DROPLETS

The Federal Reserve finalized two rules on September 30: one on the transparency and public accountability of the supervisory stress test, and another aimed at reducing year-over-year volatility in stress test-related capital requirements. Alongside them, the Fed proposed a revised model for noninterest income.

These touch the core mechanics of the Comprehensive Capital Analysis and Assessment (CCAR) exercise for large bank holding companies. Disclosure rules determine what information about stress-test methodology and outcomes reaches counterparties, investors, and counterpart banks, while a volatility-reduction rule could reshape how stress-test-derived capital adjustments evolve from one cycle to the next. Both feed into capital planning, stress capital buffers, and shareholder-return decisions.

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On Oct. 1, Assistant Attorney General Colin M. McDonald issued Directive 26-12, "Corporate Enforcement in the Fight Against Fraud," to the National Fraud Enforcement Division created in April 2026. It creates a Corporate Enforcement Section that will oversee all Division investigations and prosecutions of corporate entities and assess companies' compliance with existing corporate criminal resolutions. Prosecutors are directed to prioritize four categories: healthcare fraud (including controlled substances and FDCA violations), fraud touching the financial integrity of government contracts and procurement, tax-evasion schemes, and tariff-evasion fraud.

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What happened: as part of the roll-out of a joint final rule defining unsafe or unsound practices and matters requiring attention, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation have each released implementing policy changes. The available reporting does not set out the rule's full text, compliance dates, or which provisions differ between the two agencies, so the precise scope should be confirmed against the agencies' own releases and any effective dates they specify.

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What happened: According to Orrick's client alert, the Senate failed to gather the 60 votes required to proceed with the CLARITY Act, which the firm characterises as significantly diminishing the bill's chances of passage in the current Congress. Separately, the CFTC has sent a crypto asset rulemaking to the White House for review, with the firm's takeaway noting that the outcome of that review is not yet binding.

Why sophisticated counsel should care: US digital-asset policy is now split between a stalled legislative track and an agency track. For banks, broker-dealers, exchanges, fintech issuers and trading-desk clients, the practical consequence is extended reliance on the existing patchwork of CFTC and SEC authority plus congressional efforts elsewhere, which in turn raises questions about which tokens, intermediaries and activities stay within regulated perimeters. The White House review step is a milestone rather than a rule: the text seen by reviewers can still change, and the alert suggests the impact is not yet locked in.

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On Oct. 1 the SEC proposed a 760-page framework under the Advisers Act and Investment Company Act letting registered advisers and registered funds, including BDCs, self-custody crypto assets if a permitted custodian is unavailable, and maintain assets with state trust companies subject to diligence on the trust company's authority, policies, audited financials and internal controls. The proposal would add custody disclosure to Form ADV and Form N-CEN, with comments due 60 days after Federal Register publication. Peirce, who left the Commission on Oct. 2 and left it with two sitting members, criticized the drafting of "self-custody."

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On September 30, Governor Newsom signed AB 1776, the Competition and Opportunity in Markets for a Prosperous, Equitable and Transparent Economy (COMPETE) Act. According to Cozen O'Connor, the statute is the first in the country to extend California antitrust law to cover single-firm conduct — conduct that does not require agreement, coordination or monopoly power in the traditional sense. That departure from Clayton Act and Sherman Act § 1 architecture is the provision most likely to draw early challenge.

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On September 30, 2026, California Governor Gavin Newsom signed Assembly Bill 1776 — the Competition and Opportunity in Markets for a Prosperous, Equitable, and Transparent Economy Act, commonly called the COMPETE Act — into law, according to a Morrison & Foerster alert published October 5, 2026. The firm's headline states that the statute redefines monopolization, which would make it a live compliance consideration for any company selling goods or services into California.

Why sophisticated counsel should care: the alert as excerpted does not set out the Act's substantive standards, so the practical significance is not yet verifiable from this material alone. Counsel will want the statutory text and any accompanying or uncodified section before advising clients, because the definition of monopolization, any market-definition or dominance thresholds, and any safe harbours or concentration presumptions would drive exposure assessments, merger reviews, and pricing and distribution practices in the state.

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What happened: On September 30, the U.S. Treasury Department, on behalf of the Stablecoin Certification Review Committee, issued an interim final rule establishing interim procedural regulations and forms governing the Committee's review of state certifications submitted under Section 4(c) of the GENIUS Act. The rule is procedural rather than substantive — it sets out how certification applications move through review and what filings must look like — but it is the first operative framework for the federal-state division of authority over stablecoin issuer approval.

