President Announces Creation of Strategic Bitcoin Reserve
On March 6, 2025, President Trump issued an executive order entitled “Establishment of the Strategic Bitcoin Reserve and United States Digital Asset Stockpile.” It is the latest effort in the President’s sweeping reforms concerning the digital asset industry.
Under the order, the Secretary of the Treasury is required to establish an office to administer and maintain control of custodial accounts collectively known as the “Strategic Bitcoin Reserve.” The Strategic Bitcoin Reserve is capitalized with all Bitcoin held by the Department of the Treasury that was finally forfeited as part of criminal or civil asset forfeiture proceedings or in satisfaction of any civil money penalty imposed by any executive department or agency. Government Bitcoin deposited into the Strategic Bitcoin Reserve may not be sold and must be maintained as reserve assets of the United States utilized to meet governmental objectives in accordance with applicable law.
Similarly, the order further tasks the Secretary of the Treasury with establishing a “United States Digital Asset Stockpile,” capitalized with all digital assets owned by the Department of the Treasury, other than Bitcoin. The Secretary of the Treasury is required to determine strategies for responsible stewardship of the United States Digital Asset Stockpile in accordance with applicable law.
The order instructs the Secretary of the Treasury and the Secretary of Commerce to develop strategies for acquiring additional Government Bitcoin provided that such strategies are budget neutral and do not impose incremental costs on United States taxpayers. However, the United States Government may not acquire additional digital assets other than in connection with criminal or civil asset forfeiture proceedings or in satisfaction of any civil money penalty imposed by any agency without further executive or legislative action. Additionally, the head of each executive agency must provide the Secretary of the Treasury and the President’s Working Group on Digital Asset Markets with a full accounting of all digital assets in such agency’s possession in order to facilitate its transfer to the Strategic Bitcoin Reserve and United States Digital Asset Stockpile, as applicable.
The Big Six Items That Family Offices Need to Consider in 2025
Across all industries, family offices and their owners and management teams face rapidly evolving challenges, opportunities, and risks in the dynamic environment that is 2025. Here are six issues that family offices should consider and be mindful of this year.
1. Impending Sunset after December 31 of Temporarily Doubled Federal Estate, Gift and Generation-Skipping Transfer Tax Exemption — or Maybe Not?
In 2025, the Internal Revenue Service (IRS) increased the lifetime estate and gift tax exemption to $13.99 million per individual ($27.98 million per married couple). Clients who maximized their previous exemption ($13.61 million per individual in 2024), can now make additional gifts of up to $380,000 ($760,000 per married couple) in 2025 without triggering gift tax. Clients who have not used all (or any) of their exemption to date should be particularly motivated to make lifetime gifts because, under current law, the lifetime exemption is scheduled to sunset.
Since the 2017 Tax Cuts and Jobs Act, the lifetime exemption has been indexed for inflation each year. Understandably, clients have grown accustomed to the steady and predicable increase in their exemption. However, absent congressional action, if the exemption lapses, the lifetime estate and gift tax (and generation-skipping transfer tax) exemption will be cut in half to approximately $7.2 million per individual ($14.4 million per married couple) at the start of 2026. That being said, as a result of the Republican trifecta in the 2024 election, it is very plausible that the temporarily doubled exemption may be extended for some additional period of time as part of the budget reconciliation process, which allows actions by majority vote in the Senate (with the vice president to cast the deciding vote in the event of a tie). This is in contrast to the ordinary rules of procedure that require 60 votes out of 100 in the Senate for Congressional action. But there are no assurances that such an extension will occur, and any legislation may not be enacted (if at all) until very late in the year.
To ensure that no exemption is forfeited, clients should consider reaching out to their estate planning and financial advisors to ensure they have taken full advantage of their lifetime exemption. If the exemption decreases at the start of 2026, unused exemption will be lost. Indeed, absent Congressional action to extend the temporarily doubled exemption, this is a use-it-or-lose-it situation.
2. Buy-Sell Agreements and Their Role in Business Succession Planning
The death, disability, or retirement of a controlling owner in a family-controlled business can wreak havoc on the entity that the owner may have spent a lifetime building from scratch. If not adequately planned for, such events can lead to the forced sale of the business out of family hands to an unrelated third party.
