Project Financing and Funding of Nuclear Power in the US
The past several decades have seen minimal greenfield nuclear plant development in the U.S. Units 3 and 4 of the Vogtle power plant in Greensboro, Ga., came online in 2023 and 2024, respectively, representing the first new projects in nearly a decade. Since 1990, the only other project placed in service was Watts Bar Unit 2 outside Knoxville, Tenn., which is owned and operated by the Tennessee Valley Authority (TVA). Financing is one of the principal challenges that needs to be overcome for nuclear energy to realize its full promise and potential.
Financing Traditional Nuclear Projects: Cash (Flow) Is King
Non-recourse or limited-recourse financing for nuclear energy projects has been difficult to obtain. Traditionally developed nuclear generating assets are among the most expensive infrastructure projects. Typically in the range of approximately 1 gigawatt (GW) per unit, they are principally characterized by their technical and regulatory complexity.
Long and often-delayed permitting and construction lead to cost overruns, creating a highly unpredictable cash flow that may not be realized for 20+ years. Given the scale and capital investments involved in developing and constructing nuclear power plants, as well as the lack of greenfield development in the U.S. over the past three decades, there are few (if any) engineering and construction firms currently able to deliver projects on a lump-sum, turnkey basis.
A further complication to attracting private sector financing arises from the deregulated structure of power markets in many regions across the U.S. Debt financiers will typically look to predictability of future cashflows as a primary measure of assessing risk with any power project. For nuclear facilities in liberalized wholesale markets, this will often be difficult due to energy price fluctuations and the frequent absence of dedicated offtake terms.
Although nuclear power plants can participate in forward capacity auctions, these are generally conducted three years in advance with a limited capacity commitment period. Due to the aforementioned construction timelines, nuclear project developers are rarely in a position to bid on future capacity auctions prior to the commencement of construction.
The nature of funding required to build large-scale traditional nuclear plants severely limits – if not precludes – private investment . Governmental support has been provided in a number of different contexts. The Inflation Reduction Act (IRA) introduced a new zero-emissions nuclear production tax credit, which provided a credit of up to 1.5 cents (inflation adjusted) for projects that meet prevailing wage requirements.1 Further, the IRA’s transferability sections have allowed project sponsors the ability to unlock greater revenue streams.2 In addition to the tax credits, the IRA allocated $700 million in funding for the development of high-assay low-enriched uranium (HALEU), while the Infrastructure Investment and Jobs Act (IIJA) allocated funding for the development of modular and advanced nuclear reactors. A more direct form of project-level governmental support comes in the form of direct lending or loan guarantees. For instance, the development of Vogtle Units 3 and 4 received a $12 billion loan guarantee from the Department of Energy.
Permitting Reform Can Help
Ultimately, a stable and favorable regulatory regime would lower the discount rate and hence the required rate of return for nuclear power projects. The Trump administration has signaled its intention to promote the nuclear industry through a number of early executive actions, though legislation would likely be needed to create meaningful changes in this regard.
Notwithstanding this apparent support for nuclear energy, federal agencies have been ordered to pause the disbursement of funds appropriated under the IRA and the IIJA for at least 90 days, creating some uncertainty as to the status of funding for nuclear energy projects (as well as a broad range of clean energy projects) appropriated thereunder. Permitting reform and further funding to encourage greater development of nuclear projects receives strong bipartisan support, but is subject to delays if made part of a larger political compromise.
Permitting reform and further funding to encourage greater development of nuclear projects receives strong bipartisan support, but is subject to delays if made part of a larger political compromise.
Small Modular Reactors, Lower Hurdles to Financing and Deployment
In order to sidestep some of the technical challenges that have traditionally resulted in delays and cost-overruns, the nuclear industry has moved towards the adoption of small modular reactors (SMRs) as a means to lower delivery costs, and in turn, reduce financing hurdles. Based on the International Atomic Energy Agency’s definition, SMRs include units of up to 300 megawatts (MW) of generating capacity. There are numerous technologies currently competing under the umbrella SMR classification, but in general, these technologies allow generating assets to be largely fabricated off-site on a standardized basis, potentially reducing manufacturing costs and regulatory uncertainties, and hastening deployment of new technologies.