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On September 11, 2026, the Commodity Futures Trading Commission approved a final rule adding Rule 165.9(d) to its whistleblower regulations, establishing what the agency describes as a "30 Percent Presumption." As reported by Husch Blackwell, the provision creates a rebuttable presumption that a qualifying award should equal 30 percent of monetary sanctions collected in a successful Commission action falling within a defined size band, with awards outside that band remaining discretionary.

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Per a Wilmer Cutler alert, on September 17, 2026 the SEC issued an order granting temporary, conditional exemptive relief under Section 36(a)(1) of the Securities Exchange Act of 1934, described as an "innovation exemption," opening a conditional path to onchain trading of tokenized securities listed on national securities markets. Sophisticated counsel will care because the relief appears to target a specific structural question — whether and how an onchain venue or protocol can effect transactions in already-listed equities without triggering full registration and exchange obligations — which sits at the intersection of market-structure rules, broker-dealer status, best-execution duties and custody. Relief of this kind typically carries operational conditions (disclosure, recordkeeping, surveillance, capital or segregation) and a sunset; the alert excerpt does not set those out, and we have only the firm's characterization, so scope, conditions and duration should be confirmed against the order text.

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On Sept. 30 the U.S. Treasury issued an interim final rule setting out the process and forms for state payment stablecoin regulators to certify their regimes to the GENIUS Act's Stablecoin Certification Review Committee, the Treasury-chaired body that must approve state supervision of issuers with $10 billion or less in consolidated outstanding issuance. Separately, on Sept. 24 the Federal Reserve proposed two rules for Board-supervised issuers: one addressing permissible reserve assets, standardized capital requirements, custody of backing assets and the permissibility of stablecoin activities (23 questions), and a 104-page proposal creating application, hearing and appeal procedures for banks seeking approval for a stablecoin-issuing subsidiary (254 questions). Comments on all three close Nov. 30.

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On September 30, 2026, California Governor Gavin Newsom signed AB 1776, the Competition and Opportunity in Markets for a Prosperous, Equitable and Transparent Economy Act, amending the state's principal antitrust statute, the Cartwright Act, to address single-firm conduct.

Historically, California's Cartwright Act has been read narrowly as reaching agreements and restraints on trade; monopolization-type liability has generally been litigated in California under the state UCL and federal Sherman Act rather than Cartwright itself. An amendment expressly capturing unilateral conduct would change that baseline, and would sit alongside California's existing UCL monopolization doctrine (A.B.C. Concepts and the Brooke Group line of authority). Counsel should note that the alert reviewed here does not set out the statute's operative subsections, the conduct standards or defenses it supplies, or its effective date and retroactivity provisions, so the precise scope of the new standard is not established on this material.

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On 3 September 2026 the European Commission adopted guidelines on exclusionary abuses of dominance under Article 102 TFEU — the first of their kind — replacing the 2008 enforcement priorities paper, which ceases to apply from 10 October 2026. The text codifies existing case law and, importantly, maps where presumptions of distortion of effective competition apply: exclusive dealing and exclusivity rebates attract a rebuttable presumption, while self-preferencing attracts none and requires a full competition-on-the-merits plus exclusionary-effects assessment. Conduct "by its very nature harmful", such as paying customers not to use a rival or dismantling rival-dependent infrastructure, may be found infringing without those analyses.

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On September 29, 2026, the Third Circuit affirmed in part summary judgment for Westlaw's publisher, holding that 2,243 Westlaw headnotes carry sufficient originality to qualify for copyright protection and that ROSS Intelligence's reproduction of them to train a legal-research AI product was not fair use. The opinion is the first appellate treatment in the Third Circuit of headnote-based copying claims against a generative-AI developer, and it joins a growing line of decisions confronting publishers of legal research materials with the fair-use defense.

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On September 11, 2026, the Federal Reserve Board, the FDIC, the OCC and the NCUA issued proposed updated third-party risk management guidance, according to a Morrison & Foerster client alert. The joint proposal revisits the interagency TPRM framework that banks, savings associations and credit unions have applied since 2023, replacing or amending a document that reshaped vendor oversight after the 2023 bank failures and enforcement actions over fintech and bank-facility service providers.

Why counsel should care: TPRM expectations typically become the yardstick for examination findings and federal banking enforcement, and they flow down contractually. Institutions will need to reassess vendor inventory, due diligence, contracting standards, ongoing monitoring and exit planning; large service providers, including core processing, payments and compliance-automation vendors, face corresponding pressure to evidence their control environments to clients. The proposal is not final, so nothing is binding yet, but comment letters and any final text will shape remediation timelines.

