DROPLETS

The Protect College Sports Act of 2026 (PCSA), a bipartisan bill to comprehensively reform intercollegiate athletics, is poised for a critical cloture vote in the U.S. Senate between September 15 and 23. The legislation’s most significant provision would grant the NCAA and its members broad immunity from federal and state antitrust laws, effectively ending the wave of litigation that dismantled the association’s authority over athlete compensation and eligibility. This would empower the NCAA to enforce new rules on revenue sharing, recruiting, and transfers without fear of antitrust liability.

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The U.S. Treasury Department has taken significant coordinated action to counter Iran's use of the United Arab Emirates financial system. The Financial Crimes Enforcement Network (FinCEN) issued a notice of proposed rulemaking under Section 311 of the USA PATRIOT Act, identifying five UAE-based branches of an Egyptian state-owned bank as a "primary money laundering concern." If finalized, the proposed "special measure five" would prohibit U.S. financial institutions from opening or maintaining correspondent accounts for these branches. FinCEN alleges the branches processed approximately $1.8 billion for Iranian shadow banking front companies. Concurrently, the Office of Foreign Assets Control (OFAC) designated a Dubai-based bank manager and a Hong Kong front company for supporting sanctioned Iranian financial entities. This multi-pronged action underscores heightened U.S. focus on sanctions evasion and money laundering through third-country jurisdictions. Financial institutions should review their correspondent banking relationships and due diligence procedures, particularly for tran

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A Chinese court decision, given significant precedential weight by its publication by the Supreme People’s Court, held that the country's Anti-Foreign Sanctions Law (AFSL) overrides contractual choices of foreign law. The Shanghai Maritime Court awarded damages against a Singaporean shipping company that had returned a cargo shipment, citing US export control compliance risks. The defendant invoked the US sanctions status of the plaintiff’s Chinese parent company. Although the contract was between a Hong Kong entity and a Singaporean one and designated Singaporean law, the court ruled the AFSL applied because the breach was motivated by compliance with foreign sanctions targeting a Chinese entity. The decision significantly heightens risks for multinational companies, suggesting that standard choice-of-law and jurisdiction clauses may not shield them from liability in China for actions taken to comply with US or other foreign sanctions. Firms should urgently reassess compliance and dispute resolution strategies for all transactions with a potential nexus to China, even through non-sa

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The Securities and Exchange Commission has unveiled a significant proposed rulemaking, 'Regulation Crypto Assets,' aimed at creating a tailored regulatory framework for the offer and sale of certain crypto assets. The proposal introduces two new exemptions from the registration requirements of the Securities Act. The first would permit offerings of up to $5 million over a four-year period, while the second would allow offerings up to $75 million in a 12-month period, subject to financial statement and ongoing reporting requirements.

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The U.S. government announced a landmark oil deal securing significant influence and economic rights over a large portion of Venezuela's proven oil reserves. Concurrently, the Treasury Department's Office of Foreign Assets Control (OFAC) significantly eased sanctions by amending eight existing general licenses and issuing two new ones. This signals a major shift in U.S. policy, creating substantial commercial opportunities across Venezuela's energy, mining, and telecommunications sectors. The amendments provide greater contractual flexibility by removing U.S. governing-law requirements, while new telecom licenses allow for immediate operational support and preparatory work for future investments. However, significant compliance burdens remain, including counterparty screening against Russian and Chinese interests and specific dispute-resolution and reporting requirements. Counsel should advise clients to immediately assess the scope of these new authorizations against potential opportunities. The next steps involve conducting thorough due diligence on partners and transactions to nav

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California's legislature has passed AB 1697, amending a recent law that restricts "stay-or-pay" or training repayment agreement provisions (TRAPs). The bill, expected to be signed by the governor, postpones the law's effective date for new agreements to January 1, 2027.

The amendment creates an unusual one-year "safe harbor," rendering the prior law inoperative during 2026 and likely mooting claims arising under it for that period. This creates new strategic questions for employers, particularly those that already updated their agreements to comply with the original law. The bill also introduces important new exceptions, notably permitting certain repayment obligations tied to recruiting and retention payments in the financial services sector, such as forgivable loans. A separate carve-out allows employers to recover modest advances of paid time off under specific conditions.