SMR financing is rapidly evolving. Since there are currently no operational SMR projects in the U.S., the first generation of projects to come online will require “first-of-a-kind” (FOAK) financing. This can be challenging for a number of reasons, as it will require financiers to accept the elevated risks associated with a commercially unproven technology. Government can and does derisk initial equity financing through loan guarantees and/or grants. In fact, we saw evidence of such this in 2021’s Bipartisan Infrastructure Law, in which the US Department of Energy announced $900 million in funding to support SMR deployment. Earlier this month, the TVA and American Electric Power (AEP) led an $800 million application with partners including Bechtel, BWX Technologies, Duke Energy to pursue advanced reactor projects. The substance of the proposals is to add SMRs at existing generating sites including TVA’s Clinch River site and Indiana Michigan Power’s Spencer County site. It is unclear if the Trump Administration’s funding freezes and priority changes will jeopardize disbursements from this legislation, but general support for the nuclear industry appears to continue.
Since there are currently no operational SMR projects in the U.S., the first generation of projects to come online will require “first-of-a-kind” (FOAK) financing.
Even without governmental support, innovative financing structures will be available to assist in the deployment of SMR projects. A number of companies developing SMR designs are doing so together with corporate customers that plan to deploy these reactors as sole-source providers for facilities such as AI data centers. With a dedicated power purchase agreement with a creditworthy offtaker, many SMR projects will be considered bankable notwithstanding the novelty of the technology being deployed.
Conclusion
Although nuclear energy is widely seen as playing a key role in grid expansion and decarbonization initiatives, there are a number of obstacles which render financing challenging. Strong political support alongside appropriately tailored policy tools can help unlock the private capital needed to deploy nuclear energy at scale. The arrival of SMR technology will produce initial challenges with FOAK financing, but in time more predictable returns will attract the financing to permit a more widescale adoption of nuclear energy in countless use cases.
Knowledgeable and experienced legal counsel can assist with the proper structuring and risk allocation in transaction documents to help unlock financing and drive projects forward. Given the enthusiasm for the role of nuclear in supporting energy expansion, however, there is room for optimism about the opportunities for greenfield nuclear projects in the coming decades.
1 26 U.S.C. § 45U.2 26 U.S.C. § 6417.
Privacy Tip #430 – GrubHub Confirms Security Incident Through Third Party Vendor
If you are a GrubHub customer, read carefully. The app has confirmed a security incident involving a third-party vendor that allowed an unauthorized threat actor to access user contact information, including some customer names, email addresses, telephone numbers, and partial payment information for a subset of campus diners.
GrubHub’s response states, “The unauthorized party also accessed hashed passwords for certain legacy systems, and we proactively rotated any passwords that we believed might have been at risk. While the threat actor did not access any passwords associated with Grubhub Marketplace accounts, as always, we encourage customers to use unique passwords to minimize risk.”
If you are a GrubHub customer, you may want to change your password and ensure it is unique to that platform.
Implementation of the Mobility Directive: Significant Changes for Mergers, Divisions and Conversions with the Introduction of a New Dual Regime
On 23 January 2025, Luxembourg enacted a bill implementing the EU Mobility Directive (2019/2121) for cross-border conversions, mergers and divisions, featuring (i) a harmonised legal framework for these transactions across the European Union, and (ii) a distinct set of rules for transactions not covered by the EU special regime.
Transposition of the EU Mobility Directive and Introduction of the EU Special Regime
The Luxembourg legislator has leveraged all available options under the EU Mobility Directive to create a favourable regime for company mobility within the transposition of the EU special regime. It applies to cross-border operations involving companies based in at least two EU member states, with the Luxembourg company being an SA (société anonyme), SCA (société en commandite par actions), or SARL (société à responsabilité limitée). This regime enhances consistency and clarity in the applicable EU cross-border operations while ensuring adequate protection, including:
Minority Shareholders Rights
Shareholders who voted against the European cross-border transaction may exercise exit rights and claim cash compensation. Those who did not exercise this right can challenge the share exchange ratio.
Information Rights
Rights to information include detailed explanatory reports from the management body for the benefit of employees and shareholders. Additionally, shareholders, creditors and employee representatives may submit comments on the draft terms.
Role of the Luxembourg Notary
The notary scrutinizes the transaction to ensure the legality of the planned cross-border operations.
General Regime Applicable to Domestic Transactions and Cross-Border Transactions Not Covered by the EU Special Regime
The general regime builds on the existing framework and simplifies procedures for conversions, mergers and divisions. Key points include:
Mergers Between Sister Companies
A simplified merger process has been introduced that does not require the issuance of new shares applicable when one party directly or indirectly owns all shares in both companies or when the same parties hold the same proportion of shares in each of the merging companies.