A buy-sell agreement is an agreement between the owners of a business, or among the owners of the business and the entity, that provides for the mandatory purchase (or right of first refusal) of an owner’s equity interest, by the other owners or by the business itself (or some combination of the two), upon the occurrence of specified triggering events described in the agreement. Such triggering events can include the death, disability, retirement, withdrawal or termination of employment, bankruptcy and sometimes even the divorce of an owner. Buy-sell agreements may be adapted for use by all types of business entities, including C corporations, S corporations, partnerships, and limited liability companies.
Last June, in Connelly v. United States, the US Supreme Court affirmed a decision of the Eighth Circuit Court of Appeals in favor of the government concerning the estate tax treatment of life insurance proceeds that are used to fund a corporate redemption obligation under a buy-sell agreement. The specific question presented was whether, in determining the fair market value of the corporate shares, there should be any offset to take into account the redemption obligation to the decedent’s estate under a buy-sell agreement. The Supreme Court concluded that there should be no such offset. In doing so, the Supreme Court resolved a conflict that had existed among the federal circuit courts of appeal on this offset issue.
As a result of the Supreme Court’s decision, buy-sell agreements that are structured as redemption agreements should be reviewed by business owners that expect to have taxable estates. In many cases it may be desirable instead to structure the buy-sell agreement as a cross-purchase agreement.
For further information, please see our article that addresses the Connelly decision and its implications: US Supreme Court Affirms the Eighth Circuit’s Decision in Favor of the Government Concerning the Estate Tax Treatment of Life Insurance Proceeds Used to Fund a Corporate Redemption Obligation.
3. Be Very Careful in Planning With Family Limited Partnerships and Family Limited Liability Companies
The September 2024 Tax Court memorandum decision of Estate of Fields v. Commissioner, T.C. Memo. 2024-90, provides a cautionary tale of a bad-facts family limited partnership (FLP) that caused estate tax inclusion of the property transferred to the FLP under both sections 2036(a)(1) and (2) of the Internal Revenue Code with loss of discounts for lack of control and lack of marketability. In doing so, the court applied the Tax Court’s 2017 holding in Estate of Powell v. Commissioner, 148 T.C. 392 (2017) — the ability of the decedent as a limited partner to join together with other partners to liquidate the FLP constitutes a section 2036(a)(2) estate tax trigger — and raises the specter of accuracy-related penalties that may loom where section 2036 applies.
Estate of Fields illustrates that, if not carefully structured and administered, planning with family entities can potentially render one worse off than not doing any such planning at all.
4. The IRS Gets Aggressive in Challenging Valuation Issues
The past year and a half has seen the IRS become very aggressive in challenging valuation issues for gift tax purposes.
First, in Chief Counsel Advice (CCA) 202352018, the IRS’s National Office, providing advice to an IRS examiner in the context of a gift tax audit, addressed the gift tax consequences of modifying a grantor trust to add tax reimbursement clause, finding there to be a taxable gift. The facts of this CCA involved an affirmative consent by the beneficiaries to a trust modification to allow the trustee to reimburse the grantor for the income taxes attributable to the trust’s grantor trust status. Significantly, the IRS admonished that its principles could also apply in the context of a beneficiary’s failure to object to a trustee’s actions, or in the context of a trust decanting.
Next, in a pair of 2024 Tax Court decisions — the Anenberg and McDougall cases — the IRS challenged early terminations of qualified terminable interest property (QTIP) marital trusts in favor of the surviving spouse that were then followed by the surviving spouse’s sale of the distributed trust property to irrevocable trusts established for children. While the court in neither case found there to be a gift by the surviving spouse, the Tax Court in McDougall determined that the children made a gift to the surviving spouse by surrendering their remainder interests in the QTIP trust.
5. The Show Continues: The CTA No Longer Applicable to US Citizens and Domestic Companies
After an on-again-off-again pause of three months beginning in late 2024, the Corporate Transparency Act (CTA) is back in effect, but only for foreign reporting companies. On March 2, the US Department of the Treasury (Treasury) announced it will not enforce reporting requirements for US citizens or domestic companies (or their beneficial owners).
Pursuant to Treasury’s announcement, the CTA will now only apply to foreign entities registered to do business in the United States. These “reporting companies” must provide beneficial ownership information (BOI) and company information to the Financial Crimes Enforcement Network (FinCEN) by specified dates and are subject to ongoing reporting requirements regarding changes to previously reported information. To learn more about the CTA’s specific requirements, please see our prior client alert (note that the CTA no longer applies to domestic companies or US citizens, and the deadlines mentioned in the alert have since been modified, as detailed in the following paragraph).