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On October 1, DOJ's National Fraud Enforcement Division issued a Directive governing its approach to "Corporate Enforcement in the Fight Against Fraud," described in the source alert as building on the Fraud Division's August policy — the excerpt does not specify the year or title, so the relationship between the two documents is unconfirmed here. The reviewed material characterizes the Directive as an internal enforcement framework; its specific provisions — any declination criteria, treatment of cooperation credit, penalty considerations, or internal approval requirements — are not reproduced in the source, and the Directive text itself should be read before relying on any characterization.

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According to an Orrick alert, the Federal Reserve requested public comment on September 24 on two proposed rules implementing the GENIUS Act, enacted in July 2025 to create a regulatory framework for payment stablecoins. The first proposal would establish reserve, capital and related requirements for issuers; the excerpt available here does not describe the second proposal's subject matter, so its scope should be confirmed against the full text.

Why sophisticated counsel should care: GENIUS Act implementation is moving from statute into supervised rulemaking, and the reserve and capital framework determines what backs stablecoin par, how issuer balance sheets compare with bank deposits and money market funds, and what supervisory perimeter issuers and their sponsors now operate inside. The same rulemaking touches banking, payments and corporate treasury teams at once — issuer sponsors, banks pursuing issuance or custody relationships, and clients with stablecoin settlement or cross-border payments mandates.

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On September 30, 2026, California Governor Gavin Newsom signed SB 690. According to the firm's client alert, the law takes effect January 1, 2027 and eliminates private actions for website- and app-based "pen-register and trap-and-trace" claims under the California Invasion of Privacy Act, while leaving other CIPA provisions intact — including the more common CIPA section 631.1 wiretap claim, which requires intentional tracking of a particular consumer's movements.

For counsel defending consumer-facing platforms, ad-tech vendors, and app operators, this removes a distinct category of privacy exposure. Pen-register theories have been used to allege that a company's own analytics or advertising pixels capture and disclose granular browsing activity without adequate notice or consent; because the theory does not depend on intercepting a specific communication, it has produced high-volume, settlement-prone litigation. Removing that pathway should change the calculus on class viability, discovery burdens, and settlement valuation for pending and threatened cases.

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On September 18, 2026, the Department of Justice announced two revisions to the Justice Manual directed at False Claims Act enforcement, according to a McGuireWoods alert. One revision reinstates and expands DOJ policy bearing on FCA enforcement; the second clarifies the limits on the Department's use of agency guidance in False Claims Act matters. The full text of the revised provisions was not reproduced in the reporting reviewed here, so the precise scope of the reinstated policy language is not yet confirmed.

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On Sept. 30, 2026, the Senate Committee on Environment and Public Works and the Committee on Energy and Natural Resources reportedly reached agreement on the text of the Bipartisan American Affordability and Jobs Act of 2026, described as a sweeping federal permitting overhaul covering energy and infrastructure projects.

Why sophisticated counsel should care: permitting reform sits upstream of deal structure. Changes to NEPA review, agency timelines, and interagency coordination can alter whether a power, transmission, or major infrastructure asset is financeable on a given schedule, which in turn affects offtake agreements, project finance timelines, milestone covenants, and the risk allocation negotiated in construction and EPC contracts. Bipartisan committee agreement is also a signal on durability and floor prospects, though it is procedural rather than enacted law.

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On September 30, 2026, the Centers for Medicare & Medicaid Services published a final rule establishing the Global Benchmark for Efficient Drug Pricing (GLOBE) Model, a mandatory Medicare Part B drug payment framework described as implementing a most-favored-nation approach to U.S. drug pricing. Unlike prior voluntary demonstration models, a mandatory model reaches all participating manufacturers and creates a direct link between U.S. reimbursement and prices a manufacturer offers in certain reference markets.

Why sophisticated counsel should care: mandatory MFN-style pricing changes the regulatory character of the initiative from pilot program to baseline reimbursement methodology, touching pricing agreements, Medicaid and commercial contracting strategy, PBM economics, and rebate and discount modeling. Health-system and provider-side buyers also face downstream effects on 340B and Part B supply economics, and the rule's reference-market definitions will likely generate statutory authority and procedural challenges under the Medicare program and the Administrative Procedure Act.

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According to a Ropes & Gray client alert, Assistant Attorney General Colin M. McDonald, who leads the Department of Justice's recently created National Fraud Enforcement Division, issued Directive 26-12, titled "Corporate Enforcement in the Fight..." (full title not captured in the source), on October 1, 2026. The available source material consists of the alert's introduction and does not reproduce the directive's operative text, so the specific policy changes it makes — whether on cooperation credit, declination criteria, charging decisions, penalty exposure, or disclosure expectations — cannot be confirmed from this evidence.