Domestic and Non-EU Cross-Border Mergers and Divisions
Draft Terms
The draft terms and board report need less-detailed information, and the merger or division might be contingent upon a condition precedent.
Independent Expert’s Report
Report is no longer mandatory for single-shareholder companies in case of mergers and divisions.
Non-EU Cross-Border Conversions
Unless there are employees and specific assets involved, only an extraordinary general meeting of the company’s shareholders before a Luxembourg notary is required to approve the conversion.
When Do the New Regimes Come Into Effect?
The new law will come into force on the first day following the month of its publication in the Luxembourg Official Journal. Once the new provisions come into effect, they will apply to all new restructurings. However, the new rules will not affect ongoing projects where the draft terms were published before the first day of the month following the law’s entry into force.
California Climate Disclosure Laws Survive Significant Challenge
Judge Wright (C.D. Cal.) has significantly narrowed the Chamber of Commerce’s lawsuit challenging California’s climate disclosure laws. (These disclosure laws mandate disclosure of Scope 1, Scope 2, and Scope 3 greenhouse gas emissions for companies with over $1 billion in revenue, and the disclosure of climate-related financial risks for companies with over $500 million in revenue.) The Chamber of Commerce had filed a lawsuit challenging these laws on a number of grounds, including that California’s disclosure regime violated the supremacy clause and improperly applied extraterritorially–i.e., outside California. Both of these arguments were rejected by the federal district court.
Significantly, the Court rejected the Chamber of Commerce’s argument that a “law [] ‘aimed at stigmatizing’ and ‘shaming’ companies to ‘pressure[] them to lower their emissions’”–in other words, “a disclosure regime intended to regulate emissions through third-party actions”–constituted a “de facto regulatory scheme subject to preemption.” Further, the Court also held that the law survived a challenge that it improperly burdened interstate commerce by regulating extraterritorial conduct by holding that the Chamber of Commerce “fail[ed] to plausibly allege a significant burden on interstate commerce.” In other words, even though this decision was limited in scope–for example, certain claims could be re-filed as they were dismissed without prejudice–the Court nonetheless rejected the legal theories underpinning common challenges to state-level climate disclosure laws. (Also, certain claims were dismissed due to technical legal issues–e.g., the challenge to the mandatory disclosure of greenhouse gas emissions was dismissed as not yet being ripe for adjudication.) This decision may encourage other states to implement mandatory climate disclosure regimes similar to that enacted by California.
However, the challenge to California’s climate disclosure laws by the Chamber of Commerce remains unresolved. The State of California had not moved to dismiss the First Amendment challenge brought by the Chamber of Commerce–the court had previously rejected the Chamber of Commerce’s facial challenge to the law’s validity under the First Amendment–and so the Chamber of Commerce’s lawsuit can continue as it endeavors to construct a record to sustain its challenge based upon its argument that the First Amendment bars the climate disclosure laws as a form of compelled speech.
A US Chamber of Commerce challenge to California’s emissions reporting law was narrowed after a district judge said it failed to state a sufficient claim against a disclosure provision. The state’s climate-related financial risk disclosure requirement isn’t a regulatory scheme subject to preemption, the US District Court for the Central District of California said when it dismissed that claim with prejudice. That requirement, also known as SB 261, doesn’t discriminate against or sufficiently burden interstate commerce to support an extraterritoriality claim either, Judge Otis D. Wright II said, but he added the chamber could refile that claim. Claims against SB 253, California’s greenhouse emissions disclosure requirement, weren’t ripe, the court said, dismissing Supremacy Clause and extraterritoriality claims against it without prejudice. The state’s dismissal motion declined to address the chamber’s First Amendment argument.
news.bloomberglaw.com/…
Is Pareto Optimality The Answer For Controlling Stockholder Transactions?
Yesterday’s post concerned the Delaware Supreme Court’s decision that the business judgment rule applied to TripAdvisor’s decision to reincorporate in Nevada. Maffei v. Palkon, 2025 WL 384054 (Del. Feb. 4, 2025). This holding reversed Vice Chancellor J. Travis Laster’s earlier ruling that the entire fairness doctrine applied because the reincorporation involved a non ratable benefit in a controlling stockholder transaction. The Supreme Court essentially decided that heightened scrutiny was not warranted because there was no material non ratable benefit.