On February 27, FinCEN announced it would not impose fines or penalties, nor take other enforcement measures against reporting companies that fail to file or update BOI by March 21. FinCEN also stated it will publish an interim final rule with new reporting deadlines but did not indicate when the final rule can be expected. Treasury’s March 2 announcement indicates that the government is expecting to issue a proposed rule to narrow the scope of CTA reporting obligations to foreign reporting companies only. No further details are available at this time, but domestic reporting companies may consider holding off on filing BOI reports until the government provides additional clarity on reporting requirements. Foreign reporting companies should consider assembling required information and being prepared to file by the March 21 deadline, while remaining vigilant about further potential changes to reporting requirements in the meantime.
On the legislative front, earlier this year, the US House of Representatives passed the Protect Small Businesses from Excessive Paperwork Act of 2025 (H.R. 736) on February 10, in an effort to delay the CTA’s reporting deadline. The bill aims to extend the BOI reporting deadline for companies formed before January 1, 2024, until January 1, 2026. The bill is currently before the US Senate, but it is unclear whether it will pass in light of the latest updates.
6. Ethical and Practical Use of AI in Estate Planning
The wave of innovative and exciting artificial intelligence (AI) tools has taken the legal community by storm. While AI opens possibilities for all lawyers, advisors in the estate planning and family office space should carefully consider whether, and when, to integrate AI into their practice.
Estate planning is a human-centered field. To effectively serve clients, advisors develop relationships over time, provide secure and discrete services, and make recommendations based on experience, compassion, and intuition.
Increasingly, AI tools have emerged that are marketed towards estate planning and family office professionals. These tools can (1) assist planners with summarizing complex estate planning documents and asset compilations, (2) generate initial drafts of standard estate planning documents, and (3) translate legal jargon into client-friendly language. Though much of the technology is in the initial stages, the possibilities are exciting.
While estate planning and family office professionals should remain optimistic and open about the emerging AI technology, the following recommendations should be top of mind:
First, advisors must scrutinize the data privacy policies of all AI tools. Advisors should be careful and cautious when engaging with any AI program that requires the input of sensitive or confidential documents to protect the privacy of your clients.
Next, advisors should stay up to date on the statutory and case law developments, as the legal industry is still developing its stance on AI.
Finally, advisors should honor and prioritize the personal and human nature of estate planning and family advising. Over-automating one’s practice can come at the expense of building strong client relationships.
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Blockchain+ Bi-Weekly; Highlights of the Last Two Weeks in Web3 Law: March 13, 2025
Among the biggest news that dropped in the past two weeks was the Trump administration’s announcement of a national Bitcoin reserve plan, a move whose mere discussion marks a significant shift from the federal government’s previous stance on digital assets and crypto. The SEC has continued its trend of closing non-fraud-related investigations and enforcement actions, providing some long-awaited relief for the industry. On the litigation front, Uniswap secured a key victory at the Second Circuit against the SEC, marking another win for DeFi. Meanwhile, the SEC continues to make waves with its statement on memecoins, asserting that the tokens themselves are not securities in many contexts unless tied to an investment contract. This statement has sparked widespread debate and heightened expectations for further developments and related classifications in the coming weeks.
These developments and a few other brief notes are discussed below.
National Bitcoin Reserve Plan Announced: March 6, 2025
Background: After a few weeks of teasing it, President Trump has released his Executive Order establishing a Strategic Bitcoin Reserve and Digital Asset Stockpile capitalized with digital assets that were forfeited as part of criminal or civil asset forfeiture. On the day the Executive Order was signed, Crypto/AI Czar David Sacks released a statement on social media that under prior administrations (which includes Trump’s first term) “the federal government sold approximately 195,000 bitcoin for proceeds of $366 million. If the government had held the bitcoin, it would be worth over $17 billion today.”
Analysis: In practice, this order primarily directs federal agencies to account for and retain, rather than sell, digital assets, seized digital assets—a move that, while noteworthy, is not particularly groundbreaking. There was some interesting text in the Order about it being a “strategic advantage” to be among the first nations to create a bitcoin reserve due to its limited supply. However, beyond this symbolic step, it does little to shift the broader landscape. That said, the absence of federal government sell pressure for the next four years is a welcome development for Bitcoin markets.