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California's new Business and Consumer Services Agency (BCSA), led by former CFPB Director Rohit Chopra, announced it will investigate businesses' use of AI and chatbot technologies. The BCSA, launched in July and housing the Department of Financial Protection and Innovation, will probe for scams, data exploitation, and violations of consumer protection laws. A key focus is whether AI deployments constitute the unlicensed practice of professions in sectors like financial services, healthcare, and real estate. This initiative creates a significant new regulatory risk for companies using AI in customer-facing applications in the state. With Chopra's reputation for aggressive consumer advocacy, businesses should anticipate a robust enforcement agenda. Counsel for clients deploying these technologies in California should review their compliance frameworks for potential exposure and monitor for the BCSA's first enforcement actions, which could establish important precedents.

The Department of Housing and Urban Development (HUD) has issued new guidance that rescinds a prior interpretation treating violations of the Fair Housing Act’s (FHA) design-and-construction accessibility requirements as “continuing violations.” The new guidance instead classifies these violations as discrete acts that conclude upon the issuance of a building's initial certificate of occupancy, which starts the clock on the statute of limitations.

This change offers significant relief and predictability for developers, builders, and current and subsequent owners of multifamily properties. Under the previous guidance, liability exposure could be indefinite, subjecting owners to costly repairs for non-compliant features decades after construction, even if they were not involved in the original design. HUD noted the rescinded policy had led to over $110 million in additional repair costs for building owners in the past five years.

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The Securities and Exchange Commission has proposed rescinding Rule 206(4)-5 of the Investment Advisers Act, commonly known as the “pay-to-play” rule, along with its associated recordkeeping requirements. The rule currently imposes a two-year ban on an adviser receiving compensation from a government entity if the adviser or its associates make a political contribution to an official in a position to influence the award of advisory business.

According to the SEC, the rule has proven operationally difficult and has functioned as a strict-liability standard, imposing severe penalties for small or inadvertent contributions. Commissioners also raised First Amendment concerns, arguing the rule chills protected political speech and has led many firms to enact blanket bans on employee contributions. If the rule is rescinded, the SEC states that pay-to-play conduct would still be policed through the Advisers Act’s general antifraud provisions, fiduciary duty obligations, and compliance rules, as well as federal and state election laws.

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A threat group is reportedly targeting dozens of major U.S. financial institutions, including Apollo, Blackstone, and KKR, using a low-tech "vishing" (voice phishing) method. Attackers call employees, impersonate IT staff, and direct them to spoofed login portals to capture credentials and multi-factor authentication (MFA) tokens, leading to data theft and ransom demands.

Sophisticated counsel and clients care because this social engineering approach bypasses many technical security controls, creating significant risk regardless of the company's security stack. A successful attack triggers a cascade of legal obligations, including state data breach notifications and reporting duties under the SEC's amended Regulation S-P and New York's NYDFS Part 500 cybersecurity rules. The regulatory scrutiny and litigation risk are identical to those from more technically complex intrusions.

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In a significant move for patent litigation strategy, the Director of the U.S. Patent and Trademark Office (USPTO) vacated a final written decision from the Patent Trial and Appeal Board (PTAB) that had found patent claims invalid. The vacatur was based on a conflicting prior determination by the International Trade Commission (ITC), which had upheld the patent's validity based on nearly identical claims, evidence, and arguments. Following the Director's action, the ITC lifted a suspension on its remedial orders, allowing an import ban on the infringing product to take effect.

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The Securities and Exchange Commission has proposed the full rescission of Rule 206(4)-5, its ‘pay-to-play’ rule for investment advisers. The move would eliminate restrictions on political contributions by advisers and their associates to officials of government entities, as well as the automatic two-year ban on receiving compensation from that entity following a prohibited contribution. The SEC’s proposal argues the rule’s ‘de facto’ strict-liability standard imposes a disproportionately severe penalty for what are often small, inadvertent violations. The agency also cited First Amendment concerns, noting the rule has prompted many advisers to prohibit all employee political contributions. If the rule is rescinded, the SEC suggests that existing anti-fraud provisions under the Advisers Act and other general anti-corruption laws are sufficient to address pay-to-play risks. The proposal is open for public comment for 60 days following its publication in the Federal Register, and the SEC is specifically asking whether targeted amendments would be preferable to a full repeal.