Professor Stephen Bainbridge promptly posted a detailed summary and analysis of the decision. Among other things, Professor Bainbridge proposes that “the Delaware Courts should narrow the class of cases under which entire fairness is the standard of review by adopting a reinvigorated Sinclair Oil [Sinclair Oil Corp. v. Levien, 280 A.2d 717, 723 (Del. 1971)] threshold test under which entire fairness is triggered only when the controller receives a benefit at the expense of and to the exclusion of the minority”.
I have also been thinking that Delaware’s focus on whether a benefit is non ratable is incomplete. Implicit in this view is that transactions are always a zero sum game in which the controller’s gain is the minority’s loss. However, not every transaction is a zero sum game. Why should a controller’s decision be subject to heightened review when nothing is taken from the minority? My view is that corporate law should maximize total benefits to stockholders. Thus, a move towards pareto optimality is in society’s interests if someone can be made better off and no one is made worse off.
Europe – The AI Revolution Is Underway but Not Quite Yet in HR?
A couple of weeks ago we asked readers of this blog to answer a couple of questions on their organisation’s use of (generative) artificial intelligence, and we promised to circle back with the results. So, drum roll, the results are now in.
1. In our first question, we wanted to know whether your organisation allows its employees to use generative AI, such as ChatGPT, Claude or DALL-E.
While a modest majority allows it, almost 28% of respondents have indicated that use of genAI is still forbidden, and another 17% allow it only for certain positions or departments.
This first question was the logical build-up to the second:
2. If the use of genAI is allowed to any extent, does that mean the organisation has a clear set of rules around such use?
A solid 50% of respondents have effectively introduced guidelines in this respect. A further 22% are working on it. And that is indeed the sensible approach. It is important that employees know the organisation’s position on (gen)AI, if they can use it and for what, or why they cannot. They should understand the risks of using genAI inappropriately and what may be the sanction if they use it without complying with company rules.
Essential in the rules of play is transparency. Management should have a good understanding of the areas within the organisation where genAI is being used. In particular when genAI is being used for research purposes or in areas where IP infringements may be a concern, it is essential that employees are transparent about the help they have had from their algorithmic co-worker. The risk of “hallucinations” in genAI is still very real, and knowing that work product has come about with the help of genAI should make a manager look at it with different and more attentive eyes.
Please also note in this respect that under the EU AI Act, as from last weekend, providers and deployers of AI systems must ensure that their employees and contractors using AI have an adequate degree of AI literacy, for example by implementing training. The required level of AI literacy is determined “taking into account [the employees’] technical knowledge, experience, education and training and the context the AI systems are to be used in, and considering the persons or groups of persons on whom the AI systems are to be used”.
Since we had anticipated there would be quite a number of organisations that still prohibit the use of genAI, we had also asked:
3. What was the main driver for companies’ prohibition of the use of genAI in the workplace?
The response was not surprising. Organisations are mostly concerned about the risk of errors in AI’s responses and of its inadvertently leaking their confidential information.
While this fear of leaks is completely justified for free applications, such as the free version of ChatGPT and popular search engines such as Bing and Google that are increasingly powered by Large Language Models (LLMs), this fear is largely unjustified for the paid versions. Their business model depends on trust, and they guarantee that in the paid version of their LLM, no data will ever get reused for training purposes. To our knowledge, there have been no incidents and not even the slightest indications that the large vendors would disregard their promises in this regard.
This leads to the somewhat ironic conclusion that prohibiting the use of genAI by your employees may be more likely to realise the risks that the company fears, as employees may then be tempted to use a free, less safe version of the application on their personal devices instead.
4. In which areas of HR do our respondents use AI?
Where respondents indicated other areas of use in HR, they mentioned intelligence gathering, improvement of communication and specific areas of recruitment, such as writing job descriptions and skills testing.
5. Does your organisations plan to increase its use of AI in the next twelve months?,
The narrow majority responded that this would not be the case:
Those respondents which anticipated increased use of AI considered that there will be an increased use generally, in all areas. Specific predictions for increased use are in areas such as the use of HR bots for benefits enquiries, and forecasting.
6. If your organisation does not currently employ AI in HR, why not?
The response to this question is probably the most surprising: a majority of organisations which are not yet using AI in HR are not reluctant for philosophical, technical or employment relations reasons, but have simply not yet got round to it. It is expected that the next 12-18 months will see an important increase in usage overall, which will also lead to a similar uptick in the HR sector.
