DROPLETS

California's SB 574, signed into law Sept. 30 and effective Jan. 1, 2027, is the first state statute expressly governing lawyers' generative AI use. It reaches California-licensed attorneys, counsel appearing before California courts, and arbitrators subject to California arbitration procedures. Duties include not delegating the practice of law to AI, reasonably verifying AI output, correcting hallucinated content, honoring new confidentiality limits on entering nonpublic or personally identifying information, and satisfying disclosure obligations. The provision counsel should flag internally: attorneys must personally verify every citation in filings submitted to California courts, regardless of whether the authority came from AI, a colleague or a research platform. The statute's broad definition leaves open whether AI features inside legal research and document review tools are covered.

…

The SEC staff statement, issued September 28, 2026, addresses valuation and disclosure of private credit and other private assets by public companies and registered investment companies. The staff reasons that privately negotiated loans generally lack observable pricing data, placing them in Level 3 of the ASC 820 fair value hierarchy and making fair value dependent on unobservable inputs.

For investment advisers and private funds, three areas carry operational weight. First, valuations must reflect a market participant's perspective, not only borrower-specific relationship data; credit spreads, liquidity conditions and risk compensation may be required inputs when readily available. Second, transaction-price calibration at acquisition should be followed by periodic checks against comparable transactions, secondary indications and credit indices. Third, disclosure should be asset-specific rather than boilerplate, and should address restructurings, non-accrual policies and payment-in-kind interest.

…

On September 28, 2026, the U.S. Department of Education announced it had formally rescinded the 2024 Title IX regulations and reinstated the 2020 standards in the Code of Federal Regulations. That rulemaking swaps out substantially higher procedural duties — including mandatory training, prompt and equitable complaint resolution, supportive measures, and broader definitions of sexual harassment — for a narrower framework drawn from the 2020 text.

Why sophisticated counsel should care: the operative obligations do not depend only on the text itself. The Supreme Court's 2024 partial vacatur of the 2024 rule and the Seventh Circuit's 2025 vacatur of state-actor provisions mean education clients now face a hybrid of federal regulation and binding judicial precedent, with courts already drawing lines around notice requirements and actual-knowledge standards. Reversion to 2020 text does not by itself displace those holdings, so the compliance baseline must be mapped case by case rather than assumed.

…

Treasury and the IRS on Sept. 4 proposed regulations denying Section 501(c)(3) status to any private elementary, secondary or postsecondary school that adopts, maintains or enforces a race-, color- or national-origin-based policy in admissions, scholarships, financial aid, athletics or any other school-administered or school-supported activity. The proposal eliminates the permissive language of Revenue Procedure 75-50 and would make the mere use of race, regardless of intent or effect, grounds for loss of exemption, applying to taxable years beginning after May 31, 2027 if finalized. The agencies estimate roughly 18,000 schools and 750,000 students could be affected.

…

Per Faegre Drinker's October 2026 analysis, the Commission has advanced a proposal updating the SEC custody rule framework, following rescission of a prior proposal, with two headline elements: permission for self-custody of crypto assets under specified conditions, and codification of how state trust companies may hold client securities. The rule sits at the center of the broker-dealer and investment adviser compliance models, so the exposure is not confined to digital-asset firms; custody and safekeeping arrangements, third-party agreements, internal controls and surprise/examination practices at large advisers and retail brokers would all be implicated to the extent the proposal touches them. Client-facing consequences include the possibility of additional disclosure obligations, revised agreements with custodians, and questions about how advisers and brokers allocate responsibility for crypto assets that have no traditional intermediary. Counsel should treat the proposal as not final: the analysis available to us is a single law-firm summary, and we have not verified the full tex

…

On September 30, 2026, the Securities and Exchange Commission proposed several rule amendments intended to facilitate retail investor access to private funds and private market investments, according to a King & Spalding alert. The firm describes the package as expanding the ability of retail investors to gain exposure to private funds; the summary available here is truncated, so the specific mechanisms are not confirmed in this material.

…

Per a Hogan Lovells alert, key components of Japan's newly built legislative framework for active cyber defense took effect on 1 October 2026. The regime's headline feature is new notification and reporting obligations imposed on designated operators of essential infrastructure services — the categories of entities most exposed to state-linked and hacktivist intrusion.

