringement through the combined effect of statements in its skinny label, patient information leaflet, website, and prelaunch press releases. The District Court dismissed the complaint for failure to state a claim. On appeal, the Federal Circuit reversed, finding it was “at least plausible that a physician could read” the relevant statements “as an instruction or encouragement to” infringe.

The Supreme Court rejected the Federal Circuit’s approach, emphasizing that the relevant question is not whether healthcare providers could plausibly read those statements as encouraging infringement, but whether Hikma itself took “affirmative” steps to bring about infringement.

The Court listed three elements required to plead induced infringement: (1) a third party has directly infringed the patent; (2) the inducer knew that the induced acts constitute patent infringement; and (3) the inducer took “active steps” to encourage direct infringement. The Court focused on the third element and held that “inducement must involve the taking of affirmative, as opposed to passive, steps to bring about the desired result of patent infringement.” The Court explained that inducement cannot be based only on “vague” language “combined with speculation about how others may act.” The Court distinguished statements that could induce from those that are designed to induce. But the Court stopped short of requiring that the active inducement must be “express,” as Hikma had argued, and instead acknowledged that a party can induce infringement “through implicit encouragement.” The key, according to the Court, was that inducement must be “clear” to the relevant audience and “affirmative.”

Applying these principles, the Court held that Amarin failed to allege “more than a sheer possibility” that Hikma actively induced infringement because Amarin failed to establish that Hikma took any affirmative steps to encourage infringement.

First, statements alleged to be part of Hikma’s inducement had an “obvious alternative explanation.” The Court explained that Hikma had a lawful explanation for omitting the CV Limitation of Use in its label and retaining information about a clinical study involving some patients who were taking statins who were suffering from severe hypertriglyceridemia (the approved indication): The generic label’s text, by statute, must be identical to the reference drug label except for the carved-out use. Similarly, Hikma’s description of its product as “generic Vascepa” in the prelaunch press releases was, according to the Court, “normal industry practice.” The Court declined to penalize adherence to the law and industry standards.

Second, the Court stated that “mere omissions, inactions, or nonfeasance” were insufficient to allege active inducement. While one could imagine a physician reading between the lines and drawing a conclusion based on Hikma’s label and statements, Amarin needed to allege affirmative conduct by Hikma. The Court rejected finding inducement based on a contingent chain of events or attenuated conduct.

Third, the allegations needed to plausibly constitute steps to induce infringement. It was not sufficient that the alleged action could be plausibly understood to induce infringement. As such, for example, Hikma’s mention of an “AB” rating for the generic drug (which signals therapeutic equivalence only under the conditions specified in the generic’s label) was not plausibly designed to encourage others to infringe.

Finally, the Court found that it was too speculative that a physician would read Hikma’s press releases concerning sales attributable to both indications and then be encouraged to prescribe the generic drug for the patented indication.

In sum, in the absence of specific instructions to practice the patented indication, Amarin attempted to gather facts that it hoped would amount to a plausible allegation of induced infringement. However, the Court found that these allegations were not enough to meet the pleading standards. The decision emphasized that pleading inducement requires a showing that a generic manufacturer took clear, affirmative steps to encourage the patented use. Such a showing need not be explicit, but it cannot rely solely on speculation about how others, such as healthcare providers, may act.

Hikma Pharms. USA Inc. v. Amarin Pharma, Inc., No. 24-889, 2026 WL 1593307 (U.S. June 4, 2026)

IAM has recognized 11 Akin intellectual property (IP) lawyers in the 2026 edition of the IAM Patent 1000, a guide of leading private practice patent lawyers in the United States.  

The firm’s Pennsylvania office is ranked as a “Gold Firm” for its litigation work. IAM noted that the Akin team in Philadelphia “is well equipped to handle complex patent disputes, particularly those involving technically sophisticated subject matter.” The following Philadelphia partners were recognized:   

• Steven Maslowski, head of the firm’s IP practice, is noted for his “experienced courtroom leadership.” 

• Rubén Muñoz, partner-in-charge of the Philadelphia office, is noted for his close involvement “in shaping litigation strategy and expert coordination.” 

• Matthew Pearson is recognized for his “strong technical depth and case management.” 

• Jonathan Underwood is recognized for his “focus on complex patent litigation and strategic advisory work.” IAM also notes his “ability to manage sophisticated disputes and contribute to effective, business-aligned litigation strategies." 

In Washington, D.C., the firm is also ranked in the litigation category. IAM recognizes the firm’s lawyers for being “particularly adept at coordinating multi-forum strategies across district courts, the ITC and PTAB, allowing clients to pursue aligned and efficient outcomes in high-value matters.” The following partners were recognized:   

• Cono Carrano is praised for his focus on “patent litigation involving complex technologies” and “his ability to translate intricate technical subject matter into clear and persuasive arguments, supporting clients through all stages of contentious proceedings.”  

• David Vondle is identified as “a key figure” due to his “extensive experience in patent litigation alongside a transactional perspective that informs his strategic approach."  

• Brandon Rash is noted for his contributions “to the team’s litigation strength” due to his “methodical and detail-oriented approach.”  

• Rachel Elsby is recognized for “her practical, solutions-focused mindset,” while working “closely with clients to manage risk and drive efficient resolutions in contentious matters.” 

In Texas, the firm is also ranked for its litigation work, with IAM noting the practice as a “go-to for high-stakes patent litigation.” Daniel Moffett is recognized as the leader of “the firm’s Texas IP practice” and is noted as a “seasoned trial lawyer known for handling complex, multi-forum disputes.”  

Michael Kahn and Golda Lai are also recognized for their patent work. 

(Dubai) – Akin’s Dubai capital markets team advised Emlak Konut Gayrimenkul Yatırım Ortaklığı A.Ş. (“Emlak Konut”), Türkiye’s leading real estate investment trust, on its debut international issuance of $650 million lease certificates due 2031. The transaction represents the first-ever sukuk issuance by a Turkish real estate investment trust. 

The issuance was conducted through Emlak Konut’s wholly owned asset leasing company, Emlak Konut Varlık Kiralama A.Ş., and forms part of the company’s strategy to diversify its funding base and support its large-scale residential development projects across Türkiye. The offering was listed on the London Stock Exchange’s International Securities Market. 

The transaction was significantly oversubscribed, with an orderbook exceeding $1.85 billion (excluding joint lead manager interest), reflecting strong investor demand. It also underscores the continued development of Shariah-compliant financing solutions for asset-heavy issuers and highlights the growing role of sukuk as a financing tool for real estate platforms and infrastructure-aligned issuers in emerging markets. 

The Akin team was led by capital markets partner Rizwan Kanji and included capital markets counsels Nicola Minervini and Sahar Abas. 

Akin is a leading international law firm with more than 1,000 lawyers in offices throughout the United States, Europe, Asia and the Middle East. 

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Chambers and Partners, in its Chambers USA 2026 Guide, has recognized more than 100 Akin lawyers as leaders in their respective areas of practice, as well as more than 50 practices across the publication’s nationwide and state-level categories. 

Nationwide, the ranked lawyers are as follows, with ranked practices in bold: 

Accountant and Auditor Liability 

• Claudius B. Modesti 

Appellate Law 

• Pratik A. Shah 

Artificial Intelligence 

• Natasha G. Kohne 

Bankruptcy/Restructuring: The Elite 

Bankruptcy/Restructuring 

• Ira S. Dizengoff 

• Michael S. Stamer 

Capital Markets: Debt & Equity: Central United States 

• John Goodgame 

Climate Change 

• Kenneth J. Markowitz 

• Stacey H. Mitchell 

Corporate Crime & Investigations: The Elite 

Corporate/M&A: Highly Regarded 

Energy Transition 

Energy: Electricity (Regulatory & Litigation) 

• Stephen J. Hug 

Energy: Oil & Gas (Regulatory & Litigation) 

• Emily P. Mallen 

Energy: Oil & Gas (Transactional) 

• Charlie Ofner 

• Cole Bredthauer 

• John Goodgame 

• Wesley P. Williams 

False Claims Act 

• Robert S. Salcido 

FCPA 

• Gerry M. Moody, Jr. 

Government Contracts: The Elite 

Government Contracts 

• Angela B. Styles 

• Scott M. Heimberg 

Government Relations: Congressional Investigations 

• Miranda A. Dore 

Government Relations: Federal 

• Brian Arthur Pomper 

• Ed Pagano 

• G. Hunter Bates 

• Jeffrey D. McMillen 

Healthcare: Highly Regarded 

Hedge Funds 

• Barbara Niederkofler 

• Ira Phillip Kustin 

• Max Karpel 

International Arbitration: Arbitrators 

• Dr. Kabir Duggal C.Arb 

International Trade: CFIUS Experts 

• Christian C. Davis 

• Katherine P. Padgett 

International Trade: Customs 

• Lars-Erik A. Hjelm 

• Suzanne Kane 

International Trade: Export Controls & Economic Sanctions: The Elite 

International Trade: Export Controls & Economic Sanctions 

• Anne E. Borkovic 

• Jaelyn Edwards Judelson 

• Jonathan C. Poling 

• Kevin J. Wolf 

• Ryan P. Fayhee 

• Shiva Aminian 

• Susan M.C. Kovarovics 

• Thomas J. McCarthy 

International Trade: Trade Remedies & Trade Policy 

• Bernd G. Janzen 

• Matthew R. Nicely 

• Stephen S. Kho 

• Yujin Kim McNamara 

Investment Funds: Investor Representation 

• Prakash H. Mehta 

Investment Funds: Regulatory & Compliance 

• Jason M. Daniel 

Labor & Employment 

Litigation: General Commercial: Highly Regarded 

Native American Law 

• Donald R. Pongrace 

• Jason Travis Hauter 

• Katie Brossy 

Political Law 

• Kenneth A. Gross 

• Melissa L. Laurenza 

Privacy & Data Security: Highly Regarded 

Privacy & Data Security: Cybersecurity 

• Evan D. Wolff 

• Natasha G. Kohne 

Private Credit 

• Jaisohn Im 

Private Equity: Fund Formation 

• Blayne A. Grady 

• Dennis P. Pereira 

• Fadi G. Samman 

• James A. Deeken 

• Prakash H. Mehta 

• Wendy Dodson Gallegos 

Private Equity: Secondaries 

• Fadi G. Samman 

Projects 

• Ron I. Erlichman 

Projects: Renewables & Alternative Energy 

• April T. Kim 

• Ike Emehelu 

• Shariff N. Barakat 

Space 

• Thomas J. McCarthy 

State Attorneys General 

• Mark R. Herring 

Tax: Corporate & Finance 

Tax: Fraud 

• Robert S. Fink 

In California, the ranked practice areas and lawyers are: 

Labor & Employment: Highly Regarded 

Labor & Employment 

• Margaret G. Maraschino 

Litigation: General Commercial 

• Neal Ross Marder 

Litigation: White-Collar Crime & Government Investigations 

• Peter I. Altman 

Media & Entertainment: Transactional 

• Alissa Miller 

• Christopher Staton Spicer 

• Vanessa Roman 

Native American Law 

• Jenny Patten Magallanes 

In Illinois, the ranked lawyers are: 

Corporate/M&A 

• Jason P. Wagenmaker 

In Massachusetts, the ranked practice areas and lawyers are: 

Banking & Finance 

Employee Benefits & Executive Compensation 

• Wells W. Miller 

In New York, the ranked practice areas and lawyers are: 

Bankruptcy Litigation 

• Abid Qureshi 

Bankruptcy/Restructuring: The Elite 

Bankruptcy/Restructuring 

• Abid Qureshi 

• Arik Preis 

• Ira S. Dizengoff 

• Meredith A. Lahaie 

• Michael S. Stamer 

• Philip C. Dublin 

Corporate/M&A: Highly Regarded 

Corporate/M&A: Shareholder Activism 

• Douglas A. Rappaport 

Intellectual Property: Patent 

• Michael P. Kahn 

Labor & Employment: Highly Regarded 

Labor & Employment 

• Jessica Taub Rosenberg 

• Richard J. Rabin 

Labor & Employment: Transactional 

Litigation: General Commercial: Highly Regarded 

Litigation: Securities 

• Douglas A. Rappaport 

Litigation: White-Collar Crime & Government Investigations: The Elite 

Litigation: White-Collar Crime & Government Investigations 

• Anne M. Evans 

• James Joseph Benjamin Jr. 

• Katherine R. Goldstein 

• Michael A. Asaro 

• Parvin Daphne Moyne 

Securities: Institutional Plaintiffs: Mainly RMBS Litigation 

• Uri A. Itkin 

Tax 

• Stuart E. Leblang 

In Pennsylvania, the ranked practice areas and lawyers are: 

Intellectual Property 

• Matthew A. Pearson 

• Rubén H. Muñoz 

• Steven D. Maslowski 

In Texas, the ranked practice areas and lawyers are: 

Banking & Finance 

• Chad Nichols 

Bankruptcy/Restructuring 

• Marty L. Brimmage, Jr. 

• Sarah Link Schultz 

Capital Markets: Debt & Equity 

• John Goodgame 

Corporate/M&A: The Elite 

Corporate/M&A 

• John Goodgame 

• Thomas H. Yang 

• Wesley P. Williams 

Intellectual Property 

• Daniel L. Moffett 

Litigation: General Commercial 

• Elizabeth M. Scott 

• Lacy M. Lawrence 

Litigation: Securities 

• M. Scott Barnard 

Private Equity: Buyouts 

• Wesley P. Williams 

Real Estate 

Tax 

• Alison L. Chen 

• Julia Pashin 

In Washington, D.C., the ranked practice areas and lawyers are: 

Bankruptcy/Restructuring 

• James Savin 

• Kate Doorley 

• Scott L. Alberino 

Environment 

• Stacey H. Mitchell 

Environment: Mainly Transactional 

• David H. Quigley 

Healthcare 

• John R. Jacob 

• Kelly M. Cleary 

• Robert S. Salcido 

Healthcare: Pharmaceutical/Medical Products Regulatory 

• Nathan A. Brown 

Intellectual Property: Litigation 

• Cono A. Carrano 

• Rachel J. Elsby 

Labor & Employment 

• Robert G. Lian, Jr. 

Litigation: General Commercial 

• Anthony T. Pierce 

Litigation: White-Collar Crime & Government Investigations 

• Charles F. Connolly 

• Claudius B. Modesti 

Telecom, Broadcast & Satellite 

• Jennifer L. Richter 

For further details on the firm’s rankings and commentary, please click here. 

White Collar Defense & Government Investigations Alert

Key Takeaways

• The U.S. Attorney’s Office for the Southern District of New York (SDNY) and the Commodity Futures Trading Commission (CFTC) have brought parallel criminal and civil charges against a Google employee for trading on nonpublic information in prediction markets.
• This action, together with the SDNY’s and CFTC’s cases last month alleging insider trading by a U.S. Army soldier in event contracts relating to the ouster of Venezuelan President Nicolás Maduro, reflects a coordinated enforcement effort targeting misuse of material nonpublic information in prediction markets.
• These cases signal that misuse of both corporate and government information may give rise to commodities fraud and wire fraud liability when used to trade event contracts.
• Market participants and business organizations, whether publicly traded or privately held, should reassess their compliance frameworks to address employee access to nonpublic information and insider trading in prediction markets.

Overview

On May 27, 2026, the SDNY and CFTC filed parallel actions against Michele Spagnuolo, a software engineer employed by Google, alleging that he misappropriated confidential corporate information and used it to trade on a decentralized prediction market platform. According to the DOJ’s and CFTC’s complaints, Spagnuolo accessed nonpublic information relating to Google’s “Year in Search 2025” data through internal corporate systems. The complaints allege that this information—reflecting the ranking of the most searched individuals during the year—was commercially valuable, subject to strict confidentiality controls and not available to the public prior to its official release. Spagnuolo allegedly used that information to trade event contracts relating to Google’s year-end search rankings, including contracts such as “Will Pope Leo XIV be the #1 searched person?” and “Will Donald Trump rank in the Top 5 most searched?”

The government alleges that Spagnuolo engaged in extensive trading activity over a multiweek period, placing trades across numerous markets with near-perfect predictive success. He is alleged to have risked approximately $2.7 million on these trades and generated approximately $1.2 million in profits. The complaints further allege that, after realizing profits, Spagnuolo used cryptocurrency transfers to conceal the source and ownership of his proceeds.

Both the SDNY and CFTC charged Spagnuolo under Section 6(c)(1) of the Commodity Exchange Act (CEA) and CFTC Regulation 180.1, the principal antifraud provisions of the CEA and regulations. In addition, the SDNY’s criminal complaint charges the same conduct as wire fraud and brings an additional charge for money laundering.

Coordinated Cross-Agency Enforcement Efforts

The Spagnuolo matter follows on the heels of the CFTC’s and SDNY’s parallel actions against Gannon Ken Van Dyke, a U.S. Army soldier who was charged in April 2026 for trading event contracts relating to the ouster of Venezuelan President Nicolás Maduro, while in possession of material nonpublic information (MNPI) gained through his military service. Together, these cases show that the agencies are working together to prosecute insider trading in prediction markets both criminally and civilly.

Both the Spagnuolo and Van Dyke cases rest on a common legal theory that sounds in fraud: individuals who obtain material, nonpublic information through a position of trust and confidence may not use that information to trade event contracts for their own personal benefit. At the same time, the cases differ in important respects. Most notably, in Van Dyke, the information at issue consisted of classified government information, which—as we recently explained in an article published in Reuters Legal News—may not qualify as “property” for purposes of the federal wire fraud statute because it does not have commercial value. In Van Dyke, both agencies charged violations of Section 4c(a) of the CEA, which specifically addresses misuse of government information and therefore is not operative in the Spagnuolo case.

In addition, Spagnuolo shows the government’s ability to prosecute misconduct occurring outside the territorial boundaries of the United States. Whereas Van Dyke’s conduct occurred within the U.S., Spagnuolo is alleged to reside in Switzerland and is not alleged to have conducted any activities in the U.S. or to have traded against any counterparty who was located in the U.S.

What This Means for Market Participants

The Spagnuolo and Van Dyke cases have significant implications for institutional investors, public companies and other market participants.

First, these cases underscore that federal authorities in the U.S. are aggressively pursuing insider trading in prediction markets. The agencies have each filed two such cases within the last month, and it is likely that other cases are under investigation. Spagnuolo and Van Dyke reflect the application of traditional insider trading principles—rooted in duties of trust and confidentiality—to trading in event-based derivatives, including contracts traded on decentralized platforms on which U.S. traders are prohibited.

Second, the cases demonstrate that a wide range of information, including corporate data such as internal metrics, as well as government or regulatory information, may be material to derivatives pricing if it bears on the likelihood of an event outcome. In the Spagnuolo matter, for example, the underlying Google “Year in Search” data would not typically be viewed as MNPI for purposes of trading in Alphabet securities, yet it became economically material when tied to the pricing of event-based contracts. The proliferation of event contracts has dramatically expanded the boundaries of potential MNPI, and these boundaries will shift as new event contracts are offered and others are discontinued. Firms should therefore evaluate internal controls around access to confidential internal information—especially when that information may be the subject of an event contract—and be aware of all event contracts that relate to company-specific information.

Third, a defendant’s location overseas will not necessarily prevent U.S. criminal and civil agencies from seeking to prosecute insider trading. Where a defendant is located abroad, agencies may bring charges if the misconduct involved U.S.-based trading platforms, blockchain infrastructure located in the U.S. or other direct or significant connections with activities in, or effects on, U.S. commerce.

Finally, as demonstrated by the cases brought to date, insider trading in prediction markets is unlikely to fit within the classical theory of insider trading, which states that corporate insiders breach their fiduciary duties to a company’s shareholders by trading in the company’s securities while in possession of MNPI. Instead, these cases will likely rest on a misappropriation theory, which requires misappropriation of MNPI in breach of duty to the source of the information. As a result, corporate policies governing confidentiality, data access and employee trading will play an increasingly important role in determining when trading in possession of company information could give rise to liability for insider trading.

Considering these developments, institutional investors, public companies and other market participants should consider whether existing compliance frameworks adequately address trading in prediction markets. Participants should consider expanding policies governing personal trading and incorporating emerging enforcement theories into training and surveillance programs.

Directs executive branch agencies to expand and implement Schedule Policy/Career, an excepted-service personnel category for career federal employees in policy-influencing positions. Transfers designated positions into Schedule Policy/Career, making employees in those roles subject to streamlined removal procedures for poor performance or misconduct while retaining merit-based hiring requirements. Amends civil service regulations, requires agencies to identify additional policy-influencing positions for potential transfer, and establishes new performance award mechanisms to incentivize high-performing employees.

Additional Documentation

• Trump Executive Order - Implementing Schedule Policy/Career in the Excepted Service

Video Series

Our Emerging Manager Minute video series examines a wide array of topics that are crucial for understanding and navigating the challenges and opportunities for Emerging Hedge Fund Managers. From regulatory changes and market trends to fundraising strategies and operational best practices, each installment delves into the key issues that impact new and growing fund managers. 