We ended our survey with perhaps the most delicate question:
7. Do you expect that in the next 12 to 24 months, there will be redundancies within your organisation due to increased use of AI?
For the large majority of organisations, this is not the case.
To this same question, ChatGPT itself responded the following:
The use of AI in businesses can indeed lead to job loss in certain sectors, especially in roles that rely heavily on routine, repetitive tasks. For example, administrative roles, customer service, or even certain manufacturing and warehouse jobs could be replaced by AI, as it can often perform these tasks more efficiently and cost-effectively. On the other hand, AI can also create new jobs, especially in fields like data analysis, machine learning, AI development, and management. Businesses will likely focus more on roles that require creativity and strategy, areas where human input is essential, like decision-making and improving customer relationships. The key will be how companies combine the use of AI with upskilling their workforce, enabling employees to adapt to the changing job landscape.
As is often – though certainly not always – the case, ChatGPT is not wrong about this. We didn’t ask it specifically about its impact on staffing levels in HR, but we think that considerable comfort can be taken from its reference to the continued sanctity of roles where “human input is essential”. It is a very far-off future where many of the more sensitive and difficult aspects of HR management will be accepted as adequately discharged by an algorithm.
DEI (Diversity, Equity, and Inclusion) v. Affirmative Action: They Are Not the Same
Recently, the terms DEI (Diversity, Equity, and Inclusion) and Affirmative Action have been thrown around as if they mean the same thing, but in reality, they are not. They represent distinct concepts with unique goals and approaches.
Affirmative Action is a legal policy created to address historical injustices and discrimination by providing opportunities to underrepresented groups. It involves initiative-taking measures to ensure that individuals from these groups have equal access to education, employment, and other areas where they have been historically marginalized. The primary focus is on creating opportunities and leveling the playing field for those who have faced systemic barriers. However, it should be understood that under this theory a lesser qualified person should not be chosen over a more qualified person. If implemented as intended, it would give an otherwise unavailable opportunity to a qualified person.
On the other hand, DEI encompasses a broader framework aimed at fostering an inclusive environment where diversity is valued, equity is ensured, and everyone feels a sense of belonging. Diversity refers to the presence of differences within a given setting, including race, gender, age, and more. Equity involves fair treatment, access, and opportunities for all, while Inclusion is about creating a culture where everyone feels respected and valued.
While Affirmative Action is often seen as a legal and policy-driven approach, DEI is more about cultural transformation and ongoing efforts to create a supportive and inclusive workplace. Both are crucial for building a fair and equitable society, but they operate on different levels and address different aspects of inequality. DEI initiatives, though can impact hiring, focus on the workplace and people in it. The intent is to embrace the collective, minimize bias and treat others in a respectful and understanding manner.
In further contrast, affirmative action relates to giving a preference to one over the other, even if the other is qualified. DEI is meant to impact a broader range of people and cultures by appreciating differences and encouraging deeper engagement.
Though affirmative action and similar preference policies have been banned or in certain cases unconstitutional, DEI programs are still very legal. It should be noted that despite the recent January 2025, executive order titled “Ending Radical and Wasteful Government DEI Programs and Preferencing,” which aims to terminate DEI programs, it is only relevant to practices within the federal government. DEI programs in private companies, educational institutions, and other non-federal entities are still legal.
The Double-Edged Sword of AI Disclosures: Insurance & AI Risk Mitigation
Artificial intelligence (AI) is reshaping the corporate landscape, offering transformative potential and fostering innovation across industries. But as AI becomes more deeply integrated into business operations, it introduces complex challenges, particularly around transparency and the disclosure of AI-related risks. A recent lawsuit filed in the US District Court for the Southern District of New York—Sarria v. Telus International (Cda) Inc. et al., No. 1:25-cv-00889 (S.D.N.Y. Jan 30, 2025)—highlights the dual risks associated with AI-related disclosures: the dangers posed by action and inaction alike. The Telus lawsuit underscores not only the importance of legally compliant corporate disclosures, but also the dangers that can accompany corporate transparency. Maintaining a carefully tailored insurance program can help to mitigate those dangers.
Background
On January 30, 2025, a class action was brought against Telus International (CDA) Inc., a Canadian company, along with its former and current corporate leaders. Known for its digital solutions enhancing customer experience, including AI services, cloud solutions and user interface design, Telus faces allegations of failing to disclose crucial information about its AI initiatives.