More SEC Investigations and Cases Dropped: March 3, 2025
Background: The creators of Bored Ape Yacht Club NFTs and related products, Yuga Labs, have announced the SEC has closed its investigation into the company, stating on X (formally Twitter), “NFTs are not securities.” At the same time, the SEC appears to have reached an agreement with Kraken to drop its pending case against the second largest digital asset exchange in the U.S. This leaves only the Ripple and PulseChain lawsuits still active, with the Cumberland DRW case dismissed while we were finalizing this update, highlighting just how quickly things are changing. The PulseChain case, meanwhile, is effectively dead if the jurisdiction dismissal holds up.
Analysis: While it remains unclear how Ripple and the SEC can coordinate a dismissal at this stage in the appeal process, with nearly every other non-fraud case either closed or in the process of closing, it is reasonable to assume that this case is also likely to wind down or end in the near future. While fraud cases will continue and new cases may emerge, it is highly unlikely that we will see new non-fraud enforcement actions related to failure-to-register as a security until clearer regulatory rules are established. The substantial costs and uncertainty these cases have imposed on the industry make their resolution a much-needed reprieve.
Uniswap Wins with the SEC and at the Second Circuit: February 25, 2025
Background: The SEC’s Enforcement Division issued a Wells notice to Uniswap in April of last year, signaling its intention to recommend enforcement action against the decentralized exchange. Last week, Uniswap announced that it has been informed that the SEC has officially closed its investigation with no further action. In the same week, the Second Circuit upheld the dismissal of a civil securities class action filed against Uniswap.
Analysis: The closure of the SEC’s investigation into Uniswap follows similar decisions regarding the NFT platform OpenSea and the online exchange Robinhood. The ruling in the Second Circuit, meanwhile, is seen as a broader win for DeFi, holding that social media posts about the security of the platform and transactions executed via its smart contracts do not make its developers statutory sellers or solicitors of securities transactions. Combined with the SEC dropping its case against Consensys over the Metamask wallet swapping and staking functionalities (which facilitate transactions with third-party DeFi providers), DeFi had a strong week—despite market-wide token price declines.
SEC Stays Busy with Flurry of Developments: February 26, 2025
Background: In addition to the Uniswap and Consensys closures noted above, the SEC also has called off its investigation into the Winklevoss-backed platform Gemini. It also acknowledged 4 crypto ETFs, released a Staff Statement on Memecoins, had six Crypto Task Force meetings, released Commissioner Peirce’s statement on litigation by enforcement, and two statements from Commissioner Crenshaw decrying recent Agency actions.
Analysis: It is hard to imagine all of this would be happening so quickly if there wasn’t unofficial buy-in from the likely future Chair of the SEC, Paul Atkins. The biggest development by far was the statement on memecoins, which is seemingly an official shift in the SEC’s interpretation of the Howey test as well as an official statement that the tokens themselves aren’t securities in certain situations and need a separate investment contract, which is basically the exact opposite position the SEC took in LBRY and Kik.
Briefly Noted:
OCC Permits Banks to Engage in Cryptocurrency Activities: The Office of the Comptroller of the Currency (OCC) has issued Interpretive Letter 1183, clarifying that national banks and federal savings associations can engage in cryptocurrency-related activities, including custody services and certain stablecoin operations, without needing prior regulatory approval. This marks a significant policy shift, removing previous barriers for banks offering crypto services.
White House Crypto Summit: The White House hosted a summit of leaders in the crypto industry. While not much in terms of developments came from that meeting, it is nice to see this level of interaction between government officials and industry leaders.
Richard Heart Beats SEC: It looks like the court overseeing the Richard Heart/Hex/PulseChain case has agreed that his interactions with the U.S. were not sufficient to create specific jurisdiction or satisfy what is required for application of U.S. securities laws to his (alleged) conduct.
OKX Exchange Settles with DOJ: OKX has agreed to pay over $500 million for serving as an unregistered money transmitter for U.S. customers from 2018 until 2024.
ByBit Hack Developments: There appears to be conflicting information on whether Bybit had its own systems compromised or if the breach was solely due to a hack of its SAFE multi-sig provider. The attack resulted in significant fund losses, though the full extent is still being assessed. Notably, the founder gave a full 1-hour interview in the days following the incident—an unusual level of transparency in the aftermath of a major security breach and possibly even a level of pretty radical transparency.