We invite you to subscribe to our YouTube channel to get updates when we release new videos. 

Liquidity Management

In this installment of the Akin Emerging Manager Minute, partners Max Karpel and Ira Kustin discuss the critical importance of aligning hedge fund liquidity terms with underlying investment strategies to protect both investors and the stability of investment management businesses. They explore liquidity management features including lockups and gates, while examining challenges posed by the inherent liquidity differences between commingled funds and separately managed accounts (SMAs).

Management Fees and Performance Allocations

In this installment of the Akin Emerging Manager Minute, partners Max Karpel and Ira Kustin examine current trends in hedge fund management fees and performance allocations based on Akin’s Hedge Fund Database.

Structuring Hedge Fund Management Companies

In this installment of the Akin Emerging Manager Minute, partners Max Karpel and Ira Kustin discuss the importance of thoughtfully structuring hedge fund management companies, emphasizing the need for clear documentation, governance and alignment among founding principals. They highlight key considerations for building a durable, long-term business by addressing decision-making authority, buyout provisions, restrictive covenants and planning for future equity issuances.

Fundraising Dos and Don’ts

In this installment of the Akin Emerging Manager Minute, partners Max Karpel and Ira Kustin discuss critical fundraising legal considerations for emerging hedge fund managers, covering Reg D. private placement rules, SEC marketing regulations and international fundraising challenges.

Managing SMAs Alongside Commingled Hedge Funds

In the third installment of the Akin Emerging Manager Minute, partners Max Karpel and Ira Kustin explore the strategic advantages and operational complexities of managing SMAs alongside commingled hedge funds, including achieving optimal scale and allocating expenses across vehicles, as well as critical regulatory considerations.

Seeding Transactions

In the second installment of the Akin Emerging Manager Minute, partners Max Karpel and Ira Kustin discuss the key considerations for Emerging Hedge Fund Managers when entering into Seed Deals, including the structure, terms and tax implications of such transactions. They highlight trends in the marketplace and business considerations as well.

Popularity of SMAs

In this installment of the Akin Emerging Manager Minute, partners Max Karpel and Ira Kustin provide a quick overview of one of the hottest trends in the Emerging Hedge Fund Manager space—the proliferation of Separately Managed Accounts (SMAs). They discuss the growing importance and acceptance of SMAs in the context of first time hedge fund launches, exploring the legal and commercial implications of this development.

I was honored to present once again at the American Conference Institute’s (ACI) Annual Summit on PFAS Regulation, Compliance and Litigation, this year as part of a great state regulatory panel. Below are some thoughts from the conference:

• We now have a (slightly) greater sense of the per- and polyfluoroalkyl substances (PFAS) TSCA Reporting requirement deadline. U.S. Environmental Protection Agency (EPA) Deputy Administrator David Fotouhi anticipates the underlying rulemaking will go final just before the end of the year, which lines up well with the proposed January 31 reporting timeline (at most 60 days after the rule goes final). Fotouhi also noted that the Agency intends to make reporting more practicable and less duplicative, reducing requirements in the final rule.
  
  
• Speaking of reporting, Minnesota Pollution Control Agency head Katrina Kessler stated that the State remains on track to implement a September deadline for its own reporting rule. To date, approximately 40 entities have filed close to 700 reports, which Kessler takes as evidence that no further delay is necessary. Kessler stated the Agency has “no idea” how many reports they will receive in total.
  
  
• Two other items of note from Minnesota. First and foremost, Kessler indicated in a private conversation that she does not expect to stay on past 2026. Second, Kessler stated that the Agency will spot-check products at online and physical retailers for PFAS content to ensure compliance as she does not expect many companies to test on their own. That said, she does expect companies seeking a currently unavoidable use (CUU) determination to test their products and report on PFAS content in their applications.
  
  
• While on testing, New Mexico’s PFAS-only attorney at the state attorney general’s office, Greg Smithkier, stated that until New Mexico’s Environment Department has its own testing team (in progress), they will rely upon nongovernmental organizations (NGOs) and environmental groups to conduct spot checking. He also stated that in response to a legislative directive, New Mexico will re-evaluate its exemptions for fluoropolymers in a preliminary report this year, to be followed by a final document, August 2027. With respect to reporting, Smithkier noted that New Mexico will employ the same system as Minnesota, and that publicly available reporting in other jurisdictions may allow for a waiver from the requirements.

Akin Space Law, Regulation and Policy Update

Policy developments over the past two weeks underscore a central theme of today’s space economy: the need to scale. Projections that U.S. launch demand could quadruple in the next decade, plans to develop a third national launch site to accommodate that expanded launch tempo, and a massive internal restructuring at NASA are just a few recent U.S. developments pointing to the industry’s rapid growth. At the same time the EU, as well as several member states, are focused on investing in and growing indigenous space capabilities to reduce Europe’s exposure to changes in U.S. space policy.

All this and more in this edition of Akin’s Space Law, Regulation and Policy Update. 

Global Finance Alert

Recent geopolitical tensions in the Gulf region have introduced heightened volatility, creating uncertainty for businesses operating in the United Arab Emirates (UAE) and across the wider Gulf Cooperation Council (GCC). Against this backdrop, whilst parties to commercial contracts will need to consider whether force majeure thresholds have been breached, in the context of loan documentation, the two most pressing issues are: Firstly, whether borrowers can continue to satisfy utilization conditions to access committed liquidity; and secondly, whether a material adverse change (MAC) has occurred triggering an event of default, thereby entitling financiers to exercise their acceleration and enforcement rights.

Much of the recent practitioner commentary has focused on force majeure and impossibility under UAE law and, in the context of English law, force majeure and frustration. That analysis is important, however it does not address how loan documentation caters for adverse changes in market conditions and how, from a contractual perspective, such changes may impinge on a borrower’s ability to avail of its committed facilities to fund its liquidity requirements.

In this article, we consider how the concept of MAC is typically incorporated into loan documentation to provide credit protection for financiers, and how the relevant provisions may be interpreted in the context of macroeconomic and geopolitical turbulence.

Force Majeure and Hardship in a Financing Context

Whilst not the focus of this article, force majeure and hardship concepts remain relevant because they often contextualize MAC analysis. Where a borrower characterizes operational disruption as force majeure under its commercial contracts, financiers will naturally ask whether the same facts also affect the borrower’s business, financial condition or ability to perform its obligations under its finance documents for the purpose of establishing whether a MAC has occurred.

Under UAE law, force majeure is governed by Article 236 of Federal Decree-Law No. 25 of 2025 issuing the Civil Transactions Law of the United Arab Emirates (the New CTL), which provides that where force majeure renders performance impossible, the corresponding obligation shall cease and the contract shall be automatically rescinded. The New CTL does not elaborate on the conditions that must be satisfied for force majeure to be established, however in the context of the equivalent provision of Federal Law No. 5 of 1985 (which the New CTL replaced), UAE courts have generally required that the event was unforeseeable at the time of contracting, unavoidable despite reasonable efforts and that it rendered performance objectively impossible, not merely more difficult or costly. The related doctrine of exceptional circumstances, set out at Article 224 of the New CTL, permits judicial adjustment where performance has become excessively onerous. The New CTL expands the court’s powers in this regard, including the ability to order rescission of the contract where extreme hardship persists. The threshold, however, remains high and the doctrine does not operate as a general escape from a bad bargain.

Under English law, force majeure has no implied legal status and depends entirely on the wording of the contract. The common law doctrine of frustration applies only where performance has become impossible, illegal or radically different from what was contemplated; increased cost, commercial inconvenience or financial hardship will not ordinarily suffice.

Under both legal systems, these doctrines are rarely engaged in relation to payment obligations under loan agreements, primarily because the obligation to pay money is not generally rendered impossible by external events, even where operational disruption is significant. It is notable in this regard that it is not customary, as evidenced by the Loan Market Association (LMA) suite of precedent documentation, to include force majeure as a standalone event of default. Historically, including during the COVID-19 pandemic, force majeure and hardship arguments had limited relevance to financiers’ rights, and we are not aware of any reported English case law in which force majeure was successfully relied upon to excuse a payment default under a facility agreement.

More directly relevant in the financing context is the dissonance that can arise where a borrower invokes force majeure under its commercial contracts to excuse nonperformance, whilst simultaneously maintaining to its financiers that no MAC has occurred under its loan documentation. That tension, between arguing on the one hand that circumstances are sufficiently extraordinary to excuse operational performance, whilst asserting that those same circumstances have not materially and adversely affected the borrower’s business or financial condition on the other, is a recurring feature of distress situations.

The Role of MAC Clauses in Loan Documentation

In loan agreements based on the LMA templates, material adverse effect concepts are typically used in three distinct ways:

1. Event of Default – The events of default clause often includes a standalone MAC event of default, which occurs upon the breach of a pre-determined threshold incorporated through the definition of “Material Adverse Effect.” This defined term is typically heavily negotiated, however common formulations refer to circumstances that have a Material Adverse Effect on factors such as the borrower group’s business, operations, property, condition (financial or otherwise) or prospects; the ability of obligors to perform their obligations under the finance documents; and the validity or enforceability of the finance documents. The operative event of default provision is also commonly negotiated, with discussion focused on: (a) whether the trigger requires an actual Material Adverse Effect to have arisen, or is satisfied by a reasonable expectation that such an effect will occur; and (b) whether that determination is made by the lenders (or a specified threshold of lenders) or is otherwise to be assessed on an objective basis.
2. MAC Representation – Facility agreements ordinarily include a representation confirming that there has been no MAC in the group’s business or financial condition since the date of certain debtor group financial statements. Depending on the bargaining strength of the parties, the MAC representation may be designated as a repeating representation, meaning that the representation is deemed to be made on certain prescribed future dates in addition to the date of the facility agreement. As explored in further detail below, that designation is significant because it allows financiers to drawstop facilities in certain circumstances where there is a subsisting breach of that MAC representation, as well as providing a secondary route to an event of default by way of misrepresentation.
3. MAC Qualification – The definition of “Material Adverse Effect” referred to in (1) above is also used as a tool to qualify certain representations and warranties, such that a misrepresentation will only occur where the consequence is a Material Adverse Effect. For example, a “no default” representation may provide that no default has occurred under an agreement to which the borrower is party where that default would result in a Material Adverse Effect.

MAC as an Event of Default

English courts have approached MAC events of default cautiously. The leading authority remains the decision of Blair J in Grupo Hotelero Urvasco SA v Carey Value Added SL [2013] EWHC 1039 (Comm), which held that the assessment of a borrower’s financial condition starts with its financial information and, to be material, a change must significantly affect the borrower’s ability to perform its obligations (and in particular to repay the loan) and must not be merely temporary. The court also confirmed that a lender cannot invoke a MAC on the basis of circumstances of which it was aware at the time the facility was entered into, and that the burden of establishing a MAC sits with the lender. Where the relevant provisions are framed by reference to the lender’s opinion rather than an objective standard (a formulation common in the GCC market), the question is whether the lender’s assessment was genuinely and rationally held. Whilst this may provide a more flexible basis for invoking a MAC, in practice lenders remain cautious about doing so absent compelling supporting evidence.

Whilst Grupo Hotelero Urvasco provides helpful guidance on how MAC provisions are likely to be interpreted by the courts, it is important to highlight the narrow formulation adopted in that particular loan documentation, insofar as the MAC clause required only an assessment of the borrower’s financial condition. Accordingly, whether a MAC-based acceleration is reasonable is heavily fact-specific and dependent on the drafting of the applicable MAC provision—in particular, whether the Material Adverse Effect definition extends to considerations beyond financial condition. In any event, financiers should approach MAC-based acceleration with caution, noting that any action carries material litigation and reputational risk. It is also rare for a genuinely distressed credit to breach only the MAC event of default; payment defaults, financial covenant breaches or information undertaking defaults are likely to also subsist and may provide a clearer and more objectively defensible basis for acceleration or enforcement action. Indeed, where a force majeure event has occurred under a business’s key commercial contracts, the related loss of revenue is likely to result in an expectation of poor financial covenant performance and an increased propensity for payment default.

MAC as a Drawstop

Arguably the most valuable credit protection afforded by MAC clauses is recourse by way of a drawstop. As a further condition precedent to each utilization, most facility documentation requires that: (a) no default (or, in the context of revolving credit facility rollover utilizations, no event of default) is continuing; and (b) the repeating representations are true in all material respects.

Accordingly, if the MAC event of default has been breached or, alternatively, if the MAC representation is repeating and is no longer true and accurate, lenders are not obligated to comply with a utilization request and may refuse to advance available but undrawn commitments. In the context of rollover loans to be made in respect of outstanding loans under revolving credit facilities, these circumstances can have particularly severe consequences for borrowers as any such rollover will be drawstopped and, instead, the relevant loan will need to be repaid in full.

From a lender’s perspective, drawstops allow prospective risk management without the more aggressive step of accelerating existing loans (albeit that is the commercial effect of a rollover loan drawstop). For borrowers, the same mechanics can transform an otherwise manageable adverse development into an immediate liquidity issue. A lender considering refusal of a utilization request should nonetheless proceed carefully: If the MAC determination proves incorrect, the refusal may itself constitute an actionable breach of the commitment to lend.

Practical Considerations

MAC clauses in GCC financings are most commonly governed by English law, even where borrowers and assets are located in the UAE. Whether a MAC has occurred will therefore generally be assessed under English law principles, whilst the commercial consequences are felt locally. Current regional tensions may affect that analysis through their impact on transport and logistics, insurance costs, supply chains, sanctions diligence and operations in exposed sectors. However, for the reasons outlined above, those factors need to be connected to the relevant borrower, facility and the definition of “Material Adverse Effect,” rather than assessed in the abstract. Market-wide disruption will not generally support MAC-based acceleration on its own, however for the reasons outlined above, it may be directly relevant to a borrower’s short-term liquidity position, compliance with financial covenants, financial projections and the accuracy of repeating representations at the time of drawdown. The required analysis is credit-specific and often focused on short-term funding risk rather than long-term business prospects.

Foreseeability is also relevant. Many GCC facilities were entered into against a backdrop of known geopolitical tension. The question in each case is whether recent developments represent a deterioration materially different in nature from the environment that existed at signing, rather than merely an intensification of a risk that was already known or priced in.

The other practical application of a perceived MAC breach is commercial leverage. Financiers may cite a potential MAC breach as a means of bringing the borrower to the negotiating table or otherwise to elicit more detailed information as to its continuing creditworthiness. In practice, the value of a MAC clause often lies less in its formal invocation as an event of default or drawstop and more in its ability to create commercial pressure: By signaling that circumstances may fall within the parameters of a MAC, lenders can prompt enhanced disclosure, including updated financials, liquidity forecasts and business plans, and use that dialogue to reassess the credit’s risk profile. This, in turn, may provide a platform for renegotiation, whether in the form of covenant resets, pricing adjustments, additional security or tighter undertakings, all without the lender needing to take the more disruptive step of formally declaring an event of default.

Conclusion

Force majeure and hardship continue to play a limited role in financing arrangements. Payment obligations under loan agreements are rarely excused by external events, however disruptive those events may be to a borrower’s commercial operations. MAC provisions remain important, not primarily as a basis for enforcement, but as a mechanism through which lenders can control further exposure and open dialogue with borrowers. Prior stress events confirm this pattern. During COVID-19, standalone MAC litigation remained rare, and the predominant market response was a wave of covenant waivers, financial covenant resets and amendments, rather than enforcement action. Russia-related sanctions followed a similar pattern, with the immediate focus on illegality and sanctions compliance rather than MAC-based acceleration. The current regional situation appears consistent with those historical trends; the practical significance of MAC lies in funding discipline rather than default enforcement. An understanding of how repeating representations, utilization conditions and rollover mechanics interact is therefore essential for both borrowers and lenders negotiating and operating loan facilities in periods of heightened uncertainty.

Brazil FTO designations alert

On May 28, 2026, Secretary of State Marco Rubio announced the designation of Comando Vermelho (CV) and Primeiro Comando da Capital (PCC), two of Brazil’s largest criminal organizations, as Specially Designated Global Terrorists (SDGTs), and the U.S. Department of State’s intent to designate both groups as Foreign Terrorist Organizations (FTO), effective June 5, 2026.

The move extends the U.S. counterterrorism framework and imposes significant potential U.S. criminal and civil legal liability, as well as asset-blocking obligations, on individuals and entities that have direct or indirect business dealings with CV or PCC, including where such activities take place entirely outside of the United States.

For companies operating in Brazil, the designations present important compliance considerations, especially as the U.S. Department of Justice (DOJ) has prioritized investigations and prosecutions related to “[m]aterial support by corporations to foreign terrorist organizations, including recently designated Cartels.”The Trump Administration previously designated eight Mexico-based and transnational criminal cartels as FTOs in 2025, and subsequently took action against three Mexican financial institutions that were identified as processing transactions related to designated FTOs, severely restricting their access to the U.S. financial system.

What the FTO Designation Means

The planned designation of PCC and CV as FTOs creates significant new legal risks for companies operating in Brazil.

Criminal Risks. The “Material Support” statute (18 U.S.C. § 2339B) criminalizes knowingly providing, attempting to provide or conspiring to provide “material support or resources” to an FTO. The term “material support” is defined extraordinarily broadly to encompass any property, service, currency, financial services, lodging, training, expert advice, personnel or transportation. Violations, which can stem from conduct that occurs outside the United States, carry penalties of up to 20 years’ imprisonment (or life imprisonment if the death of any person results).

The requirement that an individual or entity “knowingly” provide material support or resources generally can be satisfied both by affirmative knowledge that it was providing support to an FTO or, alternatively, if a defendant is aware of a “high probability,” or deliberately avoids obtaining information that would confirm, that its counterparty is linked to an FTO. As a result, for companies operating in Brazil, ignoring red flags that indicate potential transactions with PCC or CV, or avoiding taking action to identify such red flags, could potentially lead to U.S. criminal liability if any such companies are found to have done business with an FTO or FTO-controlled entity.

This statute also explicitly provides for extraterritorial jurisdiction, enabling U.S. authorities to bring Material Support charges for conduct that occurs entirely outside of the United States, including against U.S. or non-U.S. persons or entities, so long as a minimal jurisdictional nexus with the United States can be established.

Civil Liability. The Anti-Terrorism Act (18 U.S.C. § 2333) provides a private cause of action—with treble damages and attorneys’ fees—for U.S. nationals injured by acts of international terrorism, including on aiding-and-abetting theories against entities that provided “substantial assistance” to a designated FTO.

The designation of PCC and CV as FTOs will subject companies to civil litigation risk where a plaintiff can credibly allege the company engaged in a commercial relationship that facilitated PCC or CV operations that caused damages. Plaintiffs injured by activities of other designated cartels have brought claims under this statute against banks alleged to have processed transactions for those FTOs.

Asset-Blocking Obligations. Under 18 U.S.C. § 2339B(a)(2), any U.S. financial institution that becomes aware it possesses or controls funds in which a designated FTO or its agent has an interest must hold those funds and report them to the U.S. Department of the Treasury. This obligation will apply to funds linked to PCC and CV upon the June 5 effective date of the designations. Violations expose noncompliant institutions to civil penalties of up to $50,000 per violation or twice the amount involved.

Additional Considerations

SDGT Designations. The U.S. Department of State’s designation of PCC and CV as SDGTs separately prohibits U.S. persons from engaging in any direct or indirect dealings with them. In addition, although PCC has been on OFAC’s SDN List since 2021, State’s SDGT designations create new secondary sanctions risks for foreign financial institutions and others who continue to engage in dealings with the groups.

Primary Money Laundering Concern. Similar to the orders that FinCEN issued in June 2025 against three Mexican financial institutions, the Trump Administration could take action against Brazilian financial institutions if they are determined to be of primary money laundering concern in connection with illicit opioid trafficking, due to the provision of financial services to PCC, CV or other illicit actors.

Operação Carbono Oculto: The Enforcement Backdrop

The recent U.S. designations of PCC and CV come against the backdrop of significant Brazilian enforcement activity against financial institutions and other companies linked to these newly designated entities. On August 28, 2025, Brazilian authorities launched Operação Carbono Oculto (Operation Hidden Carbon), involving actions across ten Brazilian states directed against a multibillion-dollar PCC money-laundering scheme involving the fuel sector. Related investigations and enforcement actions have targeted investment firms and fintech businesses.

Operation Hidden Carbon demonstrates that the risk of engaging in transactions with FTO-controlled entities is not theoretical—PCC has embedded itself in major sectors of the Brazilian economy. For example, prosecutors allege that PCC:

• Controlled over 1,000 gas stations generating BRL 52 billion (~USD 9.5 billion) in retail sales.
• Operated unlicensed fintech platforms that moved BRL 46 billion (~USD 8.5 billion).
• Managed approximately 40 investment funds holding BRL 30 billion (~USD 5.5 billion) in assets including ethanol plants, a port terminal and a nationwide truck fleet.