The lawsuit claims that Telus failed to inform stakeholders that its AI offerings required the cannibalization of higher-margin products, that profitability declines could result from its AI development and that the shift toward AI could exert greater pressure on company margins than had been disclosed. When these risks became reality, Telus’ stock dropped precipitously and the lawsuit followed. According to the complaint, the omissions allegedly constitute violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.
Implications for Corporate Risk Profiles
As we have explained previously, businesses face AI-related disclosure risks for affirmative misstatements. Telus highlights another important part of this conversation in the form of potential liability for the failure to make AI-related risk disclosures. Put differently, companies can face securities claims for both understating and overstating AI-related risks (the latter often being referred to as “AI washing”).
These risks are growing. Indeed, according Cornerstone’s recent securities class action report, the pace of AI-related securities litigation has increased, with 15 filings in 2024 after only 7 such filings in 2023. Moreover, every cohort of AI-related securities filings were dismissed at a lower rate than other core federal filings.
Insurance as a Risk Management Tool
Considering the potential for AI-related disclosure lawsuits, businesses may wish to strategically consider insurance as a risk mitigation tool. Key considerations include:
Audit Business-Specific AI Risk: As we have explained before, AI risks are inherently unique to each business, heavily influenced by how AI is integrated and the jurisdictions in which a business operates. Companies may want to conduct thorough audits to identify these risks, especially as they navigate an increasingly complex regulatory landscape shaped by a patchwork of state and federal policies.
Involve Relevant Stakeholders: Effective risk assessments should involve relevant stakeholders, including various business units, third-party vendors and AI providers. This comprehensive approach ensures that all facets of a company’s AI risk profile are thoroughly evaluated and addressed
Consider AI Training and Educational Initiatives: Given the rapidly developing nature of AI and its corresponding risks, businesses may wish to consider education and training initiatives for employees, officers and board members alike. After all, developing effective strategies for mitigating AI risks can turn in the first instance on a familiarity with AI technologies themselves and the risks they pose.
Evaluate Insurance Needs Holistically: Following business-specific AI audits, companies may wish to meticulously review their insurance programs to identify potential coverage gaps that could lead to uninsured liabilities. Directors and officers (D&O) programs can be particularly important, as they can serve as a critical line of defense against lawsuits similar to the Telus class action. As we explained in a recent blog post, there are several key features of a successful D&O insurance review that can help increase the likelihood that insurance picks up the tab for potential settlements or judgments.
Consider AI-Specific Policy Language: As insurers adapt to the evolving AI landscape, companies should be vigilant about reviewing their policies for AI exclusions and limitations. In cases where traditional insurance products fall short, businesses might consider AI-specific policies or endorsements, such as Munich Re’s aiSure, to facilitate comprehensive coverage that aligns with their specific risk profiles.
Conclusion
The integration of AI into business operations presents both a promising opportunity and a multifaceted challenge. Companies may wish to navigate these complexities with care, ensuring transparency in their AI-related disclosures while leveraging insurance and stakeholder involvement to safeguard against potential liabilities.
Corporate Transparency Act Recent Update
As previously reported, in early December, the District Court for the Northern District of Texas issued a nationwide injunction against the enforcement of the CTA [1]. The government quickly appealed. Just a few weeks later, on December 23, 2024, the Fifth Circuit Court of Appeals granted the government’s emergency motion to stay the nationwide injunction — effectively lifting the injunction and allowing the enforcement of the CTA to proceed. Given there was a January 1, 2025, deadline for millions of small business owners to file, FinCEN graciously decided to extend the filing deadline to January 13, 2025.
Then, just three days later, on December 26, 2024, in a short, one-page order, a different panel of judges from the same Fifth Circuit Court of Appeals reinstated the injunction, again placing the CTA and its enforcement provisions on hold. The government again quickly responded, petitioning the U.S. Supreme Court to lift the injunction. On January 23, 2025, the Supreme Court did precisely that — granting the government’s motion. The Supreme Court’s order, however, only applied to the injunction issued by the federal judge in Texas. Since a separate nationwide order issued by a different federal judge in Texas [2] was still in place, FinCEN posted a new update to its website one day later, stating:
“Reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop. Reporting companies also are not subject to liability if they fail to file this information while the Smith order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports. [3] “
Opinions vary regarding whether reporting companies should file voluntarily. At the very least, reporting companies should be prepared to file quickly if and when the “red light” turns green once again. In the meantime, we continue to watch for any additional rulings. To stay up to date, please check our website regularly or contact a member of our Corporate Transparency Team for advice.