Why sophisticated counsel should care: the obligations attach to a defined class of operators rather than to companies merely holding data about Japanese customers, so mapping which of a multinational's Japanese subsidiaries, joint-venture partners, or critical vendors sit inside the designation is the first gating question. The alert also suggests practical impact will reach past the regulated perimeter, since essential-infrastructure operators typically depend on long-tail suppliers and processors whose own incident-handling habits shape the customer's response timeline. Notification clocks, content standards, and any safe-harbor framing will determine whether one group incident triggers parallel filings across affi

…

In Michigan v. DOE, the D.C. Circuit rejected the Department of Energy's attempt to rely on section 202(c) of the Federal Power Act — a wartime/emergency authority to order the generation, delivery, interchange, or transmission of electric energy — to block power plant retirements. As reported by Blank Rome on October 7, 2026, the ruling signals that DOE cannot stretch emergency powers to override state decisions closing generating units, and pushes the agency back toward the congressionally mandated FPA reliability certification process run through regional transmission organizations and the North American Electric Reliability Corporation.

…

A Jackson Lewis special report surveys a dozen California employment bills from the 2026 legislative session, most operative January 1, 2027, with training and leave measures later. Automated decisionmaking: SB 947, the "No Robo Bosses Act," would bar reliance solely on an automated system to discipline or terminate, require human corroboration plus a separate written notice, and prohibit systems from inferring protected status or predicting the exercise of legal rights. The report's summary and body disagree on whether the law starts July 1, 2027 or 2028, so the operative date needs verification against the chaptered statute. Surveillance: AB 1883 reaches AI tools that infer emotional state or collect neural data, while AB 1331 covers video, audio, GPS, time-and-pace tracking and biometric tools, barring bathroom monitoring and requiring off-duty disabling. Other measures rework stay-or-pay agreements and exceptions (AB 1697), make FAA-unenforceable arbitration clauses unenforceable in California (AB 2155), raise repeat pay-data-report penalties to $1,000 per employee (SB 1237), man

…

On 2 July 2026 the Court of Justice of the European Union handed down its judgment in Google Android, the long-awaited ruling on exclusionary abuses in the mobile operating-systems market. A Perkins Coie alert published in October 2026 walks through where exclusionary-abuse law now stands as a result, but the source material available here does not set out the holding, the applicable Article 102 test, or any remedy ordered, and those details should not be inferred from this summary.

The decision matters well beyond the parties. EU dominance cases have been the reference point for competition authorities and private claimants across member states for two decades, and counsel advising platform, distribution, or technology clients routinely calibrate enforcement exposure and litigation strategy to how the Court frames the line between loyalty rebates, tying, self-preferencing, and conduct on non-essential or emerging venues. Sophisticated readers should treat the alert as a map of questions now in play rather than a statement of answers.

…

Delaware has amended its comprehensive consumer privacy statute with House Bill 380, which takes effect January 1, 2027 and significantly expands the Delaware Personal Data Privacy Act. The source available to us is a single law-firm client alert and its summary is truncated, so the precise scope of the changes — which thresholds, duties, exemptions, cure periods or enforcement provisions were altered — is not confirmed here and should be checked against the enrolled bill text before reliance.

…

What happened: Revenue Ruling 2026-20, summarized in a Morgan Lewis alert, addresses the tax treatment of a multi-step ETF seeding transaction in which appreciated assets are contributed to a fund and then distributed in kind. According to the summary, the IRS applies substance-over-form and step-transaction doctrines to the structure, and the alert indicates the ruling also reaches other investment fund strategies beyond the transaction described. Counsel should read the ruling text itself; the available summary is truncated and does not set out the full conclusion, including any treatment of basis, gain, or timing of recognition.

…

Per the Jones Day alert, the US Court of Appeals for the Third Circuit has abandoned the bright-line approach that treated a fraud allegedly concealed by a half-truth or omission as immaterial whenever the stock price did not subsequently decline, and has moved toward a totality-of-the-circumstances assessment of materiality. In practical terms, the change matters for anyone litigating or investigating Rule 10(b) and PSLRA claims in the circuit: complaint drafting, motion-to-dismiss strategy and the sequencing of discovery on loss causation all depend on how the court now frames the inquiry, and the alert suggests the order in which materiality and reliance are evaluated has shifted. Defendants in pending and newly filed Third Circuit matters should revisit dismissal arguments built on price movement and audit disclosure adequacy against the fuller standard rather than treating market reaction as a proxy. Institutional plaintiffs face the mirror task of pleading a coherent theory that survives without a price-drop crutch. Two caveats: the alert as indexed identifies no case name, doc

…

California Governor Newsom signed Senate Bill 690 on 30 September 2026, amending the enforcement section of the California Invasion of Privacy Act (Section 637.2) so that claims arising from conduct on an internet website, online application or mobile app under the pen register and trap-and-trace provisions (Section 638.51) may be brought only by the state attorney general. Private plaintiffs lose standing to assert those theories against analytics tags, pixels, cookies or session-replay tools, removing the aggregated US$5,000-per-violation damages exposure that drove the recent wave of CIPA litigation.