Based on recent enforcement activities, companies operating in Brazil, particularly in the energy, logistics, construction or financial sectors, have clear indications of the potential for exposure to PCC- or CV-linked entities. The U.S. designations of the PCC and CV as FTOs and SDGTs creates additional risk exposure for multinational companies and signals the expectation of U.S. prosecutors that companies will take appropriate measures to ensure they comply with applicable U.S. laws.  

What Companies Should Do Now

The window before the June 5 effective date is narrow. Companies should consider taking immediate steps to assess and validate their existing counterparties, activities and compliance controls:

• Conduct a risk assessment to identify, given the company’s specific operations, supply chain and business partners, areas of potential direct or indirect contact or engagement with PCC- or CV-linked entities.
• Review transactions with vendors and other business partners to identify potential prior dealings with PCC- or CV-linked entities. DOJ’s Corporate Enforcement Policy rewards voluntary self-disclosure, but a delay in investigating could result in DOJ or another U.S. agency approaching a company first, preventing the company from making a voluntary self-disclosure.
• Implement enhanced due diligence protocols, including beneficial-ownership tracing, sanctions screening, adverse media monitoring and cross-referencing existing vendor networks against PCC- or CV-linked entities. As part of these protocols, companies should train employees—particularly in procurement, finance, logistics and security—to recognize red flags that may indicate counterparties have cartel or other criminal organization links.
• Upgrade anti-money laundering and counterterrorism financing controls as standard third-party screening designed for sanctions and anticorruption compliance purposes may not be sufficient to address all FTO-related risks.

How We Can Help

Akin’s team includes former senior officials from the Justice Department, Department of the Treasury and Department of State. As the Brazil-related FTO and SDGT designations create potential criminal exposure, civil litigation risk and regulatory scrutiny across multiple enforcement channels simultaneously, our Chambers-ranked white collar defense & government investigations and economic sanctions & export controls practice groups provide seamless, comprehensive representation.

Reuters has published an article titled, “Government insider trading, prediction markets and prospects for the ‘Eddie Murphy rule’,” co-authored by Akin white collar defense & government investigations co-head Katherine Goldstein, partner James Benjamin and senior counsel Jack Murphy.  

The article examines the growing legal challenges prediction markets are facing related to government insider trading and how prosecutors may rely on the ‘Eddie Murphy Rule’ to address these emerging issues. 

For more of their insights: https://www.reuters.com/legal/legalindustry/government-insider-trading-prediction-markets-prospects-eddie-murphy-rule--pracin-2026-05-27/  

Labor & Employment Alert

Key Takeaways

• On May 5, 2026, the New Jersey Department of Labor and Workforce Development (NJDOL or the Department) adopted final rules clarifying and memorializing its interpretation of the three-prong “ABC test” for independent contractor classification. The new rules take effect October 1, 2026.
• On adoption, the Department made several targeted revisions, including clarifying that compliance with legal obligations—standing alone—does not establish control or direction under Prong A. The new rules also confirm that an individual’s personal residence where remote work is performed will not typically be treated as the putative employer’s place of business for purposes of worker classification.

Overview of the Adopted Rules

Although the ABC test has long been New Jersey’s statutory standard for worker classification, the new rules provide guidance on how the NJDOL interprets and applies that test. The rules apply under various statutes the Department administers or enforces, including the Unemployment Compensation Law, Temporary Disability Benefits Law, Wage Payment Law, Wage and Hour Law, Earned Sick Leave Law, and the Call Center Jobs Act. The final rules do not alter or eliminate existing statutory exemptions from coverage under, or exemptions from the requirements of, those statutes.

The ABC Test Framework and Burden of Proof

Under the ABC test, individuals performing services for remuneration are presumed to be employees unless all of the following circumstances apply:

• (A) The individual has been and will continue to be free from the control or direction over the performance of work performed, both under contract of service and in fact; and
• (B) The work is either outside the usual course of the business for which such service is performed, or the work is performed outside of all the places of business of the enterprise for which such service is performed; and
• (C) The individual is customarily engaged in an independently established trade, occupation, profession, or business.

The test is conjunctive; all three must be satisfied for an individual to be classified as an independent contractor. The rules reiterate that the ABC test is not a checklist and requires a holistic, fact-specific analysis.

Key Features of the Adopted Rules

Prong A. The focus is on whether the putative employer actually exercises—or reserves the right to exercise—control over how the work is performed. Relevant factors include whether: (1) the individual is required to work set hours or specific jobs; (2) the putative employer has the right to control the details and means of the work, including by requiring specific tools, supplies, or materials, requiring a uniform or logo, or requiring reporting at prescribed times or intervals; (3) the work must be performed personally; (4) the putative employer is the one sourcing and negotiating for the work; and (5) the putative employer sets the rate of pay. Prong A also calls for an examination regarding whether the individual bears any real risk of loss, has to be on call or available at set times, or is restricted from working for others, and whether the employer provides training. The presence of one or more of these factors may indicate some degree of control, but the factors are not a checklist; the analysis turns on the entire relationship and whether, taken as a whole, the individual has been and will continue to be free from control or direction. The final rule also clarifies that steps taken solely to comply with legal or regulatory requirements shall not, standing alone, be considered evidence of control or direction under Prong A.

Prong B. The NJDOL kept the general framework that an entity’s usual course of business includes the activities it regularly engages in to generate revenue or to develop, produce, market, or provide its goods or services and that an entity can have more than one usual course of business. On adoption, the NJDOL removed proposed examples of services that are typically inside or outside the putative employer’s usual course of business and proposed examples of locations where the putative employer typically conducts an integral part of its business, while retaining the core “usual course of business” and “places of business” principles. It also retained the definition of “places of business” as locations where the enterprise has a physical plant or conducts an integral part of its business. The rule clarifies that an individual’s personal residence where remote work is performed will not typically be treated as the putative employer’s place of business.

Prong C. The inquiry is whether the individual is customarily engaged in an independently established trade, occupation, profession, or business. Factors include, among others: (1) the duration, strength, and viability of the individual’s business (independent of the putative employer), (2) the number of customers of the individual’s business and the volume of business from each respective customer, (3) the amount of remuneration the individual receives from the putative employer compared to the amount of remuneration the individual receives from others in the same industry, (4) the number of employees of the individual’s business, and (5) the extent of the individual’s investment in their own tools, equipment, vehicles, buildings, infrastructure, and other resources.  The rules also memorialize that indicators such as holding another job, professional licensure, business registration, or insurance are insufficient alone to establish an independent business under Prong C. Where the putative employer requires or encourages the individual to establish a business entity or obtain liability and/or workers’ compensation insurance, those facts may suggest a business in name only or otherwise not suggest independent contractor status.

Notably, form will not trump substance. For example, issuing a Form 1099 rather than a W-2 will not, by itself, convert an employee into an independent contractor. Likewise, under the rules, a written agreement that labels a worker as an independent contractor will not be controlling. Instead, fact-finders evaluating the weight to be given to an independent contractor agreement may consider nonexclusive factors such as whether there was an imbalance in bargaining power, whether the agreement was presented on a take-it-or-leave-it basis, whether the employer retained the right to unilaterally modify terms, and whether either party could terminate the relationship at will. Finally, the fact that an individual would not qualify for unemployment benefits based on their earnings has no bearing on whether they are properly classified as an independent contractor.

What Employers Need to Know

Employers with New Jersey operations should consider auditing existing contractor relationships in light of the new rules clarifying New Jersey’s ABC test. The review should focus on how the relationships operate in practice because classification turns on the facts surrounding the relationship and the substance rather than the form of the arrangement.

The Executive Order (“EO”) directs the alignment of the U.S. core childhood vaccine schedule with the best practices of peer, developed countries, while preserving access to vaccines and protecting religious freedoms and enforcing legal protections for parents. Based on a scientific assessment completed by HHS pursuant to a Presidential Memorandum dated December 5, 2025, the order notes that the U.S. currently recommends more childhood vaccines than any peer nation and identified a set of consensus vaccines consistently recommended across all peer countries. The order directs the Centers for Disease Control and Prevention (“CDC”) and its Advisory Committee on Immunization Practices (ACIP) to review the scientific assessment and take appropriate steps to update the childhood and adolescent vaccine schedule, while providing maximum flexibility to parents and doctors regarding the timing and sequencing of routine immunizations. Additionally, all immunizations on the ACIP-recommended schedule and adopted by the CDC must continue to be covered without cost sharing by private insurance, Medicaid, the Children’s Health Insurance Program, and the Vaccines for Children Program. The order also reaffirms the Administration’s commitment to fulfilling all legal obligations with respect to parental authority, religious freedom, disability accommodations, and equal protection under the law.

Additional Documentation

• Trump Executive Order - Realigning United States Core Childhood Vaccine Recommendations with Best Practices from Peer, Developed Countries

(New York) – Akin advised Apollo-managed funds in a definitive agreement to acquire a minority interest in Apex Service Partners (Apex), the nation’s largest residential HVAC, plumbing and electrical services business. Apollo-managed funds will partner with Apex’s management team and existing investor, Alpine Investors, which is making an additional investment in Apex to support the company’s continued growth. 

The Akin team was led by head of the firm’s U.S. private equity practice Gerald Brant, private equity partners Jeffrey Kochian and Brittany Harrison and senior counsel Erika Cohen.  

For additional information on the transaction, please click here. 

Akin is a leading international law firm with more than 1,000 lawyers in offices throughout the United States, Europe, Asia and the Middle East. 

# # # 

Akin False Claims Act/qui tam defense partner Colin Huntley is quoted by CBS News in an article titled, “Justice Department to start fast-tracking benefits fraud enforcement.” The article examines the U.S. Department of Justice (DOJ) Civil Division’s recent announcement to accelerate the review of False Claims Act whistleblower complaints alleging fraud against federally funded, state-administered benefits programs. 

Drawing from his role as former Deputy Director of the DOJ’s Civil Fraud Section, Colin tells CBS News that the amount of time these cases take is “highly variable” and that the speed of decisions is determined by “scope and complexity.” 

Colin continues saying that there's “no replacement for thoroughness.” 

Read the full article here.    

Artificial Intelligence Alert

Key Points

• Federal courts issued four significant decisions in the first quarter of 2026 addressing the intersection of generative artificial intelligence (AI) and maintaining attorney-client privilege and work product protections, as well as confidentiality and data security in the context of protective orders.
• There is an emerging split regarding whether using public third-party generative AI tools waives work product protections. While the U.S. District Court for the Southern District of New York (SDNY) held that such use may destroy protection in the criminal context, courts in the Eastern District of Michigan and the District of Colorado ruled that litigants in the civil context did not waive work product protections merely by using public AI tools, likening the platforms to software tools rather than adversaries.
• Courts are proactively updating protective orders to address the unique data retention and privacy risks of public or ‘open’ AI systems. One court restricted the use of public AI tools for designated ‘Confidential Information,’ while another banned the use of public AI tools for all discovery materials, including nonconfidential documents, mandating the use of ‘closed’ enterprise systems.
• To mitigate legal risks, businesses should prioritize the use of ‘closed’ enterprise AI systems, review contracts and terms of service around the AI systems’ retention of inputs and outputs for training or sharing with third parties, and, when required in the context of a protective order, ensure the ability to permanently delete or ‘claw back’ sensitive discovery materials at the conclusion of a matter.

Background

The rapid adoption of generative AI platforms (such as ChatGPT, Claude and Gemini) has led litigants and counsel to increasingly use these tools for analyzing documents, drafting strategy and synthesizing facts. However, public AI platforms often collect user inputs and associated outputs to train their underlying machine-learning models, raising confidentiality, data privacy and privilege waiver concerns. In Q1 2026, federal courts were forced to address these novel technological issues across civil and criminal dockets. The resulting decisions yield instructive, though sometimes conflicting, guidance on how traditional legal doctrines apply to modern AI workflows.

United States v. Heppner (S.D.N.Y. Feb. 17, 2026)

Public AI Use Defeats Privilege and Work Product

As detailed in our prior client alert, the SDNY ruled in a criminal case that a defendant’s written exchanges with a publicly available generative AI platform were not protected by either the attorney-client privilege or the work product doctrine. The court found that no attorney-client relationship existed with this public AI platform. The court also held that users lack a reasonable expectation of confidentiality because the platform’s privacy policy provides that it discloses the use of inputs and outputs for AI training and reserves the right to share such data with third parties.

The court ruled the work product doctrine inapplicable because the defendant initiated the AI communications on his own initiative rather than at counsel’s behest. Because the documents did not reflect counsel’s strategy at the time of their creation, the court rejected the argument that a party’s independent research acquires protection simply by being shared with an attorney.

Warner v. Gilbarco, Inc. (E.D. Mich. Feb. 10, 2026)

AI Platforms Are “Tools,” Not Adversaries, Preserving Work Product

In an employment dispute, the defendants moved to compel a pro se plaintiff to produce all documents and information concerning her use of third-party AI tools in connection with the lawsuit. The magistrate judge denied the request, holding that the information sought was not discoverable because it was prepared in anticipation of litigation. The court further ruled that the information was not relevant, and even if marginally relevant, was not proportional to the needs of the case.

The court also denied the defendants’ request to overrule the plaintiff’s privilege objections or require a privilege log. Rejecting the argument that the plaintiff waived work product protection by using ChatGPT, the court held that a work product waiver requires disclosure to an adversary or in a way likely to reach an adversary. The court emphasized that generative AI programs are “tools, not persons,” and disclosure to such a tool does not waive work product protection. Compelling the production of the plaintiff’s “internal analysis and mental impressions” as the defendants sought here, the court noted, would “nullify work-product protection in nearly every modern drafting environment.”

Morgan v. V2X, Inc. (D. Colo. Mar. 30, 2026)

Work Product Upheld, But AI Tools Must Be Disclosed and Restricted

In another employment case, a pro se plaintiff resisted disclosing the name of the AI tool he used, citing the work product doctrine. The court agreed that Rule 26(b)(3) protects the plaintiff’s mental impressions and litigation preparation materials. The court expressly distinguished the SDNY’s ruling in Heppner, noting that, as a civil case governed by the Federal Rules of Civil Procedure, Rule 26(b)(3) protects the work product of a party, not merely counsel. Agreeing with Gilbarco, the court also noted that pro se litigants act as both party and advocate, making their use of AI protectable.

However, the court compelled the plaintiff to disclose the specific name of the AI tool used, noting that the plaintiff failed to demonstrate how identifying the tool would reveal mental impressions or case strategy. According to the court, it appeared that the plaintiff had already submitted Confidential Information to an AI system, and thus the defendant is entitled to know which one.

Addressing the extent to which a protective order should restrict AI use, the court rejected competing language from both parties. It found the plaintiff’s proposal addressed only cybersecurity concerns rather than AI-specific data processing risks, while the defendant’s language was “over-engineered” to fit its own specific AI contracts. Instead, the court amended the order with its own language, banning parties from inputting any Confidential Information into modern AI platforms unless the provider is contractually prohibited from: (1) storing or using inputs to train or improve its model; and (2) disclosing inputs to third parties except where essential for service delivery and where the third party is bound to obligations no less protective than those required by the court’s order. The court also required that the AI provider contractually afford the party the ability to remove or delete all Confidential Information upon request.

The court recognized that this provision practically bars the use of most “low-to-no-cost” AI tools for confidential data, potentially disadvantaging pro se litigants. The court decided, however, that it could not ignore the “real risks” of mainstream AI tools compromising confidentiality.

Jeffries v. Harcros Chemicals Inc. (D. Kan. Mar. 25, 2026)

Public AI Tools Banned for All Discovery Materials

In an environmental putative class action, the defendants moved to amend an existing protective order to ban the use of public or “open” generative AI tools for all documents and information produced in discovery, regardless of whether they were designated as “Confidential.” The plaintiffs objected, characterizing the proposal as a disfavored “umbrella” protective order that would drive up litigation costs and infringe on First Amendment rights. The court granted the motion, concluding that the defendants met their burden to show good cause for the amendment based on the identified AI-specific risks.

The court agreed with the defendants that because data submitted to a public AI tool is used to train and improve the system, it is “practically impossible” to effectively claw back or delete such data once it has been processed. The court found that these “very real security risks”, including the creation of a “centralized repository” for discovery data, could expose critical infrastructure information and violate U.S. data privacy laws and the strict disclosure rules under the European General Data Protection Regulation (GDPR). Ultimately, the court reasoned that restricting the parties to “closed” AI tools would facilitate the discovery process by “incentivizing more fulsome document productions.”

Practical Implications

The intersection of these four rulings demonstrates that while AI offers immense efficiency gains, utilizing it without proper guardrails poses threats to privilege, confidentiality, and protective order compliance. Organizations and legal teams should take the following steps:

• Audit and Update Acceptable Use Policies: Companies should implement or revise policies to prohibit employees from inputting sensitive or litigation-related information into publicly available generative AI platforms to avoid discovery-related risks.
• Recognize the Threat of Privilege Waiver: While some courts (Warner, Morgan) have held that using public AI for litigation preparation, particularly in the civil context, does not waive work product protection, avoiding the use of public AI is the safer approach.
• Invest in “Closed” Enterprise AI Solutions: To safely utilize AI in litigation, businesses should utilize closed, enterprise-grade AI systems. In the context of protective orders, courts are requiring that AI tools have strict contractual safeguards—specifically, “zero data retention” policies and prohibitions on using user data to train underlying models.
• Beware of Sweeping Protective Orders: Legal teams must carefully review protective orders before integrating AI into their eDiscovery workflows. As seen in Jeffries, courts may be willing to ban the use of public AI tools for any document produced in discovery, regardless of whether it holds a formal “Confidential” designation. Attempting to use a public AI tool to summarize an opponent’s production could result in a violation of a court order.

Labor & Employment Alert

Key Takeaways

• Connecticut’s Artificial Intelligence Responsibility and Transparency Act establishes a comprehensive framework for automated employment decision technology, with core obligations phasing in between October 1, 2026, and October 1, 2027.
• The law amends the Connecticut Fair Employment Practices Act to make clear that the use of automated employment decision technology is not a defense to discrimination claims, while permitting courts and the CHRO to consider an employer’s anti-bias testing efforts as a mitigator.
• Connecticut joins a growing patchwork of state AI laws—including measures in Illinois, Colorado, California, New York City and Texas—that differ in enforcement, scope and notice and audit obligations, creating a complex compliance challenge for multi-state employers.
• With the patchwork of state requirements coupled with the absence of federal statutes specifically addressing the use of AI in employment, employers should consider whether to inventory AI tools across the employment lifecycle, conduct bias audits, update vendor contracts, and/or revise WARN Act protocols.

Overview

On May 1, 2026, the Connecticut General Assembly passed Senate Bill 5, the Artificial Intelligence Responsibility and Transparency Act (SB 5 or the Act). Governor Ned Lamont has indicated that he will sign the bill into law. Once enacted, Connecticut will become one of the U.S. jurisdictions to comprehensively regulate the use of AI that impacts employment, joining Illinois, Colorado, California, New York City and Texas in a rapidly developing—and increasingly inconsistent—state-level regulatory landscape.

This alert summarizes the key provisions of SB 5, places it in the broader context of state AI employment regulation, surveys the federal landscape, and offers practical guidance for employers navigating the emerging compliance environment.

Connecticut’s Artificial Intelligence Responsibility and Transparency Act (SB 5)

Most relevant for employers, SB 5 imposes obligations on developers and deployers of “automated employment-related decision processes” (AERDP), amends the Connecticut Fair Employment Practices Act, and expands disclosure requirements under the state’s Worker Adjustment and Retraining Notification (WARN) Act. The Act takes effect in stages.

Notable Dates

• October 1, 2026: The automated employment decision technology framework takes effect; “AI is not a defense” amendments to the state’s anti-discrimination statutes apply; the WARN Act AI disclosure requirement begins; and frontier developer whistleblower provisions take effect.
• October 1, 2027: Interactive disclosure and pre-decision notice obligations for automated employment decision technology take effect.
• December 31, 2027: Before initiating enforcement, the Attorney General must afford a 60-day period to cure for violations alleged on or before December 31, 2027.

1. Automated Employment Decision Technology

SB 5 broadly defines AERDP to include any technology that processes personal data and produces outputs (e.g., scores, recommendations or classifications) that are a substantial factor in an employment decision. As such, AERDP may include resumé screening tools, candidate ranking algorithms, performance management software and automated promotion engines.

Under the law, developers of AERDP must provide deployers (i.e., employers) with the compliance information necessary to satisfy the Act’s notice and disclosure obligations. Deployers, in turn, must:

• Notify employees and applicants, in plain language, when AERDP is used in connection with an employment decision.
• Provide a pre-decision notice that identifies the purpose of the tool, its trade name, the categories and sources of data used, how that data is assessed and contact information for further inquiries.
• Make available an interactive disclosure mechanism allowing applicants and employees to seek additional information.

The Act includes a trade secret safe harbor that allows developers and deployers to withhold protected information, but they must disclose what is being withheld and specify the legal grounds for the withholding.