Brazil's landmark 2023 tax reform, enacted through Constitutional Amendment No. 132, overhauls the country's complex consumption tax system. A key provision confirmed the continuation of the Manaus Free Trade Zone (ZFM), a critical industrial and technology hub, allaying fears that its special tax incentives would be eliminated. While the amendment preserves the ZFM's constitutional standing and mandates that its competitive advantages be maintained, the specific mechanisms for doing so will change significantly. The reform replaces existing federal taxes like IPI, PIS, and COFINS with a new dual value-added tax system and a selective tax. For the ZFM, the IPI tax exemption—a cornerstone of its appeal—will be replaced by a new system of tax credits to ensure its products remain competitive. The precise nature and scope of these credits are not yet fully detailed, creating uncertainty for businesses. Counsel for multinational companies with manufacturing or sourcing operations in the region must now closely monitor the drafting of supplementary laws that will implement the reform. The

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The Federal Trade Commission on August 19, 2026, announced it is seeking public comment on a proposed enforcement policy statement concerning 'personalized pricing.' The move reflects growing unease among federal and state regulators about the use of consumer data to charge different prices to different people for the same product or service. This practice, also known as dynamic pricing, leverages personal information—such as browsing history, location, or demographics—to predict an individual’s willingness to pay.

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On September 3, the U.S. Treasury and IRS proposed regulations that would apply and significantly broaden the Supreme Court's 2023 ruling in Students for Fair Admissions v. Harvard. The proposal conditions a private school's 501(c)(3) tax-exempt status on its adherence to a strict racial nondiscrimination standard across all operations, including admissions, scholarships, and athletics.

This development is critical for tax-exempt educational institutions, as the proposed rule prohibits any policy that considers race, color, or national origin, even for remedial or diversity-related objectives. The government seeks to define any such consideration as a violation of "fundamental public policy," which underpins tax-exempt status. This could force many private primary schools, secondary schools, colleges, and universities to overhaul existing diversity, equity, and inclusion initiatives to avoid jeopardizing their tax exemption.

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The U.S. Securities and Exchange Commission has issued a significant proposal to overhaul the rules governing securities transfer agents, specifically to address the rise of blockchain and distributed ledger technology (DLT). This represents a major step in adapting decades-old financial regulations to the realities of digital assets. The current framework for recording changes in security ownership was not built for DLT, creating uncertainty for issuers and intermediaries. By modernizing these recordkeeping and reporting requirements, the SEC aims to facilitate innovation while maintaining investor protection and market integrity. Corporate counsel and their clients, particularly in the fintech and capital markets spaces, should care deeply as this signals the agency's direction on digital securities. It will directly impact how tokenized assets are issued, transferred, and serviced. The immediate next step is the public comment period, which will shape the final version of the rule and the future of on-chain securities recordkeeping in the U.S.

The UK has established a new regulatory framework for local and micro-scale energy generation, targeting heat networks and solar power. Under the Heat Networks Regulations 2025, effective from January 2026, heat networks in Great Britain are now treated as a regulated utility. Ofgem is designated as the sector regulator with significant enforcement powers, including the ability to issue fines up to 10% of an operator's annual turnover for non-compliance. The regime mandates fair pricing, service continuity, and consumer protections.

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The U.S. Treasury and IRS have issued proposed regulations that would deny Section 501(c)(3) tax-exempt status to independent K-12 schools using policies that discriminate based on race, color, or national origin. The proposal directly applies the principles from the Supreme Court's 2023 'Students for Fair Admissions v. Harvard' decision to the tax-exempt status of private institutions, which are not otherwise broadly subject to that ruling.

This development poses a fundamental threat to the operating and financial models of many independent schools. It mandates a comprehensive review of admissions criteria, financial aid awards, scholarship terms, and diversity, equity, and inclusion (DEI) initiatives to ensure they are race-neutral. Even programs intended to promote diversity could jeopardize a school's tax exemption if they rely on race-based criteria. The proposed rule would supersede prior IRS guidance that had permitted limited use of race-conscious policies to promote nondiscrimination.

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Following the January 2026 removal of Nicolás Maduro, Venezuela is reopening to foreign investment, driven by expanding US sanctions relief and new domestic legislation. The US Treasury’s Office of Foreign Assets Control (OFAC) has been incrementally issuing and amending general licenses, authorizing new investment in the country's oil, gas, and telecommunications sectors. This has prompted major US operators to act, with Chevron and Halliburton reportedly nearing multibillion-dollar agreements to expand energy operations. For sophisticated clients, this represents a rare opportunity to enter a market with some of the world’s largest untapped oil reserves, along with significant needs in mining and infrastructure. The evolving legal framework and high-risk environment—including corruption and security concerns—require careful navigation. Counsel should monitor OFAC’s licensing updates and conduct rigorous due diligence, as the durability of the opening may depend on sustained political stability and continued US engagement.