[1] Texas Top Cop Shop, Inc. v. McHenry
[2] Smith v. U.S. Department of the Treasury
[3] https://www.fincen.gov/boi (last accessed February 3, 2025)
The False Claims Act in 2024: A Government Enforcement Update
This past year, the False Claims Act (FCA) continued to be a key tool for the Justice Department and whistleblowers to bring suits against companies, including those in the financial services sector. The Justice Department secured 558 FCA settlements and judgments and collected $2.9 billion in fiscal year 2024. Whistleblowers were responsible for 979 qui tam suits — a record number — and collected over $400 million for filing actions to expose fraud and false claims. With a constant focus on FCA enforcement, the risk to corporations of huge financial penalties under the FCA remains. Companies in the financial services sector must continue to take the necessary steps to prevent FCA violations and be particularly mindful of potential whistleblowers who stand to have significant paydays in the event of a successful FCA claim. To keep you apprised of the current enforcement trends and the status of the law, Bradley’s Government Enforcement & Investigations Practice Group is pleased to present the False Claims Act: 2024 Year in Review, our 13th annual review of significant FCA cases, developments, and trends.
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Navigating Joint Employment: A Renewed Push to Implement a More Employer-Friendly Standard
With a Republican-controlled Congress and White House, business lobbyists are seizing the opportunity to push for permanent clarity on the issue of joint employment. The International Franchise Association (IFA) is advocating for legislation that would establish a narrow standard, requiring an employer to have “direct” control over a worker’s terms of employment to be deemed a joint employer.
The Save Local Business Act is at the forefront of this effort. The proposed legislation seeks to define joint employment under both the Fair Labor Standards Act (FLSA) and the National Labor Relations Act (NLRA). The law—if enacted—would specify that a company is only considered a joint employer if it exercises “direct, actual, and immediate” control over significant aspects of employment. This approach would reduce liability for parent companies including franchisors of all kinds and gig-economy platforms like rideshare applications.
Historically, the standard for joint employment has fluctuated between presidential administrations, creating regulatory uncertainty for businesses. Under the first Trump administration, the Department of Labor (DOL) and the National Labor Relations Board (NLRB) implemented rules limiting joint employer liability. However, the Biden administration reversed these policies, favoring a broader interpretation that considered indirect or unexercised control as factors for applying the standard. This broader approach was struck down by federal courts in early 2024, leaving the regulatory landscape in limbo.
Business groups argue that the lack of a consistent joint employer standard hinders growth and complicates compliance. The constant shifts in policy make it difficult for businesses to structure their operations and workforce relationships.
The Save Local Business Act represents an attempt to bring stability to this volatile area of labor law. If passed, it would provide companies with a clearer framework and limit their exposure to potential joint employment claims. However, opposition from labor groups and Democratic lawmakers could make its passage difficult. Critics argue that a narrower standard would allow large corporations to avoid responsibility for wage violations and unfair labor practices by subcontractors and franchisees.
For businesses, this ongoing debate underscores the importance of staying informed about employment law developments. As the legal landscape shifts, consulting with experienced employment law counsel is essential to mitigate potential liabilities and ensure compliance with evolving regulations.
Regulation Round Up: January 2025
Welcome to the Regulation Round Up, a regular bulletin highlighting the latest developments in UK and EU financial services regulation.
Key developments in January 2025:
31 January
UK Listing Rules: The FCA published a consultation paper (CP25/2) on further changes to the public offers and admissions to trading regime and to the UK Listing Rules.
Cryptoassets: The European Securities and Markets Authority (“ESMA”) published a supervisory briefing on best practices relating to the authorisation of cryptoasset service providers under the Regulation on markets in cryptoassets ((EU) 2023/1114) (“MiCA”).
FCA Handbook: The Financial Conduct Authority (“FCA”) published Handbook Notice 126, which sets out changes to the FCA Handbook made by the FCA board on 30 January 2025.
Public Offer Platforms: The FCA published a consultation paper on further proposals for firms operating public offer platforms (CP25/3).
30 January
FCA Regulation Round-Up: The FCA published its regulation round-up for January 2025, which covers, among other things, the launch of “My FCA” in spring 2025 and changes to FCA data collection.
29 January
EU Competitiveness: The European Commission published a communication on a Competitiveness Compass for the EU (COM(2025) 30). Please refer to our dedicated article on this topic here.