2. “AI Is Not a Defense”

SB 5 amends the Connecticut Fair Employment Practices Act to clarify that the use of automated employment decision technology is not a defense to a discrimination claim. An employer cannot avoid liability simply by attributing an adverse outcome to a vendor’s algorithm.

Importantly, however, courts and the Commission on Human Rights and Opportunities (CHRO) may consider evidence of an employer’s anti-bias testing and proactive compliance efforts as a mitigating factor. Relevant factors include the quality, efficacy, recency and scope of any testing; the results obtained; and the employer’s response to those results. Robust, well-documented governance can therefore meaningfully shape exposure even though it is not a complete defense.

3. WARN Act Disclosure

Beginning October 1, 2026, employers filing notices under Connecticut’s WARN Act must disclose whether the layoffs are related to AI or other technological change. This disclosure obligation will require HR, legal and operations teams to coordinate closely on the rationale for workforce reductions and to maintain contemporaneous documentation supporting the stated cause.

4. Enforcement

Violations of SB 5 are deemed unfair or deceptive trade practices under the Connecticut Unfair Trade Practices Act (CUTPA). Enforcement authority lies exclusively with the Connecticut Attorney General; the Act creates no private right of action. Through December 31, 2027, the Attorney General must afford alleged violators a 60-day period to cure before initiating enforcement.

The Broader State AI Employment Landscape

Connecticut’s Act takes shape against a backdrop of significant—and increasingly divergent—state activity. The most consequential measures for employers are summarized below.

California

California’s regulatory landscape is layered. Amendments to the Fair Employment and Housing Act (FEHA) (Cal. Gov. Code § 12940) addressing automated decision systems (ADS) became effective October 1, 2025; they prohibit ADS that discriminate based on protected characteristics and require four-year retention of ADS-related data. California’s FEHA regulations expressly incorporate the federal Uniform Guidelines on Employee Selection Procedures (29 C.F.R. Part 1607; Cal. Code Regs. tit. 2, § 11017), requiring that any “testing device or other means of selection” with an adverse impact be job-related and consistent with business necessity. Separately, the California Privacy Protection Agency’s final CCPA regulations took effect January 1, 2026, with risk assessment obligations beginning then for covered businesses; automated decision-making technology (ADMT) requirements for significant decisions begin January 1, 2027, including pre-use notices, explanations of how the tool works, and opt-out rights. Covered business comprise those with $25 million or more in revenue or that handle significant volumes of consumer data.

Colorado (SB 26-189)

Colorado’s Senate Bill 26-189 (S.B. 26-189, signed into law May 14, 2026, anticipated codification at Colo. Rev. Stat. §§ 6-1-1701 et seq.), which repeals and replaces the state’s original 2024 AI Act (SB 24-205), takes effect January 1, 2027, and applies to ADMT used to materially influence consequential decisions in areas including employment (e.g., hiring, promotion, discipline or discharge), education, housing, financial services, health care and insurance. Deployers must provide pre-use notices, make post-adverse outcome disclosures within 30 days, maintain three-year records and provide consumers experiencing adverse outcomes with meaningful human review and rights to correct inaccurate personal data. Developers must provide deployers with technical documentation describing intended uses, training data categories, known limitations and instructions for appropriate use and human review. Violations are enforceable by the Attorney General as deceptive trade practices under the Colorado Consumer Protection Act. The Attorney General has exclusive enforcement authority with a 60-day cure period for non-knowing violations, and there is no private right of action.

Illinois (HB 3773)

Effective January 1, 2026, Illinois HB 3773 (codified at 775 ILCS 5/2-101 & 5/2-102) prohibits employers from using AI that results in discrimination based on protected characteristics, including unintentional disparate impact. Employers must provide notice to applicants and employees when AI is used in employment decisions and may not use ZIP codes as a proxy for protected characteristics. Draft regulations released by the Illinois Department of Human Rights specify the required content of notices and impose a four-year recordkeeping requirement. There is no private right of action; complaints are filed with the Illinois Department of Human Rights.

New York City (Local Law 144)

In effect since July 5, 2023, New York City’s Local Law 144 (N.Y.C. Admin. Code §§ 20-870 to 20-874) prohibits employers and employment agencies from using an “automated employment decision tool” (AEDT), defined as an automated process or AI that is used to substantially assist or replace employment discretionary decision making, unless certain conditions are met. Employers must conduct annual independent bias audits, publicly post audit summaries, and provide candidates with at least ten business days’ notice before using an AEDT. Fines range from $500 to $1,500 per day for violations. The law applies even when humans make final decisions based on AI-generated rankings or scores.

Texas (TRAIGA)

The Texas Responsible Artificial Intelligence Governance Act (TRAIGA) (Tex. Bus. & Com. Code §§ 552.001 et seq.), effective January 1, 2026, is a broad AI governance statute with consumer-facing transparency, prohibited-practices provisions and exclusive enforcement by the Texas Attorney General. It prohibits only intentional AI-based discrimination and does not extend to disparate impact liability, imposes no audit or notice obligations and provides a 60-day notice and cure period. The Texas approach reflects a materially lighter compliance burden than that adopted in Connecticut, Illinois, Colorado or California.

The Federal Landscape

There is currently no federal statute specifically governing the use of AI in employment. Title VII of the Civil Rights Act of 1964 (42 U.S.C. § 2000e-2), the Americans with Disabilities Act (42 U.S.C. §§ 12101 et seq.) and the Age Discrimination in Employment Act (29 U.S.C. §§ 621 et seq.) apply with equal force regardless of whether an employment decision is made by a human or an algorithm. Under these statutes, employers may be liable for both disparate treatment (intentional discrimination) and disparate impact (facially neutral practices that disproportionately affect protected groups). Use of a third-party vendor’s AI tool does not insulate employers from liability; the Uniform Guidelines on Employee Selection Procedures make clear that “[t]he use of an employment agency does not relieve an employer…of its responsibilities under Federal law…” (29 C.F.R. § 1607.10). The Equal Employment Opportunity Commission has identified technology-related employment discrimination as an enforcement priority in its Strategic Enforcement Plan for fiscal year (FY) 2023–2027 and has issued guidance confirming that its enforcement authority extends to AI-driven hiring tools.

Recent federal activity has focused largely on rolling back state AI regulation. A December 2025 executive order directed the Department of Justice to challenge “burdensome” state AI laws, and the March 2026 National AI Legislative Framework recommended federal preemption of state employment-related AI requirements. As of May 2026, the White House is circulating a draft executive order calling for federal review of advanced AI models in the wake of the Anthropic Mythos release. Despite these federal initiatives, no preemption legislation has been enacted, and existing state laws remain operative—meaning employers must continue to plan for state compliance.

Practical Guidance for Employers

Given the patchwork of state requirements, employers—particularly those operating in multiple jurisdictions—should consider whether the following might be helpful:

1. Inventorying all AI tools used across the employment lifecycle.
2. Conducting bias audits and impact assessments.
3. Implementing notice, consent and accommodation protocols for candidates and employees.
4. Renegotiating vendor contracts.

Looking Ahead

Connecticut’s SB 5 is unlikely to be the last word. Additional states are expected to introduce comparable legislation in the coming sessions, and the contours of federal preemption efforts will continue to evolve. Employers that build flexible governance frameworks now—grounded in inventory, audit, notice and vendor management—will be well positioned to implement new requirements as they emerge.

If you have questions about how Connecticut’s Artificial Intelligence Responsibility and Transparency Act or other state AI employment laws may affect your organization, please contact a member of Akin’s labor & employment team.

Strategic Addition Establishes the Strongest Creditor-Side Restructuring Platform of Any Global Firm

(London) — Akin announced today that Neil Devaney, Lois Deasey and Matt Benson—all of whom previously practiced at Akin—have re-joined the firm as partners in London. The team, who have worked together for over a decade advising the world’s most sophisticated credit investors on complex cross-border restructurings and capital solutions, brings next-generation leadership and depth of experience to Akin’s Band 1-ranked London restructuring practice. Their arrival reinforces Akin’s position as the only creditor-side firm with a Band 1 restructuring practice in both New York and London.

Neil Devaney, who will lead the firm’s restructuring practice in London, is one of the most highly regarded creditor-side restructuring lawyers in the London market, advising ad hoc creditor groups, credit funds and institutional investors on complex pan-European restructurings, alternative investments and distressed and special situations.

Devaney is joined by a senior, integrated team:

• Lois Deasey — advises fund clients, private placement investors and creditor groups and has led clients through some of the most complex European restructurings and distressed situations in recent years, achieving widespread market recognition and multiple industry accolades.
• Matt Benson — advises creditor groups and fund clients on multijurisdictional restructurings, distressed financings, private credit workouts and creditor-driven enforcement strategies, again leading on some of the highest profile deals in the market and gaining the trust of some of the largest and most sophisticated funds in Europe.

“Neil, Lois and Matt are advisors that leading global credit investors consistently turn to. They bring a cross‑border sophistication that enhances the integrated U.S.–Europe restructuring platform that’s already central to who we are as a firm,” said Akin co-chair and financial restructuring partner Abid Qureshi. “Their return strengthens our entire creditor‑side franchise, from restructuring to special situations, capital solutions and hybrid capital, and ensures we can serve the same clients seamlessly across jurisdictions and the full spectrum of stressed and complex capital structure work.”

Devaney said, “Akin’s fully integrated platform brings together restructuring and capital solutions across performing credit, stressed investments, and restructurings. This is a truly unique opportunity to establish the strongest creditor-oriented platform of any global firm.”

"Private credit has reached institutional scale in Europe, the Part 26A regime has reshaped the restructuring toolkit, and cross-border capital structures have made integrated creditor counsel essential," said Barry Russell, Senior Partner of Akin's London Office. "We have built and maintained a Band 1 London restructuring practice for the past twenty years. Neil, Lois and Matt return having built a Band 1 practice in their own right and bring the leadership and depth of experience to carry our practice into its next chapter."

The team re-joins Akin from Weil, Gotshal & Manges, where they were partners in the Restructuring team and Neil co-headed the London practice.

About Akin’s Financial Restructuring Practice

Akin’s financial restructuring practice is one of the world’s leading creditor-side restructuring platforms, advising sophisticated credit investors, ad hoc creditor groups, official committees and institutional lenders on the most complex restructurings, liability management transactions, and special situations mandates across the U.S., European and Asian markets.

Akin is a leading international law firm with more than 1,000 lawyers in offices throughout the United States, Europe, Asia and the Middle East.

Energy Alert 

On May 21, 2026, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) in Docket No. RM25-12-001 proposing the most consequential overhaul of its regulations governing natural gas pipeline permitting in 20 years. If finalized, the NOPR’s proposals would expand the scope of FERC’s regulations governing Part 157, Subpart F blanket certificates, which authorize construction of pipeline facilities without the need for a case-specific Natural Gas Act (NGA) section 7 authorization, as long as the operator provides “prior notice.”

The NOPR is expressly deregulatory: the proposed changes include more than doubling of the dollar threshold governing blanket certificate eligibility, the right for operators to charge incremental rates for prior notice projects, and a modernization of the indexing methodology used to set future cost thresholds. Comments are due 60 days after publication in the Federal Register, and the Commission has invited input on several discrete proposals it characterizes as “illustrative.”

The NOPR comes at a time when FERC is facing calls to advance infrastructure development to meet growing needs for natural gas-fired power generation supporting the electric grid and large loads, like data centers, and to speed feed gas supply for liquefied natural gas (LNG) export facilities. For pipeline developers, the proposals are materially favorable, but they are likely to face scrutiny from environmental and landowner groups concerned about changes to permitting guardrails and by ratepayer representatives seeking to prevent cost shifts to captive customers.

Background

FERC first established the blanket certificate program in 1982 in Order No. 234 to create a new mechanism under NGA section 7(c) for interstate natural gas pipelines to obtain “blanket” authorization covering specified categories of future activities in an effort to streamline the certification process for routine, lower-impact activities. It permitted certain pipeline construction, modification, replacement, acquisition, operation and abandonment activities, provided they occurred within prescribed limits, with eligibility caps on total project costs. Certain activities below the lowest dollar thresholds were automatically authorized and reported to FERC in annual reports. More costly activities that still fell below a prescribed cap required “prior notice” with protest rights to preserve stakeholder protections. Those projects, however, could begin construction relatively quickly if the protests were resolved, or if no protests were filed, without a FERC order authorizing the activity. FERC categorically excludes blanket certificate activities from the preparation of an environmental assessment or environmental impact statement under the National Environmental Policy Act (NEPA). Most recently, the cost limit for prior notice projects was $41.1 million, which FERC had temporarily increased to $61.65 million in 2025 for projects placed in service prior to May 31, 2027.

The blanket certificate program has been revised since its inception, most recently in Order No. 686, which was issued in 2006. Through each revision, FERC expanded the scope and limits of the program, rather than altering the core design introduced in 1982.

The NOPR would continue FERC’s historical practice of expanding the program’s scope, rather than contracting it. It follows a petition for rulemaking filed by the Interstate Natural Gas Association of America (INGAA) for a temporary waiver to increase the cost limitations of this program from $41.1 million to $82.2 million. While FERC ultimately issued the waiver on June 18, 2025, it capped the cost threshold temporarily at $61.65 million, but initiated a Notice of Inquiry (NOI) seeking comments on the cost threshold as well as broader reforms to the blanket certificate program. The comments led to the NOPR’s issuance, as well as a one-year extension of the temporary waiver, applying it to projects placed in service by May 31, 2028.

Increased Cost Thresholds and a New Indexing Methodology

The NOPR recognizes that the current cost threshold of $41.1 million, absent the temporary waiver cap of $61.65 million, as well as the methodology used to arrive at that threshold, may be outdated. Citing data submitted by INGAA, FERC demonstrates that natural gas infrastructure construction costs have outpaced the annual gross domestic product (GDP) deflator adjustments it currently uses to adjust blanket certificate thresholds. The INGAA data showed a 256.98% median increase in cost per inch-mile and a 172.76% increase in cost per horsepower for compressor stations from 2006 through 2024, compared with only a 50–51% increase in the cost limits over the same period.

In line with this data, the NOPR proposes to substantially raise the dollar thresholds that govern blanket certificate eligibility:

• Automatic authorization would increase from $14.5 million to $30 million.
• Prior notice would increase from $41.1 million (subject to a temporary waiver to $61.65 million through May 31, 2028, pursuant to a concurrently issued FERC order) to $86 million.

FERC also proposes to abandon the GDP implicit price deflator in favor of the Handy-Whitman Index for Gas Compressors and Gas Transmission Line Pipe, averaged across all regions on a year-over-year January-to-January basis, with the Director of the Office of Energy Projects authorized to compute and publish future-year limits. FERC has invited comment on whether a three-year rolling average would better dampen volatility. However, FERC declined INGAA’s request for a further upward adjustment to account for projected (rather than historical) cost trends, viewing it as speculative.

Elimination of Cost Caps for Receipt Points and Compressor Station Expansions

Two of the NOPR’s most consequential proposals remove cost caps altogether for discrete categories of work:

• Receipt points would be treated the same as delivery points­—eligible for automatic authorization with no cost limit—on the rationale that the underlying facilities (taps, meters, heaters, gas conditioning, odorization) are functionally identical. A new definition of “Receipt Point” would be added at § 157.202(b)(14).
• A new § 157.210 would authorize, under prior notice procedures, construction, modification, replacement and operation of compression and other facilities within the fence line of an existing compressor station with no cost limit, provided the pipeline owns or leases all project land. Applicants must submit the full Resource Report 9 (air and noise quality) information required by § 380.12(k), and applications must be complete when filed given the compressed 60-day environmental review window.

Mainline Facilities — Comment Invited

One of the single most impactful changes in the NOPR is FERC’s proposal to incorporate mainline facilities (compression and looping that are not “eligible facilities” under § 157.202(b)(2)(i)) into § 157.208(a)(3) for automatic authorization. FERC seeks comment on whether such projects have minimal impacts on ratepayers and pipeline operations and whether automatic predeterminations of rolled-in rate treatment should apply. At present, any mainline projects must be reviewed under the prior notice procedures, even if they fall below the automatic authorization cost threshold.

Streamlined Abandonment and Facility-Specific Reforms

• Storage well abandonments that do not alter the storage field’s certificated physical parameters (total inventory, reservoir pressure, reservoir and buffer boundaries, certificated capacity) would qualify for automatic authorization rather than prior notice.
• The abandonment cost calculation would be based on the actual cost of abandonment rather than the hypothetical modern-day cost of replicating the facility, freeing more abandonment activity to proceed under blanket authority.
• Synthetic gas and revaporized LNG facility projects would no longer be channeled into prior notice review under the current § 157.212; instead, they could proceed under either automatic authorization or prior notice subject to the applicable cost limits, reflecting FERC’s accumulated post-2006 experience and existing gas-quality tariff protections.
• Delivery point abandonments would be permitted under automatic authorization where the certificate holder obtains written customer consent for service in the prior 12 months, or where the point has not provided service for 12 months and is no longer covered by a firm contract.

Incremental Rates on Prior Notice Projects — A First

In a significant policy shift, FERC proposes to permit pipelines to charge incremental rates on projects constructed under prior notice procedures, reversing a longstanding prohibition. Applications must include a rate calculation supported by the exhibits required for NGA section 7 project-specific applications located § 157.14(a)(14)–(19) to enable FERC staff and parties to evaluate the rate within the 60-day notice period. If unprotested, the incremental rate effectively would be approved through the prior notice proceeding, with a subsequent NGA section 4 filing to implement the tariff record before service commences. Applications must be complete when filed; incomplete applications risk rejection or staff protest.

The Commission proposes to continue automatic predeterminations of rolled-in rate treatment for blanket projects charging existing system rates, but applicants for prior notice mainline expansions seeking rolled-in treatment must provide evidence of no major impact on existing customers—responsive to cost-shifting concerns raised in the NOI comment period by certain trade associations representing investor owned and municipal natural gas public utilities. A new § 157.208(c)(7) also would require applications seeking to implement an incremental rate to include a statement explaining how the public convenience and necessity requires approval, including the project’s purpose and beneficiaries.

Two-Year In-Service Deadline

Currently, all prior notice projects must be in service within one year of the authorization taking effect. FERC proposes to extend this time limit to two years, consistently with its practice for project-specific NGA section 7 authorizations to accommodate permitting delays, supply-chain disruptions and seasonal construction windows. Director-level extensions remain available. If delay is attributable to end-user/shipper unreadiness, the certificate holder must notify the Commission within 10 days after expiration of the two-year period.

Environmental Compliance

While prior notice projects are categorically excluded under NEPA, they remain subject to consultations under the Endangered Species Act (ESA) and National Historic Preservation Act (NHPA). In the NOPR, FERC proposes to streamline the ESA process and make certain changes to the NHPA process. For ESA purposes, if the certificate holder determines (using federal databases such as the United States Fish and Wildlife Service’s Information for Planning and Consultation tool) that a project will have no effect on listed species or critical habitat, only documentation of the finding is required and no informal consultation is necessary. Projects that “may affect” species would still require informal consultation, and projects “likely to adversely affect” species would continue to require a case-specific order.

The NOPR did not adopt INGAA’s proposal to change the blanket certificate eligibility standard from “no effect” to “no adverse effect” on properties listed or eligible for listing in the National Register of Historic Places (defined as historic properties). FERC was concerned that such a change could not be easily implemented and remain compliant with the NHPA. However, FERC proposed changes to the program that would designate the certificate holder as FERC’s non-federal representative for NHPA compliance upon acceptance of the blanket certificate, paralleling existing ESA practice.

Expanded Landowner Notification

Landowner notifications are one area in which FERC proposes more onerous regulations for blanket certificate projects. FERC would require certificate holders to contact all affected landowners using certified or first class mail, both for automatic authorization and prior notice projects, replacing the subjective “good faith effort” standard and harmonizing with section 7 practice. In the case of prior notice projects, landowner notifications would be required both at initiation of easement negotiations and within three business days of docket number assignment, closing the gap where easement negotiations may precede docket assignment by months. FERC declined to expand the “affected landowner” definition, mandate electronic notice or require Office of Public Participation meetings during the notice period.

General Takeaways

The prior notice program’s popularity has grown in part due to growing opposition to pipeline infrastructure. In part because Part 157, Subpart F authorized projects are categorically excluded from the preparation and review of time-consuming NEPA documents, pipeline operators are able to deploy capital faster with greater commercial flexibility and increase their customer base. Projects that may not have penciled out because of the permitting timeline may become economic if they can fall into the revised prior notice project category. Hence, it did not escape notice by the FERC Commissioners that their proposed reforms were in alignment with more general permitting reform efforts currently under review in Congress and at other federal agencies. Indeed, the NOPR represents a generational opportunity for interstate natural gas pipelines to expand the universe of projects executable under blanket authority, thereby expanding the size of the pipeline grid at a time when natural gas demand is rising.