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What is reported: on October 1, 2026, Assistant Attorney General Colin McDonald issued Directive 26-12, titled "Corporate Enforcement in the Fight Against Fraud," establishing new enforcement priorities and procedures for the U.S. Department of Justice's Fraud Division. The cluster contains a single, truncated source summarizing the directive, so its operative text, any accompanying manual or policy guidance, and the specific priority areas it names are not in evidence here.

Why sophisticated counsel should care: a written division-level directive of this kind is the kind of internal policy document that can shape charging posture, cooperation credit, and the treatment of self-reported misconduct — the levers corporate counsel and compliance teams rely on when deciding whether and how to approach prosecutors. Confirming whether it supersedes or supplements existing department and Fraud Division corporate enforcement policy is the first task, not an assumption.

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What the evidence supports: the US Department of Justice's National Fraud Enforcement Division has issued a directive describing how its prosecutors will approach corporate investigations and enforcement actions across the division's portfolio, which reportedly includes healthcare-related matters. The specific charges, sentencing positions, cooperation credit criteria and sector coverage are not detailed in the material reviewed here, and should be confirmed against the directive text itself.

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On September 30, 2026, the chairs and ranking members of the Senate Committee on Environment and Public Works and the Senate Committee on Energy and Natural Resources jointly released the Bipartisan American Affordability and Jobs Act of 2026, a bill exceeding 400 pages and addressing federal permitting. Public reporting on the text is limited, so specific provisions — including any changes to review timelines, agency authority, or litigation exposure under NEPA and related statutes — should be confirmed against the bill language itself rather than commentary.

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In an action brought by 22 states and the District of Columbia, the U.S. District Court for the District of Oregon granted partial summary judgment on September 25 (the year is not stated in the available source), ruling that the CFPB's acting director acted unlawfully in cutting off the bureau's congressionally appropriated funding, on Administrative Procedure Act and constitutional grounds.

Why sophisticated counsel should care: this is an institutional-authority decision rather than a substantive consumer-finance rulemaking, but funding impoundment questions determine whether the bureau can compel supervised entities to produce data, complete pending investigations and enforcement actions, fund rulemakings, and maintain operations at all. State coalitions have deployed APA and separation-of-powers theories in comparable challenges to other federal funding disputes, so the reasoning may travel beyond the consumer-finance space.

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What is reported: a California federal district court drew a sharper boundary between metadata-type internet records and the "contents" of communications under the federal Wiretap Act (18 U.S.C. §§ 2510, 2517). Mayer Brown's 6 October 2026 client alert states that the court treated browsing data — the record of what pages a user visited — as falling outside the statutory definition of communication "contents," implying that CIPA-style consent orders compelling disclosure of such records are correspondingly narrower than some prosecutors and plaintiffs have assumed.

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On September 30, 2026, California Governor Gavin Newsom signed the COMPETE Act into law, amending the state's antitrust statute, the Cartwright Act, to target single-firm monopolization and monopsonization conduct. California is one of a small number of US jurisdictions with a unilateral-conduct antitrust statute, so the bill is a significant expansion of the state's substantive reach beyond what federal law would ordinarily require a firm to face for exclusionary conduct directed at rivals or suppliers.

For major-firm clients, the immediate significance is that the conduct thresholds, burden-shifting structure, and available remedies under the amended statute may differ from the Section 2 framework applied elsewhere, including in any later parallel federal action. Antitrust counsel should expect renewed attention to pricing, exclusivity, non-compete, and buyer-power practices in California-facing transactions and commercial arrangements, particularly where a client holds dominant share in a narrow product or input market, or is a monopsonistic buyer.

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On October 1, 2026, Assistant Attorney General Colin M. McDonald issued Directive 26-12, the National Fraud Enforcement Division's first corporate enforcement directive. It identifies four charging priorities — health care fraud (including controlled-substance distribution and FDCA violations), fraud on government functions such as procurement and contracts, significant revenue evasion, and trade fraud including tariff evasion, import fraud and forced labor — and directs prosecutors to give "great weight" to ten factors, beginning with management knowledge or involvement and extending to immigration offenses and moving US dollars to foreign adversaries.

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Per a Blank Rome client alert, the U.S. Court of Appeals for the D.C. Circuit issued its decision in Anthropic PBC v. U.S. Department of War on Sept. 25, upholding the Defense Department's exclusion of Anthropic's Claude models from its AI portfolio. The available source is a single law-firm alert and its text is truncated, so the panel's reasoning, the standard of review applied to the contracting officer's determinations, and the precise remedial disposition are not established here; the alert also captions the department as the "Department of War," which counsel should confirm against the docket.