…

California has closed one of the most visible gaps in its antitrust toolkit. On September 30, 2026, Governor Gavin Newsom signed the COMPETE Act, amending the Cartwright Act so that, for the first time, the state statute reaches single-firm conduct: it makes it unlawful to monopolize or monopsonize. The full text was not available to this briefing, so scope, any thresholds or market definitions, exemptions, enforcement authority and remedies remain unverified and should be read directly before reliance.

Why sophisticated counsel should care: California is a large, economically concentrated market with heavy platform, technology, retail, healthcare and labor-market overlap with major-firm clients. A state-law prohibition on monopolization supplies a direct legal duty and, importantly, an in-state forum, expanding parallel-risk and follow-on exposure alongside federal Sherman Act and FTC Act theories. Monopsony language also reaches buyer-side power, relevant to employers, staffing firms, aggregators and other large purchasers.

…

Reported in recent days, the FTC and the Washington state attorney general announced a settlement resolving allegations that Amway Corporation and affiliated recruiting companies, including World Wide Group, LLC, made deceptive claims about income levels and recruiting opportunities in their multilevel marketing model. The announced figure is $225 million. Terms, the allocation of funds to consumers, and any admission of liability are not fully described in the available reporting and should be confirmed against the filed order.

…

On September 18, 2026, DOJ revised two Justice Manual sections governing False Claims Act enforcement. Section 1-19.000 reinstates the policy that sub-regulatory guidance cannot create legal obligations beyond statute or regulation, and bars DOJ from bringing actions based solely on guidance-document noncompliance — while permitting DOJ to use a guidance document as evidence of scienter, notice, or knowledge of the law, including in some criminal contexts. The revision conforms the Manual to the February 2025 Bondi memorandum rescinding the July 2021 Garland memorandum.

Section 4-4.111 upgrades the prior "should consider" language to a directive that DOJ attorneys "will in each case assess" whether dismissal serves the government's interests in every declined qui tam action, and permits re-evaluation as litigation progresses. Dismissal factors remain non-exhaustive, though "meritless qui tams" replaces the narrower facial-merit standard, and delegated U.S. Attorney's Offices must give the Civil Fraud Section ten days' notice before filing dismissal motions.

…

On October 6, 2026, the Office of Management and Budget confirmed receipt of a draft final rule from the EEOC titled "Rescission of Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act." Because the vehicle is a final rule, the EEOC is expected to publish it and repeal the guidance effective upon publication once OMB approves it, although the review timetable is unclear and the proposal is not final.

The 2012 guidance has shaped employer screening practice for roughly 15 years, most visibly the "targeted screen" keyed to the three Green factors drawn from Green v. Missouri Pacific Railroad (8th Cir. 1975). Repeal would not, however, license employers to consider criminal records freely.

…

Senate Bill 690, signed into law by Governor Newsom on September 30, 2026, amends the California Invasion of Privacy Act to eliminate the private right of action for CIPA violations. CIPA has long served as the vehicle for wiretap claims against publishers, retailers and app operators, with a provision allowing recovery per violation without proof of actual harm, generating substantial class action and mass arbitration volume.

CIPA claims typically carry low individual value and depend on volume, so removing the private claim eliminates a recurring settlement and defense cost line rather than one large exposure. That affects reserves, case budgets, class action monitoring, and the settlement calculus for pending and threatened claims affecting consumer-facing businesses with California operations.

…

On September 30, 2026 the Federal Reserve approved two final rules, published October 2 in the Federal Register, 6–1 with Governor Barr dissenting. The Volatility Rule sets each firm's stress capital buffer using the average stress capital decline projected in the two most recent supervisory stress tests, with the first averaged SCB effective January 1, 2029 and based on 2027 and 2028 results. The SCB effective date moves from October 1 of the announcement year to January 1 of the next year, the dividend add-on shifts to quarters five through eight, and averaging generally will not apply to biennial Category IV firms or after a material-change recalculation.

…

On October 1, 2026, the DOJ's National Fraud Enforcement Division released a memorandum describing the principles and procedures of its corporate enforcement program. The Memo is a division-level policy statement rather than a case, holding or settlement, but it tells companies and their defense counsel how the Division intends to operate when corporate misconduct enters its orbit: what it weighs in charging decisions, how cooperation is assessed and credited, and the considerations shaping resolution terms.

That matters for major-firm clients because a division enforcement memo becomes a reference point in internal investigations and negotiations. It can inform how a company characterizes its remediation, whether to seek credit for self-disclosure, and how to calibrate expectations on penalties and monitorship discussions involving the Fraud Division. It also offers a benchmark against which other DOJ divisions' corporate enforcement policies can be compared.