EMIR 3: ESMA published a speech given by Klaus Löber, Chair of the ESMA CCP Supervisory Committee, that sets out ESMA’s approach to the mandates assigned to it by Regulation (EU) 2024/2987 (“EMIR 3”).
28 January
EMIR 3: The European Systemic Risk Board published its response to ESMA’s consultation paper on the conditions of the active account requirement under EMIR 3.
ESG: The FCA published its adaptation report, which provides an overview of the climate change adaptation challenges faced by financial services firms.
27 January
Artificial Intelligence: The Global Financial Innovation Network published a report setting out key insights on the use of consumer-facing AI in global financial services and the implications for global financial innovation.
DORA: The Joint Committee of the European Supervisory Authorities (“ESAs”) published the terms of reference for the EU-SCICF Forum established under the Regulation on digital operational resilience for the financial sector ((EU) 2022/2554) (“DORA”).
24 January
Cryptoassets: ESMA published an opinion on draft regulatory technical standards specifying certain requirements in relation to conflicts of interest for cryptoasset service providers under MiCA.
MiFIR: The European Commission adopted a Delegated Regulation (C(2025) 417 final) (here) supplementing the Markets in Financial Instruments Regulation (600/2014) (“MiFIR”) as regards OTC derivatives identifying reference data to be used for the purposes of the transparency requirements laid down in Articles 8a(2), 10 and 21.
ESG: The EU Platform on Sustainable Finance published a report providing advice to the European Commission on the development and assessment of corporate transition plans.
23 January
Financial Stability Board: The Financial Stability Board published its work programme for 2025.
20 January
Motor Finance: The FCA published its proposed summary grounds of intervention in support of its application under Rule 26 of the Supreme Court Rules 2009 to intervene in the Supreme Court motor finance appeals.
Motor Finance: The FCA published its response to a letter from the House of Lords Financial Services Regulation Committee relating to the Court of Appeal judgment on motor finance commissions.
Cryptoassets: ESMA published a statement on the provision of certain cryptoasset services in relation to asset-referenced tokens and electronic money tokens that are non-compliant under MiCA.
17 January
DORA: The ESAs published a joint report (JC 2024 108) on the feasibility of further centralisation of reporting of major ICT-related incidents by financial entities, as required by Article 21 of DORA.
Basel 3.1: The Prudential Regulation Authority published a press release announcing that, in consultation with HM Treasury, it delayed the UK implementation of the Basel 3.1 reforms to 1 January 2027.
16 January
Cryptoassets: The European Banking Authority and ESMA published a joint report (EBA/Rep/2025/01 / ESMA75-453128700-1391) on recent developments in cryptoassets under MiCA.
14 January
FMSB’s Workplan: The Financial Markets Standards Board (“FMSB”) published its workplan for 2025.
FSMA: The Financial Services and Markets Act 2000 (Designated Activities) (Supervision and Enforcement) Regulations 2025 (SI 2025/22) were published, together with an explanatory memorandum. The amendments allow the FCA to supervise, investigate and enforce the requirements of the designated activities regime.
Sanctions: HM Treasury and the Office of Financial Sanctions Implementation published a memorandum of understanding with the US Office of Foreign Assets Control.
13 January
BMR: The European Parliament published the provisionally agreed text (PE767.863v01-00) of the proposed Regulation amending the Benchmarks Regulation ((EU) 2016/1011) (“BMR”) as regards the scope of the rules for benchmarks, the use in the Union of benchmarks provided by an administrator located in a third country and certain reporting requirements (2023/0379(COD)).
10 January
Artificial Intelligence: The UK Government published its response to the House of Commons Science, Innovation and Technology Committee report on the governance of AI.
9 January
Collective Investment Schemes: The Financial Services and Markets Act 2000 (Collective Investment Schemes) (Amendment) Order 2025 (SI 2025/17) was published, together with an explanatory memorandum. The amendments clarify that arrangements for qualifying cryptoasset staking do not amount to a collective investment scheme.
8 January
EU Taxonomy: The EU Platform on Sustainable Finance published a draft report and a call for feedback on activities and technical screening criteria to be updated or included in the EU taxonomy. Please refer to our dedicated article on this topic here.
3 January
Consolidate Tape: ESMA published a press release launching the first selection for the consolidated tape provider for bonds.
Sulaiman Malik & Michael Singh contributed to this article.