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DOJ has revised its False Claims Act enforcement policy, as reflected in the Justice Manual, to state that the department generally may not base an FCA action solely on a contractor's failure to follow "agency guidance" — handbooks, manuals, FAQs, policy memoranda and technical publications explaining or implementing agency programs. An FCA case must instead rest on a violation of a binding requirement: a statute, regulation, or enforceable contract term.

The effect is that the source of each compliance obligation becomes the central diligence question. Because contracts routinely incorporate outside documents, guidance that is advisory for the public can be mandatory for a given contractor. Where a clause flows a standard into the contract — the source's example is NIST SP 800-171 incorporated through DFARS 252.204-7012 — knowingly falling short while seeking payment can still support liability. The source also notes the FAR clause implementing Executive Order 14398 makes compliance material to payment decisions, narrowing a later materiality defense.

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September 2026 produced a notably employer-favorable appellate set for labor clients. In Siren Retail Corp. v. NLRB (2d Cir.), the court vacated an unfair labor practice order on union-logo dress codes and rejected the Board's Tesla presumption, holding the agency exceeded its authority by applying strict scrutiny-like review to facially neutral policies and directing a "more evenly measured balancing test" weighing Section 7 intrusion, facial neutrality and consistent enforcement, and context. In Starbucks Corp. v. NLRB (5th Cir.), the court declined to enforce most of the Board's order, finding no evidence that store-hour cuts and a hiring-freeze remark were threats or that the manager's union comments amounted to surveillance.

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On 24 September 2026, the UK Competition and Markets Authority imposed civil penalties on two individuals for concealing evidence during an unannounced visit to a business's premises. According to the Perkins Coie report, a member of senior management was fined £20,000 and an office manager £5,000, marking the CMA's first use of its penalty powers against individuals rather than undertakings alone.

The signal matters because it converts what many treat as housekeeping compliance during a dawn raid — preserving and producing documents, laptops and messages — into personal, financially enforceable exposure for management, and it lands as the UK merger and competition regime is under active reform debate. The amounts are modest, but the precedent is not: officers will now weigh the cost of resisting an inspection against their own liability, and boards should be asking who is authorised to respond to a dawn raid and who is not.

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Treasury and the IRS issued temporary regulations (T.D. 10057; Temp. Treas. Reg. §§ 1.25F-1T, 1.25F-4T, 1.25F-5T) and proposed regulations (REG-117199-25) implementing Section 25F, the federal credit for cash contributions to scholarship-granting organizations, up to $1,700 per individual and, on the proposed reading, $3,400 for joint filers who each contribute. The credit begins January 1, 2027; comments are due December 1, 2026, and reliance is permitted until final rules issue. Treasury estimates the program will shift more than $26 billion annually.

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A presidential memorandum signed September 16, 2026 extends the administration's September 8 direction to strip Canadian-origin goods from the entire federal civil procurement system, instructing OMB, USTR and the FAR Council to take steps "permitted by applicable law" and notify agencies of domestic alternatives. Nothing is excluded yet: Canadian end products remain eligible until implementing action, and the civilian scope excludes Department of War procurements, which sit under a separate reciprocal defense procurement understanding.

The mechanics are unresolved. The most plausible vehicle is USTR delisting Canada as a Trade Agreements Act designated country, which would bar Canadian end products above TAA thresholds rather than merely trigger a Buy American price penalty, and would require modifications to existing contracts. GSA MAS Refresh 33, pushed from September to October, is the near-term indicator of how aggressive the removal will be.

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On September 25, 2026, the SEC's Division of Corporation Finance staff issued FAQs applying the federal securities laws to crypto assets, following the Commission's March 17, 2026 Interpretive Release (Release No. 33-11412). The FAQs have no force of law, so the baseline is unchanged, but they signal likely staff approaches — relevant for issuers, protocols, and platforms facing enforcement risk.

Staff explain how the Interpretive Release's "functional" and "decentralized" definitions drive classification, and when a nonsecurity asset may separate from the investment contract through which it was sold, with the issuer's own prior representations central. A receipt token backed by a nonsecurity digital commodity may be a digital tool rather than a security where depositors retain rights and benefits and the issuer does not take ownership, pledge, or rehypothecate. Marketing existing utility, ongoing development of a functional system, buyback announcements on functional systems, and mere listing on a trading platform are each unlikely alone to create new investment-contract exposure,

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