Engagement in this NOPR will be crucial for pipeline industry participants interested in reforms that do not require statutory changes at the Congressional level. We expect priorities for industry engagement to include (i) the proposed automatic authorization for mainline facilities; (ii) the proposed new indexing methodology; (iii) the rolled-in rate evidentiary showing for prior notice mainline expansions; and (iv) preserving the deregulatory thrust of the package against anticipated opposition. Comments will be due 60 days after Federal Register publication. Hence, we expect a final rule prior to the end of the year.

International Disputes Alert

On 22 May 2026, the International Chamber of Commerce (ICC) published its updated Arbitration Rules (2026 ICC Rules), which will apply to all ICC arbitrations commenced on or after 1 June 2026. The President of the ICC Court of Arbitration, Claudia Salomon, says the goal is to make arbitration “more efficient, while preserving the flexibility and procedural integrity that parties expect”.

The update comes as ICC arbitration continues to be the preferred choice for users globally.¹ The ICC’s caseload has remained consistently high over the past 5 years. In 2025, 894 new cases were filed (compared to 946 in 2020), with 1,869 ongoing cases administered under the ICC Rules at year end (1,833 in 2020), and the value of pending disputes totalling $299 billion ($258 billion in 2020, though this difference is not inflation-adjusted).²

The new 2026 ICC Rules (available here) introduce a series of notable changes – including a ‘highly-expedited’ procedure and an early determination mechanism for unmeritorious claims – alongside other adjustments aimed to streamline proceedings and reduce time and cost, ensuring the ICC Rules remain the preferred institution globally. The 2026 ICC Rules have also increased arbitrators’ case management powers in general. We highlight the key changes below.

Introduction of a Highly Expedited Procedure

In line with the parties’ desire for efficient, quick dispute resolution solutions, the 2026 ICC Rules introduce new ‘highly expedited arbitration provisions’ (HEAP),³ designed to resolve disputes with lower-complexity, a simple factual matrix, or discrete issues. The HEAP, which do not have automatic application based on value or other criteria, work on an opt-in basis by agreement between parties (either in an existing arbitration agreement or after a dispute arises).

The HEAP condense the arbitral process such that the final award is issued within three months of the initial case management conference (CMC):

• HEAP arbitrations are always referred to a sole arbitrator;
• the sole arbitrator has 7 days from receipt of the file to hold the CMC;
• the sole arbitrator has discretion over the procedure adopted, and a decision can be made on the documents (i.e. without a hearing);
• the parties can agree to an award being issued without reasons;
• the Request and Answer must include a Statement of Claim and Defence respectively;
• the parties are encouraged to submit evidence concurrently; and
• no joinder of additional parties or consolidation of arbitrations will be allowed.

The introduction of HEAP aligns with a broader trend among arbitral institutions to offer faster tracks for smaller claims: notably, the Singapore International Arbitration Centre (SIAC) introduced a similar streamlined procedure in its 2025 Rules, which applies by default to disputes under SGD 1 million (≈USD 750,000) and likewise aims to issue an award within three months.

New Early Determination Power

The 2026 ICC Rules empower ICC tribunals to dismiss clearly unmeritorious claims or issues (or defences thereto) at an early stage - without the need to proceed to a full evidentiary hearing. The introduction of an early determination power brings the ICC into line with other major arbitral institutions – notably the Hong Kong International Arbitration Centre (HKIAC), SIAC and London Court of International Arbitration (LCIA).

While arguably ICC tribunals already possessed the inherent authority to do this, explicitly codifying this mechanism in the rules will bring increased clarity and is expected to enhance parties’ and tribunals’ confidence on early determination, which will help streamline proceedings and deter purely tactical commencement of arbitrations.

Specifically, parties will be able to apply for claims or defences to be disposed of summarily on the grounds that they are “manifestly without merit”, or “manifestly outside the arbitral tribunal’s jurisdiction”.⁴ It remains to be seen how ICC arbitrators will employ the new summary dismissal power, and how the threshold will be applied.

Changes to Emergency Arbitrator Provisions

Emergency arbitration permits parties to obtain urgent interim or conservatory relief prior to the constitution of a full arbitral tribunal, and the ICC’s emergency arbitrator provisions have been utilised 287 times since first introduced in 2012.⁵

The 2026 ICC Rules have expanded their scope of application and enhance their effectiveness, based on the realities of past ICC practice.

Going forward:

• emergency arbitrations proceedings can be initiated against a party who is not a signatory to an arbitration agreement, where the President of the ICC Court is satisfied that an arbitration agreement binding that party may exist; and
• preliminary orders (including without notice to the other party) are now expressly provided for (again taking after the LCIA, HKIAC, and SIAC rules), to prevent another party from frustrating the purpose of the EA application. Procedural safeguards apply and other parties will be given a reasonable opportunity to present their case if an order is granted.

Increased Scope of Expedited Procedure Provisions (EPP)

As we anticipated earlier in 2026, the ICC has increased the threshold below which the EPP apply by default.⁶

From 1 June 2026, all disputes with a value of less than $4 million filed in respect of an arbitration agreement concluded on or after 1 June 2026 will proceed under the EPP.⁷

The EPP, as carried over from the 2021 Rules, allow for the appointment of a sole arbitrator (even where parties have agreed a greater number of arbitrators), compress the procedural timetable to rendering a final award within six months from the CMC, and give the tribunal powers to streamline proceedings by limiting document production, pleadings, and evidence, and even to decide the case without an oral hearing.

The increase in value threshold demonstrates the confidence of the ICC in the ability for higher-value disputes to be resolved fairly and effectively under shorter, simplified frameworks.

The scope of the EPP will now be substantial – according to ICC statistics, in 2025 alone, 40% of cases filed did not exceed $4 million in value.⁸

Terms of Reference No Longer Mandatory

The Terms of Reference, a long-term defining characteristic of ICC arbitration, will no longer be mandatory under the 2026 ICC Rules.

Up until now, parties and tribunals in all ICC arbitrations (excluding those under the EPP) had to agree and sign at the start of an arbitration the so-called “Terms of Reference” – a document setting out the framework for the proceedings, the parties’ claims and relief sought, the issues to be determined, the jurisdictional basis of the arbitration, and key procedural matters.

Yet what was originally envisaged as a tool to crystallise the dispute and enhance early case management gradually became more controversial. The change is therefore intended to simplify proceedings and prevent early delay to claims. It also brings the 2026 ICC Rules in line with the rules of other major arbitral institutions.

Parties will still be free to adopt Terms of Reference voluntarily, however it remains to be seen how often they will choose to do so in practice – by comparison, under the EPP, parties have voluntarily adopted Terms of Reference in under 2.5% of cases.⁹  Importance may therefore shift to the CMC and Procedural Order 1 as the parties’ opportunity to establish the boundaries of proceedings.

Other Changes

In addition to the structural changes to the 2026 ICC Rules identified above, the new rules also adopt other notable amendments:

• the 2026 Rules maintain arbitrators’ disclosure standard as an ongoing duty but clarify that any doubt should be resolved in favour of disclosure. Parties are also now requested to include in the Request for Arbitration and Answer, a list of individuals and entities that prospective arbitrators should screen for potential conflicts;¹⁰
• there is a greater emphasis on electronic communication, and express provision for hybrid hearings and tribunal deliberations;¹¹
• arbitrators and tribunal secretaries are now bound by an express obligation of confidentiality, though the 2026 ICC Rules do not have a confidentiality obligation on the parties themselves by default.¹² That remains a point of contrast to other major institutional rules, including the LCIA, HKIAC, and SIAC;
• parties now have 45 days (as opposed to 30 days) to apply to correct awards – which may create conflicts with local national laws, where deadlines to challenge or set aside an award can be much shorter;¹³
• a party can now be joined to an ICC arbitration after the tribunal is constituted if it consents to such joinder. The consent of the tribunal and other parties is no longer needed;¹⁴
• the schedules of administrative expenses and arbitrators’ fees have been decreased for disputes below $10 million, though increased for claims over that threshold.¹⁵ While the ICC has historically been the natural forum for high-value claims, this measure may attract more lower-value disputes which might formerly have been priced-out of the ICC;
• when an ICC arbitration follows an ICC mediation, the ICC will credit half of the mediation administrative expenses against the arbitration costs.¹⁶ This incentivizes users of ICC arbitration to also rely on the ICC for mediation purposes, while creating a financial incentive for parties that may not have considered mediation before to rely on it.

Conclusion

As international arbitrations have become increasingly lengthy and rigid, more akin to traditional litigation proceedings, the changes brought in by the 2026 ICC Rules are a welcome reversal to this trend, introducing or improving a variety of procedural mechanism to ensure greater speed, efficiency and flexibility in the arbitral process.

The new rules are expected to maintain the pre-eminence and desirability of ICC arbitration, not only within its traditional bastion of high-value international commercial disputes, but also to boost its appeal for lower-value, more cost and time-sensitive arbitration and mediation proceedings.

Our international disputes team is on hand to assist with any queries.

¹ “2025 International Arbitration Survey The path forward: Realities and opportunities in arbitration” (Queen Mary University London, 3 June 2025, available here).

² “ICC releases preliminary 2025 dispute resolution statistics” (International Chamber of Commerce, 12 February 2026) < https://iccwbo.org/news-publications/news/icc-releases-preliminary-2025-dispute-resolution-statistics/ >; “CC Dispute Resolution Statistics: 2020” (International Chamber of Commerce, 3 August 2021) < https://iccwbo.org/news-publications/arbitration-adr-rules-and-tools/icc-dispute-resolution-statistics-2020/ >.

³ 2026 ICC Rules, Article 33 and Appendix VI.

⁴ 2026 ICC Rules, Article 30.

⁵ “Unveiling the 2026 ICC Arbitration Rules, part 3: Expedited Procedure Provisions and Emergency Arbitration” (International Chamber of Commerce, 19 May 2026) <https://iccwbo.org/news-publications/news/unveiling-the-2026-icc-arbitration-rules-part-3-expedited-procedure-provisions-and-emergency-arbitration/>

⁶ “International Arbitration: Time and Cost Efficiency – The ICC Commission Publishes Reports on its Expedited Procedure Provisions” (Akin, 2 February 2026) <https://www.akingump.com/en/insights/alerts/international-arbitration-time-and-cost-efficiency-the-icc-commission-publishes-reports-on-its-expedited-procedure-provisions >

⁷ Unless: i) the parties agree to opt out of the Expedited Procedure Provisions; ii) the Court determines that it is inappropriate in the circumstances to apply the Expedited Procedure Provisions; or iii) the arbitration agreement was concluded before the date on which the Expedited Procedure Provisions came into force. This is a substantial increase from the prior threshold of $3 million (in respect of arbitration agreements concluded between 1 January 2021 and 1 June 2026 - or $2 million in respect of arbitration agreements concluded between 1 March 2017 and 1 January 2021). 

⁸ “Unveiling the 2026 ICC Arbitration Rules, part 3: Expedited Procedure Provisions and Emergency Arbitration” (International Chamber of Commerce, 19 May 2026) <https://iccwbo.org/news-publications/news/unveiling-the-2026-icc-arbitration-rules-part-3-expedited-procedure-provisions-and-emergency-arbitration/ >

⁹ Fewer than 25 cases out of over 1,000 administered under the EPP - “Unveiling the 2026 ICC Arbitration Rules, part 2: Moving beyond mandatory Terms of Reference” (International Chamber of Commerce, 15 May 2026) <https://iccwbo.org/news-publications/news/unveiling-the-2026-icc-arbitration-rules-part-2-moving-beyond-mandatory-terms-of-reference/>

¹⁰ 2026 ICC Rules, Article 12(2) and 12(5).

¹¹ 2026 ICC Rules Article 3, Article 19, Article 27.

¹² 2026 ICC Rules Article 12.

¹³ 2026 ICC Rules Article 39.

¹⁴ 2026 ICC Rules Article 8.

¹⁵ 2026 ICC Rules Schedule of Fees.

¹⁶ 2026 ICC Rules Appendix III Article 6(12).

White Collar Defense & Government Investigations Alert

Key Takeaways

• The CFTC’s Division of Enforcement issued a new cooperation advisory that creates a clear path to declination, subject to the Division’s discretion, for companies that self-report, fully cooperate, provide full restitution and/or disgorgement, and remediate misconduct, absent aggravating circumstances.
• The advisory replaces prior, highly structured guidance with a more streamlined approach.
• The Division will credit prompt, good-faith self-reporting even if the CFTC already learned of the misconduct from another source, a notable departure from past practice.
• The new advisory reflects the Commission’s continuing effort to recalibrate its cooperation framework, but frequent revisions to cooperation policies create uncertainty for market participants weighing self-reporting decisions.

The New Cooperation Framework

On May 19, 2026, the Commodity Futures Trading Commission’s (CFTC) Division of Enforcement (Division) issued a staff advisory outlining a new approach to evaluating cooperation, self-reporting and remediation in enforcement matters. The advisory supersedes all prior guidance and is intended to provide greater clarity, promote consistency and reinforce transparency in the Division’s enforcement practices.

The centerpiece of the new advisory is a defined pathway to declination. Under the advisory, the Division may, in its discretion, decline to recommend enforcement action where a party voluntarily self-reports misconduct, provides full cooperation, undertakes timely and appropriate remediation and provides restitution and/or disgorgement as necessary, so long as no aggravating circumstances preclude eligibility. This represents a meaningful change from prior guidance, in which declinations were reserved for exceptional or extraordinary cases.

To qualify as a voluntary self-report, disclosure must be made proactively and before any known or reasonably anticipated imminent threat of disclosure from another source. The self-report may be made to any CFTC division and need not be made directly to the Division of Enforcement. It also must be made within a reasonably prompt time after becoming aware of the misconduct, and the party must report all material, non-privileged information in its possession or control. Notably, the Division will credit good faith self-reporting even if the Commission has already learned of the underlying conduct from a confidential source.

To receive credit for full cooperation, a party must make timely and proactive disclosure of all relevant non-privileged information at the time of reporting, even if an internal investigation is ongoing. Full cooperation typically requires, among other things, preserving and producing relevant documents in a timely manner, providing factual information identified through internal reviews, identifying and facilitating access to key personnel and otherwise assisting the Division in understanding the facts.

Timely and appropriate remediation requires a company to identify and address the root causes of the misconduct. A party must implement an effective compliance and ethics program and appropriately discipline employees responsible for the misconduct, including those who engaged directly in wrongdoing and those who failed in their supervisory responsibilities. Recognizing that the remediation process may be lengthy and complex, the Division may award cooperation credit before full implementation of remediation.

If a party voluntarily self-reports, provides full cooperation, undertakes timely and appropriate remediation and provides restitution or disgorgement as required, the Division has discretion to grant a declination. Aggravating circumstances—such as intentional or reckless misconduct, recidivism or egregious harm—may preclude eligibility for a declination, though the Division still retains discretion to refrain from recommending an enforcement action where such circumstances do not outweigh cooperation and remediation. The advisory also provides for reductions in recommended civil monetary penalties of between 25 and 75 percent under certain circumstances, such as when a party has provided timely and appropriate remediation and full restitution and/or disgorgement, but did not make a voluntary self-report, did not engage in full cooperation, and/or aggravating circumstances are present.

Implications for Market Participants

The CFTC’s new cooperation advisory is a sharp departure from the detailed framework set out in the CFTC’s February 2025 advisory on self-reporting, cooperation and remediation. That earlier guidance introduced a highly structured methodology for evaluating cooperation, including a three-tier scale for self-reporting, a four-tier scale for cooperation and a mitigation credit matrix linking those assessments to quantitative reductions in civil monetary penalties.

The advisory reflects a deliberate effort to simplify the approach to self-reporting and cooperation while strengthening incentives for market participants to disclose and remediate misconduct. By establishing a clearer path to declination and replacing a complex matrix-based framework with a simplified standard, the Division has prioritized transparency and ease of administration.

This presents both opportunities and potential pitfalls for market participants. The most immediate benefit is the availability of a clearer and more transparent pathway to declination for companies that are prepared to self-report, cooperate fully and remediate misconduct. This clarity may facilitate more predictable and favorable outcomes and encourage earlier engagement with the Division. However, the advisory creates a relatively high bar for declination, and parties who self-report misconduct risk failing to meet it. In addition, the Division’s history of frequent revisions to its cooperation guidance introduces uncertainty regarding the durability of the new advisory.

The cooperation framework also raises important questions regarding its interaction with the CFTC’s whistleblower program, which is designed to incentivize individuals to report potential violations by offering monetary awards and anti-retaliation protections. By allowing firms to receive self-reporting credit even where the Commission has already learned of the misconduct from a confidential source, the advisory may reduce the relative leverage of whistleblower tips in certain enforcement scenarios.

Market participants should carefully evaluate how the new framework affects their compliance programs, internal investigation protocols and decision-making regarding self-reporting. Our experienced white collar and regulatory lawyers can assist with reviews of policies and procedures and other considerations in light of this new advisory.

(Dubai) – Akin's Dubai capital markets team advised Türkiye Petrolleri Anonim Ortaklığı (TPAO), Türkiye's state oil and gas company, on the $500 million tap issuance of its inaugural $1 billion lease certificates, issued under TPAO's $4 billion trust certificate issuance program.

This transaction builds on Akin's role advising TPAO on both the formation of its $4 billion Sukuk program and its landmark $1 billion issuance, representing the first sukuk issuance by a Turkish public economic enterprise and the largest corporate sukuk completed in Türkiye.

The successful execution of this tap offering confirms TPAO's standing as a repeat issuer in the international Islamic capital markets and its capacity to access capital efficiently under its established program framework. The lease certificates were issued through TPAO's asset leasing company, TPAO Varlik Kiralama A.Ş., with Standard Chartered Bank and Emirates NBD Capital serving as joint lead managers.

The transaction reflects the continued development of Türkiye's sukuk market and sustained institutional demand for high-quality, Shariah-compliant emerging market instruments, particularly from international institutional investors.

The Akin team was led by capital markets partner Rizwan Kanji, with support from counsel Nicola Minervini and Sahar Abas.

Akin is a leading international law firm with more than 1,000 lawyers in offices throughout the United States, Europe, and the Middle East. 

The Harvard Law School Forum on Corporate Governance has published an article titled, “Delaware Supreme Court Affirms Dismissal of Premature Challenges to Advance Notice Bylaws,” co-authored by Akin investment funds litigation and shareholder activism practice head Douglas Rappaport and litigation partners Scott Barnard and Stephanie Lindemuth. 

The article examines the Delaware Supreme Court’s decision to dismiss challenges to advance notice bylaws and explores its broader implications.  

As the authors explain, "This decision reinforces a practical threshold point for advance notice bylaw litigation: Delaware courts are generally reluctant to engage in pre‑enforcement equitable review of advance notice bylaws based on alleged deterrent effects alone, where plaintiffs cannot plead a concrete dispute.” 

To read the full piece: https://corpgov.law.harvard.edu/2026/05/21/delaware-supreme-court-affirms-dismissal-of-premature-challenges-to-advance-notice-bylaws/ 

Akin has been recognized as part of the Afghan Pro Bono Initiative (APBI), which was named the winner of the Pro Bono Award at the 2026 LexisNexis Legal Awards. The awards celebrate excellence, innovation and impact across the legal profession, with the Pro Bono Award honoring innovative programs and outstanding contributions to access to justice.

APBI was established to address the urgent need for Afghans to access legal information, advice and representation relating to safe routes to the United Kingdom. The initiative is a multiyear collaboration led by Refugee Legal Support and Safe Passage International, alongside ten international law firms. The project operates across the UK, Afghanistan and neighboring countries and has grown into the largest collaborative pro bono effort of its kind in the UK.

Since its launch, the initiative has provided full legal representation to 284 Afghans, delivered one‑off legal advice to more than 500 individuals, and shared reliable legal information with over 2,000 people. This recognition reflects the dedication and commitment of the lawyers involved, and the power of collaboration in advancing access to justice.

The Akin team working on the initiative was led by partner Kambiz Larizadeh and included senior counsel Aimee Smart, counsel Suley Siddiqui and associate Radu Suciu.

Akin has been named UAE Corporate Compliance & Investigations Law Firm of the Year at the Chambers Middle East Awards 2026.

The awards recognize outstanding achievements over the past year, including exceptional legal work, strategic growth and superior client service.

This win is accompanied by the practice’s Band 1 ranking in the Chambers Global Guide 2026, for which, “the team is especially highlighted for its extensive experience assisting clients with the full gamut of export control and cross-border sanctions-related issues.”

Akin was also shortlisted in the category UAE Dispute Resolution International Law Firm of the Year.

For more information, click here.

Lobbying & Public Policy Alert

While much of the policy debate about cryptocurrency on Capitol Hill has been centered around market structure, members of the tax writing committees have also been working on proposals to update the Internal Revenue Code to give taxpayers greater clarity around the tax treatment of digital assets, and may be prepared to advance a tax package with or without accompanying market structure legislation.