…

McDermott Will & Emery reports that the EU Packaging and Packaging Waste Regulation (PPWR) became generally applicable on 12 August 2026, with many substantive requirements still being introduced in phases between 2028 and 2030 and beyond — but a set of core obligations is already in force. The alert is operator-facing rather than adjudicative: it walks clients through what the regulation now requires of businesses placing packaging on the EU market.

…

In Lion Elastomers LLC, 375 NLRB No. 41 (Sept. 23, 2026), the NLRB returned to the General Motors LLC, 369 NLRB No. 127 (2020) standard for deciding whether misconduct during protected concerted activity forfeits NLRA protection. The general counsel must first prove, by a preponderance, that the employee engaged in union or protected concerted activity, the employer knew of it, and antiunion animus motivated the adverse action; only then does the burden shift to the employer to show it would have taken the same action absent the protected activity. The majority (Members Mayer and Macy, with Chairman Murphy concurring) reasoned that the Fifth Circuit's 2024 vacatur of Lion Elastomers II nullified that decision's attempt to overrule General Motors, leaving the 2020 framework as extant precedent. Member Prouty agreed General Motors controlled the remanded proceeding but disputed that the vacatur erased Lion Elastomers II elsewhere, and the Board left open whether Intertape Polymer Corp., 373 NLRB No. 68 (2024), independently displaced General Motors.

…

Per a Ropes & Gray client alert, California Governor Gavin Newsom signed Senate Bill 574 into law on September 30, 2026, making California the first state to enact a comprehensive statutory scheme governing lawyers' use of generative artificial intelligence. The alert does not set out the bill's operative provisions, so the specific obligations, scope, and effective date should be confirmed against the enacted text.

Why it matters beyond California: the largest US law firms operate under multi-state and global AI-use policies, and a state statute setting enforceable duties on attorneys sits alongside — and may interact with — ABA Formal Opinion 512, state bar guidance, client confidentiality and supervision duties, and privilege risks when AI tools are used for drafting, research, or client analysis. A first-of-its-kind state regime is likely to be watched by other state regulators and bar bodies, making it a template risk rather than a purely local one.

…

Per Ballard Spahr, the Supreme Court on October 6 took a further step toward resolving the split over the scope of National Bank Act preemption, inviting the Solicitor General to express the government's views in Cantero, Conti and Kivett. A request for the Solicitor General's views typically signals that at least one Justice wants briefing on a case the Court may decide, and can precede a grant of certiorari.

Why it matters: the National Bank Act's supremacy clause underpins the OCC's authority to issue binding rules, order restitution, and bring enforcement proceedings against national banks, federal thrifts and their affiliates without state banking regimes displacing federal supervision. The controlling question — whether a state-law claim is "incurred by ... entering into any transaction" of the type the Act prohibits, and what the Commencement Date provision excludes — determines whether state courts retain concurrent jurisdiction over suits against federally chartered institutions.

…

On September 30, 2026, California Governor Gavin Newsom signed Senate Bill 690, amending the California Invasion of Privacy Act (CIPA) to remove the private right of action for violations of Section 638.51, CIPA's pen register provision. The available reporting does not set out the amendment's broader text, including any preservation of public enforcement or related statutory remedies, so the enrolled text should be read before reliance.

Why sophisticated counsel should care: CIPA's pen register provision has been a recurring source of class and mass-tort style filings against communications providers, data brokers, and technology companies. Removing a private remedy for one section narrows that litigation channel and can affect pleading strategy, class certification economics, settlement valuation, and the discovery posture of claims asserted on other theories. A further practical question for pending matters is whether the removal operates retroactively or only prospectively; the reporting summarized here does not address it, and it is likely to be litigated.

…

What happened: According to Latham & Watkins, California enacted more than two dozen AI-related laws during its 2026 legislative session, addressing transparency obligations, chatbot safety requirements, and rules governing automated decision-making, among other domains. The alert frames the slate as evidence that California remains the most active US state legislature on artificial intelligence.

Why sophisticated counsel should care: A volume of two dozen enactments is an operational burden, not a headline. Each law carries its own compliance dates, covered entities, definitions and enforcement exposure, so product teams deploying consumer chatbots, recommendation engines or automated decision tools in California now face a layered patchwork rather than a single regime. The transparency and automated-decision provisions are likely to intersect with existing obligations under California consumer-protection and privacy law, and with sector regimes covering employment, health or financial services, multiplying the work behind a single product launch. Affected clients should map which

…