A U.S. district court in Pennsylvania has allowed a state attorney general's lawsuit to proceed against mortgage brokerages that allegedly used an equity-sharing scheme to reward real estate agents for referrals. The court denied the defendants' motion to dismiss, rejecting their claim that the structure was protected by the Real Estate Settlement Procedures Act's (RESPA) affiliated business arrangement safe harbor. The lawsuit, brought under the Consumer Financial Protection Act, alleges the brokerages sold discounted shares to agents—yielding returns up to 900%—and provided over $500,000 in entertainment perks to incentivize referrals. This ruling is a significant warning for financial services and real estate companies that use joint ventures or equity models with referral partners. The court found the AG’s complaint plausibly alleged the arrangement was a sham, as the brokerages failed to provide required consumer disclosures and the payments to agents were not bona fide returns on ownership. The case, which now moves to discovery, signals heightened scrutiny of such arrangements

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The U.S. Internal Revenue Service has issued proposed regulations under IRC Section 129, providing the first detailed guidance in over 45 years on the nondiscrimination rules for dependent care assistance programs (DCAPs). The guidance clarifies four key tests: the contributions and benefits test, the eligibility test, the owner concentration test, and the average benefits test. This resolves long-standing ambiguities that have made compliance challenging for employers offering these common tax-favored benefits.

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A guide for in-house and outside counsel identifies key issues when negotiating contracts involving artificial intelligence, whether as a customer or a vendor. It advises aligning any contractual commitments with the company's internal AI governance program and usage policies before negotiation. Key clauses discussed include restrictions on AI processing of confidential or personal data, requirements for enterprise-grade tools, and prohibitions on using counterparty data for model training. The guide also covers representations about compliance with specific AI-related laws, such as the EU AI Act or Colorado AI Act, which counsel should seek to narrow, rather than agreeing to broad "compliance with all laws" provisions.

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Regulators are shifting their approach to digital assets, moving beyond a narrow focus on anti-money laundering and sanctions to a broader evaluation of institutional governance, accountability, and control effectiveness. This evolution means supervisors are increasingly scrutinizing not only whether risks materialize but also the quality of the frameworks designed to identify, escalate, and manage them. This development is critical for all regulated financial institutions, not just crypto-native firms, as exposure can arise indirectly through conventional customer relationships, payment flows, and third-party vendors. A recent European enforcement action, which concerned a failure to monitor transactions worth approximately €176 billion, highlights the severe consequences of inadequate controls. Firms should proactively map both direct and indirect crypto-related exposures and ensure their compliance functions—including customer due diligence, transaction monitoring, and operational resilience—operate as an integrated framework. The upcoming EU Anti-Money Laundering Regulation (AMLR

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Advocate General Juliane Kokott has advised the Court of Justice of the European Union (CJEU) to annul the extended producer responsibility (EPR) scheme within the revised Urban Wastewater Treatment Directive. This provision would have imposed a levy on pharmaceutical and cosmetics companies to fund the advanced 'quaternary treatment' required to remove micropollutants from their products in urban wastewater.

This opinion is significant for clients in the affected sectors as the levy was designed to implement the 'polluter pays' principle. If the Court follows the AG’s recommendation, the substantial cost burden for this advanced treatment would shift away from producers, potentially to public utilities and taxpayers, creating major financial and policy implications. The case also raises uncertainty for future EPR schemes for other product categories in the EU.

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The U.S. Securities and Exchange Commission has proposed the first substantive modernization of the rules governing registered transfer agents since their initial adoption. The proposed amendments aim to update the regulatory framework for an era of electronic securities and distributed ledger technology (DLT), expressly permitting transfer agents to use blockchain for their master securityholder files.

Sophisticated counsel and their clients should care because the proposal goes far beyond technology updates. It introduces significant new compliance and risk-management obligations, replacing the existing safeguarding rule with a comprehensive framework requiring written policies, procedures, and business continuity plans. New proposed rules would also mandate formal compliance programs and place a greater duty on transfer agents to ensure they do not facilitate unregistered securities transactions. These changes will impact not only registered transfer agents but also the public companies, investment funds, and broker-dealers who rely on them. The public comment period is open unti

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