On May 19, 2026, House Ways & Means Committee members Rep. Max Miller (OH-07) and Rep. Steven Horsford (NV-04) along with Reps. Carey (OH-15) and DelBene (WA-01) formally introduced legislation (The Digital Asset PARITY Act) that would address the taxation of digital assets in a comprehensive manner. The bill represents the culmination of a lengthy process of incorporating feedback on several public discussion drafts going back to 2025. The introduced version covers wash sales, charitable contributions, digital asset lending, and newly created digital assets. Significantly, it takes a novel approach to so-called “de minimis” transactions with regulated payment stablecoins, adopting a deemed basis rule rather than the exemption approach that has generally been proposed to date, accompanied by a US Treasury study to assess the administrability and effectiveness of a de minimis rule.

In the upper chamber, Sen. Cynthia Lummis also has a comprehensive crypto tax proposal that’s been introduced in the Senate, around the time of consideration of the One Big Beautiful Bill Act. Sen. Steve Daines has also been a leading voice for action on crypto tax policy, and has taken steps to outline a potential policy framework.

The House Ways and Means Committee has already touched on crypto issues, having marked up legislation to repeal the IRS’s DeFi Broker Rule in February 2025, and is continuing to hold discussions at the Member level about what should be included in a broader package. During consideration of the DeFi Broker Rule, political tensions flared between Republicans and Democrats, signaling potential turbulence on the journey ahead for any far-reaching crypto legislation. While the Miller-Horsford effort demonstrates significant bipartisan potential in the crypto tax space, there is not yet consensus on a path forward. House Ways & Means Committee majority staff and Chairman Jason Smith have indicated that they are working on their own Committee product that they will be working to build unanimity around. Chairman Smith convened a bipartisan Member briefing with stakeholders in May 2026 to help educate lawmakers about the tax policy questions raised by digital assets. has generally expressed a desire to limit consideration of a digital assets tax bill to a single subject matter, to avoid pulling in extraneous issues and costs, with a goal of considering legislation during the current Congress pending bipartisan support.

Senate Finance Committee Chairman Mike Crapo has similarly indicated that action on crypto tax is a priority for his committee, and Ranking Minority Member Senator Wyden has also indicated an interest in moving these issues forward. However, as in the House, a consensus has not yet formed around how the many issues legislation could cover should be resolved, and the politics of legislating around crypto generally could present an ongoing challenge for any bipartisan effort. For example, Senate Finance Committee Ranking Member Ron Wyden cited in an October 1, 2025 hearing on digital assets past testimony from former IRS Commissioner Charles Rettig that the “tax gap” may be twice what has been reported because of the “shadowy” world of crypto. Wyden urged legislation and regulation, asserting that unclear rules of the road enable bad actors. At the same hearing, Sen. Elizabeth Warren attacked bipartisan de minimis policies, likening cryptocurrency to securities and asserting that such policies represented “special” rules – not parity with traditional currency. Sen. Tina Smith was critical of proposals that would treat mining/staking rewards as anything other than currently taxable income.

If divides do emerge in consideration of digital asset tax legislation, it is possible they will not fall along traditional partisan lines as a matter of substance. Digital asset skeptics could be expected to emphasize closing the tax gap, creating parity rather than advantages over traditional finance, limited application of deferral, and comprehensive information reporting. On the other hand, policymakers adopting a more bullish position on digital assets might prioritize administrability and technological feasibility, especially for DeFi. They might also target higher de minimis thresholds, deferral to avoid creation of “phantom income,” and more caution in trying to fit digital assets into traditional securities tax regimes.

Ultimately, there appears to be bipartisan agreement that current laws and regulations are inadequate to ensure compliance and provide taxpayers with the clarity they need, but a lack of agreement on the best path forward. The live fights are not about whether crypto should be taxed, but about how aggressively to force compliance through reporting, how much relief to give everyday users, and whether tax law should bend to new technology or force crypto into old boxes. Those questions will continue to define where bipartisan deals are possible—and where they break down. Apart from policy substance, hot-button political issues including industry’s growing involvement in political campaigns and elected officials’ personal or family investments in the industry have the potential to derail bipartisan efforts around areas that otherwise enjoy bipartisan agreement. As the potential for movement on Capitol Hill increases, both direct and indirect stakeholders should carefully monitor this space and engage with policymakers where needed, as the taxation of digital assets continues to be highly fluid, with both legislative and oversight implications that could have a far-reaching impact over the coming years.

International Arbitration Alert

Two key decisions from the French Court of Cassation (First Civil Chamber) issued on 6 May 2026 deal with the question of dual nationals in ISDS arbitration and the application to treaty interpretation of Article 31 of the Vienna Convention on the Law of Treaties 1969 (the Vienna Convention). While the decisions reached opposite practical results, they are indicative of the highly methodological and detailed approach of the French Court of Cassation in dealing with issues of international law, and will have practical significance for treaty interpretation going forward.

These cases were decided in the context of the jurisdictional hurdle faced by dual nationals to bring bilateral investment treaty (BIT) arbitration claims against a state of which they hold nationality, a question recently before several Courts internationally.

A brief case note follows. The decisions can be found here: Cass. civ. 1ère, 6 May 2026, n° 24-10.445; Cass. civ. 1ère, 6 May 2026, n° 24-21.876.

Dangelas v. Vietnam

The dispute arose after the Claimant, Vietnamese by birth and later naturalized as a United States (US) citizen, invested in the Kien Luong Thermal Complex Power Project in Vietnam. Following an alleged expropriation by the Vietnamese government, the Claimant commenced arbitration under the UNCITRAL rules, invoking protections under the US-Vietnam BIT.  Vietnam challenged jurisdiction from the outset, on the basis that the Claimant, as a dual citizen, did not fall within the scope of the BIT. In an award dated 8 December 2021, the tribunal recognised jurisdiction, finding that the Claimant met the unambiguous definition of the term ‘national’ and that the BIT did not impose any additional criteria in relation to dual nationals.¹

On 7 March 2022, Vietnam applied to the Paris Court of Appeal to set aside the tribunal’s award on jurisdiction, arguing that:

• in accordance with Article 31 of the Vienna Convention, a “treaty must be interpreted in good faith, in accordance with the ordinary meaning of its terms, in their context and in light of its object and purpose”;
• the scope and meaning of the BIT must thus be interpreted in light of the parties’ common intention, which can transpire from any further agreement in that respect;
• on 4 April 2023, the US embassy in Hanoi issued a diplomatic note, whose authenticity was undisputed, stating that “dual nationals are treated as having the nationality of their dominant and effective nationality for the purposes of submitting a claim under international law”; and
• accordingly, the BIT did not preclude dual nationals from bringing claims pursuant to the BIT.

The Paris Court of Appeal rejected Vietnam’s challenge, disregarding the diplomatic note as “merely an opinion from the economic section of the United States Embassy”.²

On appeal, the French Court of Cassation annulled the Paris Court of Appeal decision, holding that:

• a treaty must be interpreted in light of “any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions”;
• the diplomatic note established an agreement between the US and Vietnam for the purposes of interpreting the BIT; and
• by ignoring the diplomatic note, the Paris Court of Appeal had breached Article 31 of the Vienna Convention.

García Armas and García Gruber v. Venezuela

The Claimants were two individuals: a man, born in Spain in 1944, who later acquired Venezuelan nationality in 1972 (and regained Spanish nationality in 2004 after a ban on dual nationality ended), and his daughter, born in Venezuela in 1980 who took Spanish nationality in 2003. After the Venezuelan authorities confiscated the Claimants’ investments in the Venezuelan food distribution sector, they commenced UNCITRAL arbitration under the Spain-Venezuela BIT. The tribunal established jurisdiction in an award issued on 15 December 2014 (following a challenge by Venezuela based on the Claimants’ dual nationality), and later awarded damages of $370 million in an award dated 26 April 2019.

On 29 January 2022, Venezuela brought a challenge to that award in the Paris Court of Appeal, arguing that the Claimants were not entitled to rely on the Spain-Venezuela BIT because:

• pursuant to public international law, Claimants could not rely on their Spanish nationality in their relationship with Venezuela because they were also Venezuelan nationals; and
• in any event, the Claimants only acquired their Spanish nationality after they made the investments that were the subject matter of the dispute such that the requirement of the investments being made by a national of the other contracting state was not met.  

The Paris Court of Appeal, and subsequently the French Court of Cassation, rejected Venezuela’s arguments on jurisdiction, holding that:

• a BIT constitutes a lex specialis between the contracting states;
• the sole requirement of the BIT was that an investor be a national of one contracting state, and in accordance with the ordinary meaning of these terms, this did not exclude the possibility for an investor also holding the nationality of the other contracting state;
• where a BIT contains clearly worded provisions to delimit its scope, as also confirmed in the travaux préparatoires as well as the BIT’s overall structure, recourse may not be had to other rules of public international law, including diplomatic protection principles, to fill the silence of the BIT on dual nationals; and
• the BIT did not exclude dual nationals from entitlement thereunder.

This decision confirms the approach of the French Court de Cassation in Ibrahim Aboukhalil v Senegal,³ whereby the Court declined to make a distinction for dual nationals where the France-Senegal BIT itself did not.

The French Court of Cassation’s Approach to Treaty Interpretation

Read together, the two decisions confirm that:

• the treaty remains the starting point and the wording must be considered strictly;
• general international law (including diplomatic protection principles) cannot automatically be imported to change the scope of treaty protection, unless the contracting states clearly intended to do so; however
• States retain the power to refine the interpretation of the treaty through subsequent agreements, including post-treaty interpretative notes.

They also evidence the long-standing practice of French courts to exercise a de novo review over jurisdictional challenges in investment treaty arbitrations pursuant to Article 1520(1) of the French Code of Civil Procedure.

The decision reinforces the importance of considering subsequent agreements and diplomatic exchanges in treaty interpretation, as well as the primacy of the actual text when interpreting a treaty. The decision may influence future treaty interpretation disputes in French courts and beyond, broadening the scope for what may constitute an “agreement” for the purposes of Article 31(3)(a) of the Vienna Convention, though limiting the scope to import international law principles where not expressly addressed by the parties to the treaty.

Our international disputes team is on hand to assist with any queries following this decision.

¹ Dangelas and others v. Socialist Republic of Viet Nam (PCA Case No. 2020-05) (Decision on Jurisdiction) (10 December 2021)

² Cour d’appel [CA] Paris, 1e ch., 12 September 2023, 15e ch, No. 22/05075.

³ Cass. civ. 1ère, 17 May 2023, n° 21-25.377.

Corporate Alert

On May 19, 2026, the Securities and Exchange Commission (SEC) proposed two companion rulemakings that, if adopted, would constitute significant changes to the public offering and reporting framework. The proposals are part of a broader deregulatory agenda that also includes the SEC’s recently proposed option for semiannual interim reporting in lieu of quarterly reports on Form 10-Q. Both proposals are open for public comment for 60 days following publication in the Federal Register. This alert summarizes the key elements of both proposals and highlights practical takeaways for public companies and investors.

Registered Offering Reform (Release No. 33-11418)

The first proposal would restructure the registered offering framework with the stated intention of facilitating capital formation in the public securities markets.

Expanded Form S-3 Eligibility. The proposed amendments would remove the current requirement that issuers be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (Exchange Act), for 12 months before using Form S-3 and eliminate all of Form S-3’s transaction requirements, including the instruction that requires issuers to have at least $75 million in public float to register an unlimited amount of securities on the form. Form S-3 would continue to require that issuers be current and timely in their Exchange Act reporting and would prohibit certain “ineligible issuers” from using the form. The SEC estimates that these changes could increase the number of issuers eligible to offer an unlimited amount of securities on Form S-3 by over 60%.

Enhanced Registration and Communication Benefits. Currently, significant registration and communication benefits—including automatic shelf registration, pre-filing offers, and flexible use of free writing prospectuses—are reserved for well-known seasoned issuers (WKSIs), which must have at least $700 million in public float or $1 billion of registered debt securities issued. The proposal would create a three-tier structure:

• Some benefits (including the research report safe harbor and flexible use of free writing prospectuses) would be available to all Form S-3 eligible issuers.
• Additional benefits (including pre-filing communication flexibility and pay-as-you-go registration fees) would be available to “Eligible Listed Issuers” (ELIs)—Form S-3 eligible issuers with at least one class of common equity securities listed on a national securities exchange.
• Automatic shelf registration would be available only to “Seasoned Eligible Listed Issuers” (SELIs)—ELIs with at least 12 months of Exchange Act reporting history.

The SEC estimates that this could result in a more than 200% increase in the number of issuers eligible for all of the enhanced registration and communication benefits.

Preemption of State Securities Laws. The proposed amendments would define “qualified purchaser” under Section 18(b)(3) of the Securities Act of 1933, as amended (Securities Act), and preempt state securities law registration and qualification requirements for all registered offerings, including registered offerings of unlisted securities. While many registered offerings are already preempted, including offerings of exchange-listed securities and securities issued by registered investment companies, many registered offerings of unlisted securities remain subject to state registration and qualification requirements.

Form S-1 Incorporation by Reference. Currently, only issuers that, among other things, have filed an annual report for their most recently completed fiscal year, have the ability to incorporate by reference information into Form S-1 filed before the effective date of the registration statement (backward incorporation by reference). In addition, only smaller reporting companies have the ability to incorporate by reference information filed after the effective date of a Form S-1 (forward incorporation by reference). The proposal would expand the ability to incorporate information by reference into Form S-1, allowing both backward and forward incorporation by reference, regardless of whether the issuer has filed an annual report or qualifies as a smaller reporting company. The SEC estimates this could increase the number of issuers eligible to forward incorporate by reference in Form S-1 by up to 106%.

Business Development Companies, Closed-End Funds and Insurance Products. The proposal would extend similar registration efficiencies and communication benefits to a broader group of exchange-listed business development companies and registered closed-end funds on Form N-2, while unlisted affected funds would continue to rely on the existing Rule 486 framework. It also would amend Rule 482 to permit broad-based advertising for registered index-linked annuities and registered market value adjustment annuities, subject to product-specific investor protection conditions, including limits on performance advertising and required fee and expense disclosures.

Public Company Reporting Framework Overhaul (Release No. 33-11419)

The second proposal would simplify the filer status framework and extend disclosure scaling and other accommodations to most public companies.

Simplified Filer Status Categories. Currently, there are five partially overlapping filer statuses—large accelerated filer, accelerated filer, non-accelerated filer, smaller reporting company and emerging growth company. The proposal would streamline the SEC’s filer-status framework into two primary regulatory categories—large accelerated filers and non-accelerated filers—while retaining emerging growth company status as a statutory category. The accelerated filer and smaller reporting company categories would be eliminated.

Higher Large Accelerated Filer Threshold. The public float threshold for large accelerated filer status would be raised from $700 million to $2 billion, calculated based on the average stock price over the last 10 trading days of the second fiscal quarter. The threshold must be met for two consecutive years, and a company must have been subject to Exchange Act reporting requirements for at least 60 consecutive calendar months before qualifying. The SEC described this as effectively creating an “initial public offering (IPO) on-ramp” during which newly public companies benefit from scaled disclosures and other accommodations (described below) regardless of market capitalization.

Extended Accommodations for Non-Accelerated Filers. All non-accelerated filers would receive substantially the same disclosure scaling and other accommodations currently reserved for smaller reporting companies and emerging growth companies, subject to certain exceptions for asset-backed issuers, certain foreign private issuers and certain investment-company-related issuers. These accommodations include scaled executive compensation disclosure (including elimination of pay-versus-performance requirements), two rather than three years of audited financial statements, elimination of the say-on-pay and say-when-on-pay shareholder advisory vote requirements, and exemption from the auditor attestation on internal control over financial reporting under SOX Section 404(b). If adopted, the SEC estimates that these accommodations would apply to approximately 81% of all current public companies.

Small Non-Accelerated Filer Sub-Category. The proposal would create a small non-accelerated filer sub-category for non-accelerated filers with total assets of $35 million or less as of the end of each of their two most recent second fiscal quarters, granting them an additional 30 days to file Form 10-K (120 days total) and an additional five days to file Form 10-Q (50 days total). The SEC estimates that 17.9% of all public companies would qualify for this sub-category.

Key Takeaways

For public companies currently below the $2 billion public float threshold, the proposals represent a reduction in compliance costs and regulatory burden. Companies below the proposed $2 billion public float threshold may transition to non-accelerated filer status, subject to the proposal’s two-year measurement and transition rules, gaining access to scaled disclosure accommodations, relief from SOX 404(b) auditor attestation requirements, and the non-accelerated filer filing deadlines of 90 days for Form 10-K and 45 days for Form 10-Q (with 120-day and 50-day deadlines available to the smallest companies qualifying as small non-accelerated filers). Companies should begin assessing whether they would qualify as non-accelerated filers under the new threshold.

For newly public companies and IPO candidates, the 60-month on-ramp before a company can become a large accelerated filer—combined with elimination of the 12-month seasoning requirement for Form S-3 and the extension of enhanced registration benefits to ELIs and SELIs—would significantly ease the transition to public company status and provide immediate access to efficient capital raising tools.

For investors, while the proposals are designed to preserve core investor protections, the expansion of scaled disclosures and elimination of the SOX 404(b) auditor attestation for a larger share of the market may reduce the volume of disclosure and assurance available for mid-cap companies. Investors should closely evaluate how the loss of the auditor attestation requirement for companies that currently provide it may affect investor perceptions of the reliability of a company’s internal controls.

For pre-IPO investors and sponsors, while it is already possible to file a resale shelf registration statement on Form S-1 immediately after an IPO, the elimination of the 12-month seasoning requirement for Form S-3 would allow newly public companies to use the more efficient short-form registration for resale shelves from day one. Combined with the extension of Rule 430B(b) to all Form S-3 eligible issuers—permitting companies to omit both the identities of selling security holders and the amounts of securities to be registered on their behalf from the registration statement until the time of offering, with that information added after effectiveness by post-effective amendment, prospectus supplement or incorporated Exchange Act report—these changes could streamline the regulatory path to liquidity for pre-IPO investors, venture capital and private equity sponsors, and company insiders. Separate from the proposed rules, contractual lockup agreements—which typically restrict sales for 90 to 180 days following an IPO—would continue to govern the timing of when stockholders can actually sell, and some lockups may also restrict the filing of a registration statement during the lockup period. Where the lockup permits filing (but restricts sales), a key benefit of the proposed rules is that, upon lockup expiration, a resale shelf on Form S-3 could already be effective and available for immediate use. Even where a lockup restricts filing, the elimination of the seasoning requirement means the company could file a resale registration statement on Form S-3 promptly upon lockup expiration.

We will continue to monitor developments as the rulemaking progresses. Please contact any member of our Capital Markets and Public Company group with questions about the proposed rules or their potential impact.

This alert is for informational purposes only and does not constitute legal advice.

If you have questions about this client alert, please contact any Akin lawyer or advisor below.

Lobbying & Public Policy Alert

Key Points:

• Major Committees in Congress are moving forward with bipartisan surface transportation reauthorization efforts ahead of the September 30, 2026 expiration of current law.
• Two House Committees are scheduled to markup their respective legislative measures this week, but timing constraints make a short-term extension likely.

On May 21, 2026, the House Transportation and Infrastructure Committee is scheduled to begin marking up its $580 billion, five-year surface transportation reauthorization legislation that includes highway, public transportation, rail, highway safety, motor carrier safety and hazardous materials transportation programs. On the same day, the House Energy and Commerce Committee is expected to markup a package of motor vehicle safety legislation, which would form the safety title of the broader reauthorization bill.

Key Committees

Multi-year surface transportation reauthorizations are passed by Congress for varying lengths, with the most recent being the Infrastructure Investment and Jobs Act (IIJA; P.L. 117-58), which was signed into law in November 2021 and authorized federal surface transportation programs for five years, expiring on September 30, 2026. Reauthorizing surface transportation programs has historically been a bipartisan priority for Congress.

On May 17, 2026, the House Transportation and Infrastructure Committee released the BUILD America 250 Act bill text as well as a Section-by-Section summary. This $580 billion reauthorization of surface transportation programs funds programs over a five-year period. It bolsters highway trust fund revenues by adding new annual fees for electric vehicles and plug-in hybrids.  The bill retains many of the core transportation programs, including most of the competitive grant programs authorized in the IIJA. Of note, the bill would create a new bridge formula program, establishes safety standards for commercial motor vehicles equipped with autonomous driving systems to operate in interstate commerce, seeks to reduce permitting and project delays, consolidates duplicative programs, and includes passenger rail investments and modernizations, among other provisions.

The House Energy and Commerce Committee has jurisdiction over vehicle safety provisions and has been working to build consensus on motor vehicle safety legislation, holding hearings and advancing legislation through a subcommittee markup earlier this year. The Committee is expected to markup a package of legislation as part of the Safety Title of Highway Reauthorization and additional details will be shared in a subsequent alert once publicly available.

Together, these markups will begin shaping the House’s broader surface transportation reauthorization framework ahead of the approaching September 30^th deadline.

Moving Forward

After this week’s action in key House Committees, attention will shift to the House Ways and Means Committee, which may consider their tax provisions later this summer. The Committee will have to address ongoing policy debates, such as proposals related to gas tax suspension and Highway Trust Fund revenues mentioned previously. Only after action by the House Ways and Means Committee would the various bill titles be merged into a single reauthorization proposal and considered by the full House.  Thus far, House leadership has not indicated a potential timeline for floor action.

Following the House Committee markups this week, we expect additional attention to turn to the Senate.  The Senate Environment and Public Works Committee has begun hearings and stakeholder engagement but has not yet released legislative text or scheduled markups.  The Senate Commerce, Science, and Transportation Committee and the Senate Banking Committee will also have an opportunity to weigh in on their respective jurisdiction (vehicle safety, rail and public transit, respectively).

Upcoming elections could affect the legislative outlook and priorities, including potential changes in committee leadership and policy direction if a multi-year reauthorization bill isn’t signed into law by September 30.

We are closely monitoring the upcoming committee activity, as the legislation is expected to address a range of policy priorities impacting federal highway and transit programs, project delivery, freight and rail infrastructure, safety initiatives, and potential changes to formula and discretionary grant programs – not to mention the revenue needed to pay for such a multi-year transportation bill (including contributions from the General Fund).

Key Issues to Watch:

Energy and Commerce Committee:

• Legislation related to Right to Repair, Autonomous Vehicles, Vehicle Safety, and NHTSA

Transportation and Infrastructure Committee:

• Overall funding levels for FY27-31 for road, bridge, and transit investments.
• New revenue from annual fees on owners of Electric Vehicles and Plug-in hybrid vehicles.
• Discontinuation of certain IIJA programs for EV Charging but still eligible under CMAQ.
• Freight rail and passenger rail safety.
• House Ways and Means Committee and Senate Finance Committees:
  • Excise taxes, gas/diesel taxes, and other related funding mechanisms for the Highway Trust Fund.
• Senate Environment and Public Works Committee
  • Highway, bridge and overall infrastructure programs
  • Transportation Research
  • Permitting and project streamlining.
• Senate Commerce, Science, and Transportation Committee
  • NHTSA and safety programs
  • FMCSA and trucking provisions
  • Passenger and Freight Rail programs.
• Senate Banking Committee
  • Transit and light-rail programs.

Labor & Employment Alert

Key Takeaways

• States continue to restrict non-compete agreements. Virginia and Tennessee have both enacted new laws effective July 1, 2026, reflecting a national trend toward limiting enforceability while preserving employers’ ability to use confidentiality and non-solicitation agreements.
• Common themes in recent state legislation include compensation thresholds below which non-competes are unenforceable, enhanced employee remedies and penalties for violations and preservation of other restrictive covenants such as confidentiality and non-solicitation agreements.
• Employers with workers in multiple states should review the patchwork of state non-compete laws and consider working with counsel to develop compliant, jurisdiction-specific agreements.

Overview

Non-compete agreements continue to face increased scrutiny at the state level. Following years of growing restrictions—including expanded protections for low-wage workers and heightened enforcement mechanisms—Virginia and Tennessee have each enacted significant new legislation that takes effect on July 1, 2026. These laws join those in a number of states moving toward limiting the scope and enforceability of non-compete agreements while preserving employers’ ability to protect legitimate business interests through other means.

Virginia’s new law conditions enforceability on severance for employees discharged without cause, extends civil enforcement rights to all employees and imposes significant penalties for violations. Tennessee’s new law establishes a compensation threshold below which non-competes are unenforceable, creates duration presumptions and codifies courts’ authority to modify overbroad covenants. Both states preserve employers’ ability to use confidentiality, customer non-solicitation, and employee non-solicitation agreements.

Notably, not all states are moving in the same direction. While jurisdictions like Virginia, Tennessee, and Washington State (discussed in our prior client alert, available here¹) have enacted increasingly restrictive measures, Florida has taken the opposite approach. The Florida CHOICE (Contracts Honoring Opportunity, Investment, Confidentiality and Economic Growth) Act, effective July 1, 2025, permits covered garden leave agreements and covered noncompete agreements of up to four years to protect confidential information and customer relationships. The Act applies to employees earning more than twice the annual mean wage of the applicable Florida county (excluding health care practitioners) and expressly provides that such agreements do not violate public policy as a restraint of trade when certain procedural and substantive requirements are met. Employers with multi-state operations should be aware that these divergent trends create an increasingly complex compliance landscape.

Virginia

On April 13, 2026, Governor Abigail Spanberger signed SB 170, further restricting non-competes under Va. Code § 40.1-28.7:8, effective July 1, 2026. Under SB 170, a non-compete is unenforceable against any employee discharged without cause unless the employer provides severance or other monetary payment disclosed when the covenant is signed. This prohibition applies to all employees—not just low-wage workers. The existing prohibition on non-competes for low-wage employees remains intact regardless of any severance offered.

SB 170 extends civil enforcement rights to all employees. Any employee may sue a former employer for attempting to enforce a non-compete in violation of the law, subject to a two-year statute of limitations. Courts may void the agreement and order injunctive relief, liquidated damages, lost compensation, attorney fees and expert witness fees. Violations carry a $10,000 civil penalty per violation, and employers must post the statute (or a Department-approved summary) in the workplace. The law is not retroactive, but any amendment or renewal on or after July 1, 2026 will subject the agreement to the new requirements.

Employers may still enforce non-competes against employees discharged for cause. The statute also preserves nondisclosure agreements protecting trade secrets, proprietary information and confidential information, and excludes from the definition of “covenant not to compete” restrictions on serving customers the employee did not solicit.

Tennessee

On May 7, 2026, Governor Bill Lee signed House Bill 1034, effective July 1, 2026 for any non-compete entered into, renewed, or amended on or after that date. Employers may not require, request, or enforce a non-compete against any employee earning less than $70,000 in annualized compensation (wages, salary, commissions and nondiscretionary bonuses). Non-competes below this threshold are void and unenforceable. The statute does not expressly include discretionary bonuses or equity compensation, which may affect whether certain employees meet the threshold.

The law creates rebuttable presumptions for non-compete durations: two years or less is presumed reasonable for employees and independent contractors; three years or less for distributors, dealers, franchisees and certain licensees; and the longer of five years or the payment period for sale-of-business transactions. Courts have express statutory authority to “blue pencil” overbroad covenants—modifying them to be reasonable rather than invalidating them entirely—though judicial reformation should not be treated as a guaranteed backstop for aggressive drafting.

The law does not restrict other types of restrictive covenants. Confidentiality agreements, customer non-solicitation agreements and employee non-solicitation agreements remain fully enforceable, provided they are reasonable in scope.

What Employers Should Do Now

With July 1, 2026 approaching, employers should:

• Audit existing non-compete agreements and identify any that need revision. Agreements renewed or amended after July 1, 2026 will be subject to the new requirements.
• In Virginia: Evaluate whether non-competes include required severance disclosures and post the required workplace notice.
• In Tennessee: Verify employees subject to non-competes meet the $70,000 threshold and that durations fall within presumptively reasonable periods.
• Consider alternative protections such as confidentiality and non-solicitation agreements.

Our team is available to advise on practical steps for compliance with these new laws. We invite you to reach out to us if you have any questions or would like to discuss how these changes may impact your business.

1 Washington State Enacts Near-Total Ban on Non-Compete Agreements | Akin

Akin white collar defense & government investigations partner Peter Altman and corporate partner Carlos Bermudez are featured in the Los Angeles Times as 2026 Legal Visionaries. Honorees are California attorneys who “distinguish themselves not only through skill and results but through an unwavering commitment to their clients.”  

The L.A. Times highlights Peter as a “leader in white-collar defense and government investigations” and spotlights his role representing public companies and investment advisers before the United States Securities and Exchange Commission and the Department of Justice.  

Carlos is highlighted for his work “advising global technology leaders on complex cross-border transactions and secondary investments.”  

Both partners are also recognized for their efforts with KIPP SoCal Public Schools, a nonprofit organization that operates tuition-free, open-enrollment charter public schools.  

To view the full list of honorees, click here. 

On May 12, 2026, the Food and Drug Administration (FDA) published a notice in the Federal Register requesting comment on the agency’s efforts related to drug repurposing to help address unmet medical needs. In this request for information (RFI), FDA is seeking input to identify potential new uses for FDA-approved drugs—such as a new indication or a new population—to help accelerate the availability of treatments for unmet medical needs. Stakeholders are encouraged to submit priority disease areas and potential candidates for drug repurposing, particularly in cases where there is a lack of commercial incentive to pursue labeling changes or a significant unmet need.

FDA is focusing on drugs that meet the following criteria for new use: (1) there is scientific evidence to support the effectiveness of the drug for the new use; (2) the dosage forms and/or route of administration for the new use are the same as for an approved indication and (3) there is a comparable safety profile for patient populations for the new use and approved applications. FDA specifically seeks input on the following topics:

• Priority areas. Whether the FDA’s proposed priority disease areas—including metabolic, neurodegenerative, men’s and women’s health, substance use and rare diseases—appropriately reflect unmet medical needs that could benefit from drug repurposing.
• Candidates for drug repurposing. Which candidates for drug repurposing show the greatest potential to effectively treat specific medical conditions.
• Approaches to identifying candidates for drug repurposing. What innovative approaches could be used to identify new candidates for drug repurposing, including specific methods or opportunities to facilitate this process.
• Barriers and opportunities. Barriers to drug repurposing, both in the absence of commercial incentives and in the clinical use of approved drugs for unapproved indications, and recommendations on how the Agency can address these challenges and improve data collection on real-world use.

Drug repurposing has been recognized as a tool for potentially improving public health in several contexts. The Make Our Children Healthy Again Strategy Report, released in September 2025, explicitly directed the National Institutes of Health (NIH) and FDA to strengthen the use of repurposed drugs for the treatment of chronic disease, while harmonizing authorization processes through collaborative clinical trial designs to achieve FDA approval. FDA’s Oncology Center of Excellence leads Project Renewal, an initiative aimed at updating labeling information for certain older oncology drugs to ensure information is clinically meaningful and scientifically up to date.

Congress has also been active on drug repurposing policy issues in recent years. In 2020, the Making Objective Drug Evidence Revisions for New (MODERN) Labeling Act was signed into law as part of the Consolidated Appropriations Act, 2021 (P.L. 116-260), which outlined a process to update generic drug labeling in cases where there is new scientific evidence available pertaining to new or existing conditions of use that is not reflected in the approved labeling; the approved labeling does not reflect current legal and regulatory requirements for content or format; or there is a relevant accepted use in clinical practice that is not reflected in the approved labeling, and updating the approved labeling would benefit the public health. The MODERN Act also explicitly outlined a mechanism for public input in identifying drugs with repurposing potential and FDA’s recent RFI builds on these legislative efforts. Congress more recently reaffirmed its support for exploring drug repurposing in pediatric research through the Mikaela Naylon Give Kids a Chance Act, signed into law in February 2026 as part of the Consolidated Appropriations Act, 2026 (P.L. 119-75). The bill reauthorized parts of the Best Pharmaceuticals for Children Act, specifically the NIH program that prioritizes and sponsors clinical trials of off-patent drug products for further study in children.

The notice establishes a public docket, and FDA invites interested parties, including clinical and public health communities, patients and researchers to submit comments by June 11, 2026. Given the bipartisan congressional work and the administration’s focus on advancing drug repurposing, the RFI presents a timely opportunity to submit public comment, and it might also inform the upcoming Prescription Drug User Fee Act (PDUFA) and Generic Drug User Fee Act (GDUFA) reauthorizations as lawmakers may seek to consider these issues further and build on their previous legislative efforts on this front.

Akin Space Law, Regulation and Policy Update

Another week, another reminder that space and defense come with sky‑high costs. Congress is pushing back on a proposed 23% cut to NASA’s budget with a $24.4 billion plan, while the Trump administration has requested congressional approval for a $1.5 trillion defense budget. Meanwhile, the Congressional Budget Office estimates the Golden Dome missile defense initiative could carry a $1.2 trillion price tag over the next two decades.

Across the globe, the space race continues to heat up. The U.S. and China are increasingly competing over space-related projects in Argentina and Chile. At the same time, the U.S. and six allies are developing a joint concept of operations to better defend space assets, while the European Space Agency is advancing its reusable “Space Rider” orbital vehicle, capable of months-long missions and return-to-Earth payloads.

All this and more in this edition of Akin’s Space Law, Regulation and Policy Update.

Akin lobbying & public policy partner and former senior Trump administration trade official Kelly Ann Shaw appeared on Bloomberg Surveillance TV to discuss the future of the United States and China’s relationship and trade negotiations following President Donald Trump’s two-day summit in China.  

“This is about managing the relationship. It's about keeping an otherwise rocky situation as stable as possible...having that leader-to-leader touchpoint keeps the connectivity, keeps the stability.” 

To watch the full appearance, click here (01:05:46).  

Cybersecurity, Privacy & Data Protection Alert

• California regulators characterize this settlement as the “largest CCPA penalty in California history” and the state’s first data minimization enforcement action.
• The settlement signals heightened scrutiny for connected vehicle data, including precise geolocation (including parking location) and driving behavior signals (for example, hard braking and acceleration).
• The settlement underscores three recurring enforcement themes: (1) accurate disclosures, (2) meaningful consumer choice (notice and opt-out where required), and (3) purpose limitation and data minimization (retain and use only what is reasonably necessary and proportionate).
• For businesses that collect device and location data, this action underscores the need to align (i) consumer representations made during product enrollment or activation, (ii) consent practices and (iii) data retention practices with the company’s actual collection, use and disclosure of the data.
• As businesses increasingly seek to use existing datasets for AI, analytics, and other secondary purposes, this action underscores the need to review and update privacy disclosures before repurposing data, rather than relying on historical collection for new or expanded uses.

On May 8, 2026, California Attorney General Rob Bonta, together with several county district attorneys (DAs) and the California Privacy Protection Agency (CalPrivacy), announced a $12.75 million settlement with General Motors (GM) to resolve allegations that the company sold driving data of hundreds of thousands of California motorists to data brokers without their consent. Regulators characterized the settlement as the largest California Consumer Privacy Act (CCPA) penalty in California history to date and the state’s first data minimization enforcement action.

Specifically, California regulators alleged that GM collected consumers’ names, contact information and geolocation data, including precise geolocation information such as where consumers drove and parked their vehicles, as well as driving behavior data such as speed, hard braking and rapid acceleration through its OnStar connected vehicle platform between 2020 and 2024 and sold it to LexisNexis Risk Solutions and Verisk Analytics, despite privacy disclosures suggesting such data would only be used to provide requested services (such as emergency assistance, navigation and driver support) or shared at the consumer’s express direction. Regulators alleged that the data brokers intended to use the information to develop driver-risk scoring products marketed to auto insurers. Although California law prohibits such “usage-based insurance,” regulators noted that drivers in other states were reportedly impacted by premium increases tied to similar data-sharing practices. Regulators also stated that GM reportedly made a total of approximately $20 million nationwide from these data sales.

The complaint alleges that GM violated California’s Unfair Competition Law (UCL), False Advertising Law (FAL) and multiple provisions of the CCPA through misleading disclosures, unlawful secondary uses of personal information and inadequate data governance practices. Regulators further alleged that GM failed to provide consumers with legally required notice and opt-out rights regarding those sales and omitted reference to the data-sharing arrangements during inquiries from CalPrivacy regarding its connected vehicle practices. CalPrivacy announced connected vehicle investigations back in 2023 (see here for our article on these investigations) and began engaging with GM and other manufacturers. The California Department of Justice (DOJ) and partner DAs later opened a joint investigation after media reporting about automakers sharing driving behavior data with insurers.

Regulators also alleged that GM violated the CCPA’s purpose limitation principle by collecting consumer data to provide OnStar services but later repurposing that information for undisclosed, insurance-related driver scoring and premium-setting purposes that were unrelated to the original service purpose. The complaint further alleges violations of the CCPA’s data minimization and purpose limitation requirements, asserting that GM retained driving and geolocation data longer than reasonably necessary to provide OnStar services and later sold that data for undisclosed, insurance‑related uses that were not reasonably related to the purposes for which the data was collected. Regulators specifically highlighted GM’s sale of precise parking-location data, which they noted could reveal highly sensitive information about consumers’ private activities and movements, including visits to homes, medical facilities, places of worship and political events. The complaint highlights that Verisk contractually prohibited the transfer of precise geolocation data, which regulators characterized as a compliance warning sign that GM and its privacy personnel allegedly failed to appropriately address. In announcing the resolution, the California AG emphasized data minimization as a central theme: “companies can’t just hold on to data and use it later for another purpose.”

Beyond the monetary penalty, the settlement imposes operational and governance obligations on GM. The company must stop selling driving data to consumer reporting agencies and data brokers for five years, direct LexisNexis and Verisk to delete relevant driving data and delete retained driving data within 180 days unless consumers provide affirmative express consent for additional retention. GM is also required to develop and maintain a comprehensive privacy compliance program designed to assess, mitigate and document risks associated with connected vehicle data collection and sharing practices. The agreement further requires GM to conduct and submit ongoing privacy assessments to California regulators, including California Department of Justice (DOJ) officials, participating DAs and CalPrivacy.¹ The settlement follows a similar agreement reached earlier this year between GM and the Federal Trade Commission (FTC) and comes amid broader regulatory scrutiny of connected vehicle data practices, including a recent California privacy settlements involving Ford. The lawsuit brought by the State of Texas against GM based on similar allegations is still pending.

Next Steps

Los Angeles District Attorney Nathan Hochman has pointed to the agreement as an indication that companies should expect higher penalties in the future. The enforcement environment is also expected to intensify as California expands consumer privacy tools and enforcement mechanisms, including the upcoming August 1, 2026, rollout of the Delete Request and Opt-out Platform (DROP), which will require more than 500 registered data brokers to process centralized consumer deletion and opt-out requests.

Akin’s cybersecurity, privacy & data protection practice continues to advise clients on navigating the rapidly evolving privacy landscape, including compliance with the CCPA and other state privacy laws, data governance and minimization obligations, connected device and geolocation data practices, and regulatory investigations and enforcement actions.

^{1 The proposed judgment defines “Covered Driving Data” to include (among other items) precise geolocation and certain driving behavior signals linked or reasonably linkable to a California OnStar customer, including hard braking, hard acceleration, crossing a designated high-speed threshold, seat belt usage, late-night driving, and trip time and duration. It also defines “Covered OnStar Data” to include identifiers disclosed with Covered Driving Data, such as name, mailing address, phone number, email address and vehicle identification number (VIN).}

White Collar Defense & Government Investigations Alert

The Commodity Futures Trading Commission (CFTC) received extensive comment letters in response to its Advance Notice of Proposed Rulemaking (ANPRM) on prediction markets, issued on March 12, 2026. The ANPRM launched the CFTC’s effort to draft new regulations relating to event contracts traded on prediction markets. Event contracts allow participants to trade on the outcome of future events—including economic, political and, increasingly, sports-related outcomes, among many others—and are regulated by the CFTC as swaps. A diverse group of stakeholders, including exchanges and trading platforms, traditional sportsbooks, sports leagues, states, American Indian tribes and blockchain technology companies, submitted over 1500 comments in response to the ANPRM. These comments present a range of opinions regarding the sufficiency of the current derivatives framework, the proper scope of permissible event contracts, market integrity and consumer protection.

Sufficiency of the Existing Derivatives Framework

Market participants—including exchanges and trading platforms—generally agree that event contracts are properly treated as derivatives and fall within the CFTC’s jurisdiction. Accordingly, most commenters do not advocate for a new or bespoke regulatory framework, but instead argue that the Core Principles currently applicable to designated contract markets (DCMs) provide a sufficient foundation for regulating prediction markets. At the same time, commenters recognize that prediction markets have unique attributes and present unique risks warranting tailored rules and guidance. Among other things, commenters highlighted the need for targeted guidance addressing contract design, market integrity and retail participation. This includes defining objective and verifiable settlement criteria, ensuring robust surveillance to detect manipulation and insider trading and implementing safeguards to protect retail users.

Rule 40.11 and the “Public Interest”

A central focus of many comment letters is the CFTC’s approach to Rule 40.11, which governs when the CFTC may prohibit event contracts as contrary to the public interest. Section 5c(c)(5)(C) of the Commodity Exchange Act (CEA), on which Rule 40.11 is based, provides that the CFTC “may” determine that certain contracts—those that involve unlawful activity, terrorism, assassination, war, gaming or other similar activity—are contrary to the public interest and prohibit their listing. Commenters observe that this statutory language reflects a discretionary, case-by-case framework that contemplates individualized Commission judgment rather than categorical decisions. Rule 40.11, in contrast, is widely viewed by commenters as a blanket prohibition on entire categories of contracts.

Several commenters argue that the CFTC should align Rule 40.11 more closely with the statutory framework by adopting an explicit two-step analysis for prohibiting event contracts that are contrary to the public interest. Under this proposed approach, the Commission would first determine whether a contract falls within one of the enumerated categories set forth in Section 5c(c)(5)(C), and only then assess, based on the specific facts and characteristics of the contract, whether it is contrary to the public interest. Commenters contend this framework would allow the CFTC to differentiate among products within the same category—for example, distinguishing between contracts that may facilitate legitimate hedging or price discovery and those that raise substantive policy concerns—rather than applying broad prohibitions.

Diverging Views on Sports-Related Contracts

The most pronounced divergence in the comment record concerns sports-related event contracts. Derivatives industry participants generally favor the CFTC’s oversight of sports-related event contracts trading on DCMs. In contrast, many other commenters, including gambling industry stakeholders, states and tribal governments, argue that sports-related event contracts are functionally indistinguishable from traditional wagering and should be treated as gambling rather than derivatives. These commenters argue that permitting sports-related event contracts would undermine existing state and tribal gaming regimes and transform the CFTC into a de facto national gambling regulator and that the CFTC is not equipped to take on those responsibilities.

Many commenters also noted the absence of a clear definition of “gaming” in Section 5c(c)(5)(C) of the CEA and Rule 40.11. Derivatives industry commenters favor a narrow definition limited to traditional games of chance, which would allow prediction markets to continue to offer sports-related event contracts. Gambling industry stakeholders, states and tribal governments, in contrast, argue that event contracts based on sports fall within the plain meaning of the word “gaming.”

Market Integrity, Insider Trading and Manipulation

Commenters across the spectrum identified market integrity—particularly risks of manipulation and misuse of nonpublic information—as a central concern. A recurring theme is that, while these risks are not unique to event contracts, they may be amplified in certain contexts, especially where outcomes can be influenced by a small group of individuals. In response, many submissions call for enhanced contract design standards, including the use of objective and independent data sources, clear settlement criteria and limitations on contracts tied to highly discretionary or individually controlled outcomes. In addition, commenters broadly support robust surveillance frameworks, including real-time monitoring, position limits and restrictions on high-risk participants, to detect and deter potentially manipulative conduct.

Consumer Protection

Many commenters emphasize consumer protection, considering the growing participation of retail users in prediction markets. Submissions highlight that, although event contracts share characteristics with traditional derivatives, they are often more intuitive and accessible and thus may attract a broader, less sophisticated user base. Some commenters draw on existing derivatives protections—such as position limits, margin controls and market surveillance. Stakeholders with experience in regulated gambling markets, such as gambling associations, sports leagues, states and tribes, argue that prediction markets should incorporate more robust gambling-style protections, including stricter age restrictions, licensing regimes, responsible participation tools (such as self-exclusion and spending limits) and enhanced compliance oversight.

Sports Integrity

Sports league comments focus primarily on integrity concerns. Their comments emphasize that event contracts tied to game outcomes and discrete in-game events could create new incentives for misconduct, including match-fixing and manipulation of specific plays. Sports leagues argue that these risks reflect the unique structure of sports, where outcomes may be influenced by a relatively small number of identifiable participants with direct control over performance and gameplay. As a result, leagues argue that any regulatory framework permitting such contracts should place integrity considerations at its core, rather than treating these products as functionally indistinguishable from other derivatives.

Consistent with this approach, sports leagues call for a formalized and ongoing role in oversight of prediction market activity tied to their competitions. This includes robust information-sharing arrangements with exchanges and regulators, access to transaction-level trading data for monitoring purposes and the ability to participate in or support investigations into suspicious activity. Leagues also emphasize the importance of restricting participation by individuals with direct or indirect influence over outcomes—such as athletes, coaches, referees and team personnel—through prohibited trader lists and related controls. In addition, they identify certain categories of contracts as presenting particularly high risks of manipulation or misuse of insider information, including player-specific “proposition” markets and contracts tied to discretionary or subjective decisions, such as officiating calls, injuries or disciplinary actions.

Native American Tribal Sovereignty

Tribal governments argue that many event contracts—particularly those tied to sports outcomes—are economically and functionally indistinguishable from wagering, insofar as they involve staking value on the occurrence of uncertain events with the expectation of a payout. In their view, this functional equivalence places such contracts squarely within the category of “gaming,” regardless of how they are structured or traded. As a result, they contend that these products fall outside the intended scope of the CEA’s derivatives framework and should be prohibited.

Tribal commenters also raised concerns about the potential impact of prediction markets on the existing tribal–state gaming ecosystem. They warn that allowing event contracts to proliferate on federally regulated exchanges would undermine the carefully negotiated system of tribal–state compacts and regulatory oversight established under federal law, specifically the Indian Gaming Regulatory Act (IGRA) and that any such event contracts would constitute unlawful Class III gaming on tribal lands in violation of IGRA. Further, they argue that prediction markets could facilitate nationwide participation in wagering-like activity without complying with the licensing, geographic limitations and regulatory safeguards that govern tribal gaming operations. This, in turn, could divert economic activity away from tribal enterprises that were carefully negotiated under tribal-state compacts consistent with the existing regulatory framework under IGRA.

Blockchain and Crypto-Native Perspectives

Blockchain and crypto-native market participants broadly support a technology-neutral, principles-based regulatory approach. These commenters emphasize that prediction markets can use blockchain technology to meet regulatory objectives by improving transparency, auditability and market surveillance, while also reducing settlement and counterparty risk. They advocate for flexibility in how regulatory obligations are satisfied, including recognition that blockchain-based systems may achieve compliance through alternative technological means. In particular, they caution against rules that implicitly assume centralized intermediaries or that could limit the development of decentralized market structures.

Key Takeaways

The comment record reflects broad support for maintaining the existing derivatives regulatory framework while providing targeted guidance to address prediction markets. At the same time, it highlights significant disagreement about how far the CFTC should extend that framework—especially with respect to sports-related contracts. The CFTC now faces a series of foundational policy decisions that will shape the future of prediction markets in the United States. Among the most significant is how broadly to permit event contracts relating to gaming and other categories of event contracts that may be contrary to the public interest. As a next step in the process, the CFTC will likely issue proposed new rules, which will be followed by another period of public comment.

False Claims Act Update

On May 13, 2026, the Centers for Medicare & Medicaid Services (CMS) imposed two nationwide, six‑month moratoria on new Medicare enrollments of hospice and home health agencies (HHAs). CMS states that the action, taken in coordination with Vice President JD Vance’s Anti-Fraud Task Force, “continues the Trump Administration’s crackdown on fraud, waste, and abuse in the Medicare program by stopping improper billing and preventing bad actors from entering the system.”

CMS is expanding its use of its health care provider and supplier enrollment moratorium authority.¹ CMS has traditionally used this authority to impose moratoria in specific geographic regions; however, in February 2026, CMS issued its first nationwide enrollment moratorium—of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) medical supply companies. With three nationwide enrollment moratoria in as many months, CMS is signaling that this authority is now a regular tool in its fraud-prevention toolkit.

Central Features of the Moratoria

The moratoria, which took immediate effect on May 13, 2026, and will remain in place for six months, bar new Medicare enrollments for hospices and HHAs nationwide, including for enrolled providers seeking to establish new HHA branches and hospice practice locations and where a change in majority ownership requires a new enrollment. The moratoria do not otherwise affect existing enrolled providers, who may continue furnishing services and submitting claims. Also, while pending enrollment applications received before May 13, 2026, are not subject to the moratoria, applications submitted during the moratorium period will be denied and must be resubmitted after the relevant moratorium is lifted.

Providers may administratively appeal a denial of billing privileges based on the moratoria under 42 C.F.R. Part 498. But, according to CMS, the scope of any such appeal is limited to whether the moratorium applies to that particular provider. CMS’s regulations do not permit individual exceptions to a moratorium.

The moratoria may be extended in additional six‑month increments if CMS determines an extension is necessary.² When the moratoria are ultimately lifted, any provider that was unable to enroll due to the moratoria and applies within six months of its lifting will be assigned to the “high” categorial risk screening level under 42 C.F.R. §§ 424.518(c)(3)(iii) and 455.450(e)(2), meaning those providers will be subject to additional requirements during the enrollment process.

CMS Cites DOJ Enforcement, Including False Claims Act Settlements, As Rationale

On May 15, 2026, two days after the imposition of the provider moratoria were issued, CMS published two Notices in the Federal Register—one on the enrollment moratorium of hospices (91 FR 27946) and the other on the enrollment moratorium of HHAs (91 FR 27954). The notices cite ongoing program integrity concerns and data analytics that, according to CMS, indicate potential fraud justifying the nationwide restrictions.

In its notice rolling out the enrollment moratorium on HHAs, CMS states that program integrity risks surrounding HHAs are “among the highest of any provider/supplier type” and that “hundreds of millions of taxpayer dollars remain under threat from fraudulent parties.” In the enrollment moratorium on hospices, CMS states that “hospices present no less of a payment safeguard threat than HHAs and DMEPOS suppliers.” CMS also mentions three specific concerns regarding hospices:

1. Instances of hospices certifying patients for hospice care when they were not terminally ill and providing little to no services to beneficiaries.
2. Rapid growth in potentially fraudulent hospices.
3. “Churn and burn” schemes where a new hospice opens and bills Medicare until it reaches its statutory yearly payment limit or is audited, at which point it shuts down, retains payments, and buys a new Medicare billing number. It then transfers the patients over to the new Medicare billing number and starts the cycle again.

CMS cites an increasing number of criminal convictions and False Claims Act (FCA) settlements in recent years involving hospice and home health fraud as evidence of the “significant potential for fraud, waste, or abuse” warranting a nationwide moratorium rather than a geographically targeted one.

Increased Fraud Enforcement

The identification of hospice and home health as high‑risk areas, as well as CMS’s reliance on Department of Justice (DOJ) enforcement actions in its moratoria notices, is likely to increase government scrutiny in these areas by DOJ civil and criminal enforcement authorities, as well as FCA whistleblowers.

CMS itself notes that it plans to increase fraud enforcement during the period of the moratoria, advising that it will “intensify targeted investigations, deploy advanced data analytics and accelerate the removal of hospice and HHA providers from the Medicare program that are suspected of committing fraud.”

Further, this announcement portends added ramp-up in provider payment suspensions. CMS has already substantially increased payment suspensions over the past year with about $5.7 billion in suspended funds in 2025, including around $1.5 billion related to DMEPOS billing. Given the steady drumbeat of public-facing statements by both HHS and DOJ about leveraging data analytics to maximum effect,³ including in this announcement, providers should expect CMS to use sophisticated analytics to compare their billing against national benchmarks, flagging anomalies in volume, frequency and coding that can trigger pre-payment reviews or immediate payment suspensions. Notably, suspensions can be predicated on any “credible allegation of fraud,”⁴ well before the conclusion of a government investigation or any final determination on the merits. This poses a significant financial risk for providers given that the impact is immediate and severely restricts cash flow.

Vice President Vance’s Warning to States

On the same day that CMS issued these moratoria, Vice President Vance announced that the administration had sent letters to all 50 state attorneys general warning that states failing to comply with Medicaid antifraud statutes risk losing federal Medicaid funding. The administration is currently withholding $1.3 billion in Medicaid payments to California, following a similar $260 million withholding from Minnesota earlier this year. Given the administration’s stance, providers may also see heightened scrutiny from Medicaid Fraud Control Units and other state enforcement authorities.

Congressional Action

In addition to the administration’s focus on fraud, waste and abuse in the Medicare and Medicaid programs, Congress has also been active on these issues in the 119th Congress. As more recent examples of this focus, the House Committee on Ways and Means and Committee on Energy and Commerce Subcommittee on Oversight and Investigations both held hearings this year on “combatting” and “cracking down” on fraud in Medicare and Medicaid. Specific concerns over fraud in HHAs and hospices were raised in those hearings, both with regard to the financial impact of fraud on the sustainability of the programs and the negative impact fraudulent actors have on legitimate actors and beneficiary access to care.

In addition to congressional hearings and the potential for legislative action related to fraud, waste and abuse, Congress is likely to continue to engage on these issues as part of the Fiscal Year (FY) 2027 Appropriations process. In CMS’s FY27 Budget Justification, sent to Congress in April 2026, anti-fraud efforts were prominently featured, with the CMS Administrator’s opening message highlighting the agency’s focus on “modernizing our systems to tackle fraud, waste, and abuse with unprecedented precision” and increased funding requested for programs focused on fraud. With all three branches of the federal government engaged, additional and potentially novel, approaches to rooting out fraud, waste and abuse are possible this year, and may further emerge as an issue that candidates focus on as part of the upcoming mid-term elections.

Key Takeaways and Recommendations

• Nationwide provider/supplier enrollment moratoria are now a core CMS enforcement tool. CMS’s issuance of three nationwide enrollment moratoria in the past three months signals a marked shift away from the narrower, geographically-targeted enrollment moratoria of the past.
• CMS is explicitly aligning enrollment controls with DOJ enforcement, including enforcement under the FCA. The moratoria notices emphasize DOJ criminal prosecutions and FCA settlements as justification for nationwide action.
• Enhanced CMS scrutiny may portend more payment suspensions during and after the moratoria. Suspensions may be imposed early in an investigation, long before any DOJ or CMS final resolution.
• Enforcement attention may extend beyond federal agencies to states. The administration’s contemporaneous warnings to state attorneys general regarding Medicaid antifraud enforcement may increase the likelihood of parallel state investigations and state whistleblower actions.
• Providers and suppliers should strengthen their compliance programs and audit their current enrollment information for accuracy. Investors should also closely assess whether contemplated ownership changes could trigger scrutiny and new enrollment requirements during the moratorium period.

1 42 C.F.R. § 424.570.

2 See 42 C.F.R. § 424.570(b).

3 Akin recently advised clients on the DOJ Civil Division’s FOCUS Initiative, an anti-fraud program designed to deepen DOJ’s working relationship with so-called “data-miner” whistleblowers who file FCA qui tam complaints based on “publicly available government data.”

4 42 CFR § 405.371(a)(2).

White Collar Defense & Government Investigations Alert

On May 12, 2026, the U.S. Department of Justice (DOJ) announced a $549.5 million False Claims Act (FCA) settlement with Perfectus Aluminum Inc., Perfectus Aluminum Acquisitions LLC and four related warehouse companies, marking a significant escalation in customs fraud enforcement under the FCA. This settlement is by far the largest resolution to date associated with DOJ’s Trade Fraud Task Force, more than 10 times larger than the $54.4 million Ceratizit settlement announced in December 2025, which was previously the government’s largest customs-related FCA recovery. The amounts that will actually be recovered under the Perfectus Aluminum settlement depend on various contingencies outlined in the agreement and overlap with amounts already owed under criminal resolutions for the same underlying conduct.

This settlement underscores a development that should be top of mind for importers and companies with international supply chains: DOJ is increasingly treating alleged tariff and customs violations not simply as administrative issues, but as criminal and civil fraud matters, where it brings its full arsenal of law enforcement tools to bear.

How the Case Unfolded

DOJ alleged that Perfectus Aluminum Inc., Perfectus Aluminum Acquisitions LLC and four affiliated warehousing companies made false statements on customs forms to avoid paying antidumping and countervailing duties on more than 2.2 million aluminum extrusions imported from China between 2011 and 2014. The companies allegedly spot-welded the aluminum extrusions together to make them seem like “pallets,” which were not subject to duties. The government claims that the companies did not have customers for the pallets, which the government alleges were never sold.

In August 2021, a federal jury found the aluminum and warehouse companies guilty of conspiracy (18 U.S.C. § 371), wire fraud (18 U.S.C. § 1343) and passing false and fraudulent papers through a customhouse (18 U.S.C. § 545). The aluminum companies also were found guilty of international promotional money laundering (18 U.S.C. § 1956(a)(2)(A)). In April 2022, the federal district court ordered the six companies to pay $1.83 billion in restitution and sentenced them to five years of probation and also entered a final order of civil forfeiture for the government to seize the pallets.

The civil settlement credits funds recovered through the other proceedings to the civil settlement and resolves FCA and related civil liability for the same underlying conduct through a consent judgment entered in a consolidated whistleblower “qui tam” suit. The settlement brings to an end three qui tam suits brought by private plaintiffs under the FCA in 2015, 2017 and 2018, two individuals and one trade association representing the aluminum extrusion industry, the Aluminum Extruders Council. The qui tam provisions of the FCA allow private plaintiffs, known as “relators,” to file suit for alleged monetary frauds on the United States and share in 15–30% of any government recovery. The settlement provides that the relator who filed first will receive 17.5% of amounts actually collected and recovered by United States Customs and Border Protection (CBP) in connection with the $549.5 million civil settlement. It provides that none of the three relators will seek any additional shares of amounts recovered in the various criminal and civil actions for the underlying conduct. The settlement alludes to possible agreements to share among the various relators, a feature that arises frequently in settlements resolving multiple overlapping qui tam suits.

Implications: DOJ’s Trade Fraud Enforcement Playbook Comes into Focus

This settlement signals the vigorous enforcement efforts led by the Trade Fraud Task Force, which was launched by DOJ and the Department of Homeland Security (DHS) in August 2025. Notably, the settlement underscores that the Task Force’s mandate is not limited to new cases and investigations but also brings coordinated civil and criminal enforcement resources to bear on past conduct and pending investigations that may long predate the Task Force’s launch.

The Perfectus settlement is consistent with several themes already evident in the Task Force’s early matters. It reflects DOJ’s pattern of pairing civil FCA theories with criminal enforcement tools: the settlement agreement itself details related criminal actions, and DOJ has underscored that, where appropriate, the Task Force will pursue customs violations through FCA actions alongside parallel criminal proceedings. The matter also involves antidumping and countervailing duties on Chinese-origin aluminum products, aligning with recent customs fraud announcements involving similar alleged evasion schemes to underpay duties on products from China.

As the settlement announcement makes clear, this case was, at its core, a customs matter—and another powerful example of the close coordination between DOJ and CBP that was identified as a key Task Force priority. Office of Trade Executive Assistant Commissioner Susan S. Thomas said, “Duty evasion is not a victimless crime; it hurts businesses that play by the rules and undermines U.S. economic security. I am proud of CBP’s close collaboration with the Justice Department and Homeland Security Investigations[.]” This case demonstrates how traditional customs violations can escalate into major civil and criminal enforcement actions.

The settlement also highlights the central role of qui tam relators, including industry participants, in customs fraud enforcement. The relator’s share provisions of the FCA provide competitors, industry groups, brokers, vendors and other supply chain participants likely to have valuable information with powerful incentives to bring alleged customs violations to the government’s attention. DOJ encouraged competitors and other whistleblowers to come forward when it announced the Trade Fraud Task Force. The FCA’s qui tam provisions allow qui tam relators to share in proceeds of their cases, including those obtained through “alternate remedies” DOJ may choose to pursue. DOJ has traditionally resisted paying proceeds of criminal recoveries to FCA qui tam relators and has won this issue in court many times, but the settlement illustrates how it will do so in certain cases by allocating recoveries from criminal proceedings to civil settlements, avoiding litigation with relators over their entitlement to a share.

Key Takeaways

• Customs duties exposure can become FCA exposure. The FCA reaches not only false claims for payment from the government, but also knowing avoidance of obligations to pay money to the government. DOJ can use this “reverse false claims” theory to pursue alleged underpayment of duties and tariffs, including customs duties obligations. Importers should therefore assess whether trade compliance decisions create potential treble-damages and penalty exposure under the FCA, as well as potential criminal exposure, rather than assuming the issue will be resolved solely through CBP administrative processes.
• Whistleblower risk is not limited to insiders. The FCA allows private relators to sue on behalf of the United States and share in the government’s recovery. The Task Force has invited referrals from domestic industries and encouraged whistleblowers to use the FCA qui tam provisions in trade fraud matters. The Perfectus settlement illustrates that industry participants and trade associations may play a direct role in identifying and pursuing alleged customs fraud.
• Civil and criminal teams should be assumed to be coordinating. DOJ’s Task Force is designed to leverage DOJ’s Civil and Criminal Divisions, CBP and Homeland Security Investigations in trade fraud matters. The Perfectus resolution follows criminal and forfeiture proceedings involving the same alleged customs fraud scheme. Companies should not assume that resolving a CBP inquiry or civil customs issue will foreclose parallel criminal or civil fraud scrutiny.

How Akin Can Help

This settlement highlights the substantial civil, criminal and regulatory risks facing companies that import goods subject to complex tariff, country-of-origin and customs duty requirements. Akin’s recently expanded FCA team, which has brought in former senior officials with decades of experience in DOJ’s Civil Fraud Section, works hand-in-hand with Akin’s Chambers-ranked white-collar defense and customs practices. Our integrated approach brings together customs attorneys who understand the technical and regulatory framework with defense counsel experienced in handling both civil and criminal investigations and litigation. This combination allows us to provide seamless, comprehensive representation when customs matters evolve into civil fraud or criminal proceedings—exactly the trajectory seen in the Perfectus matter.