Senate Banking Hearing on Digital Asset Legal Framework: The Senate Banking Subcommittee on Digital Assets held a hearing titled Exploring Bipartisan Legislative Frameworks for Digital Assets, demonstrating that lawmakers are following through on their commitment to prioritize the fast-tracking of digital asset regulations in the coming months.
Senate Passes CRA to Overturn IRS Crypto Broker Rule: In a strong bipartisan move, the Senate passed a 70-28 resolution to overturn a controversial tax reporting rule enacted in the final days of the previous administration. This rule would have broadly classified internet service providers as brokers, requiring them to collect tax information, including Social Security numbers, from users. President Trump has already stated that he will sign this resolution into law if and when it passes in the House. If enacted, this legislation will prevent the IRS from reintroducing similar tax reporting requirements in the future without Congressional approval.
SEC Sets First Crypto Roundtable: The SEC is set to host their first roundtable for the crypto task force, conveniently scheduled for the Friday before the D.C. Blockchain Summit. The SEC also named a number of industry veterans as the staff of its Crypto Task Force, with a promising sign that those with hands-on experience in the space will have a role in shaping policy.
Bi-Partisan “Congressional Crypto Caucus” Formed: Republican House Majority Whip Tom Emmer and Democrat Ritchie Torres are creating a “Congressional Crypto Caucus,” which is intended to create a unified and bipartisan coalition to spearhead bills that support the growth of digital assets in America.
Senate Bill to Stop Chokepoint 3.0: The chair of the Senate Finance Committee is proposing a bill that eliminates “reputational risk” as a component of the supervision of depository institutions after it was used to debank unfavored industries in Operation Chokepoint and Chokepoint 2.0.
Houlihan Capital Issues Q4 2024 Crypto Market & VC Industry Report: Houlihan Capital released its latest report analyzing crypto market trends, venture capital deal activity and sector performance. A key takeaway is that while early-stage investments slowed, later-stage crypto deals saw an uptick, reflecting growing investor confidence in established blockchain projects.
Crypto Market Sees Price Declines, Over the past two weeks, Bitcoin (BTC) dropped about 21% to $78,000, while Ethereum (ETH) fell nearly 15% to $1,873. Despite prices still being much higher than six months ago, the decline suggests that crypto remains viewed as a high-risk asset rather than a hedge like gold, reflecting its continued correlation with equities.
Conclusion:
Although the current iteration of the national Bitcoin reserve strategy is quite limited—essentially just preventing the federal government from selling Bitcoin it otherwise would have—it is symbolically significant and has the potential to evolve into something much more impactful. The SEC appears to be following through on its commitment to wind down non-fraud-related litigations and investigations, providing some regulatory relief for the industry. Beyond the SEC, Congress has been increasingly active in exploring and advancing crypto-related legislation and regulatory frameworks, further intensifying focus on the industry.
Price Transparency: A Regulatory Priority
Price Transparency: A Regulatory Priority
March 6, 2025 – The Trump administration is beginning to lay out its regulatory (and deregulatory) priorities, and on February 25, 2025, the administration spotlighted one of those priorities in an executive order on price transparency. While the executive order mainly focuses on enforcing current price transparency requirements, it also hints at changing or even expanding them, which would require rulemaking to accomplish. To help me describe this executive order and potential changes to existing price transparency requirements, I’m bringing in my colleague Leigh Feldman.
Before diving into topic at hand, we want to note that we are assessing the impact of the policy statement that the US Department of Health and Human Services (HHS) issued on February 28, 2025, announcing HHS’s intention to refrain from rulemaking in certain situations. As background, the Administrative Procedure Act exempts certain rules from formal notice-and-comment rulemaking, including rules regarding “public property, loans, grants, benefits, or contracts.” Despite this exemption, past guidance known as the Richardson Waiver encouraged greater public participation and directed government agencies to use the more formal rulemaking process for this category of rules. HHS’s February 28 policy statement rescinds the Richardson Waiver. The scope of the regs that could be impacted is not easily defined, as other statutes and legal requirements may still require notice-and-comment rulemaking – such as for annual Medicare payment updates and policy changes. In all, the Trump administration will still likely carry out some policy priorities, such as promoting price transparency, through rulemaking.
With that important context, we now move on to the issue of the day. In the first Trump administration, the Centers for Medicare and Medicaid Services (CMS) established price transparency requirements for hospitals and health plans. Since January 1, 2021, hospitals have been required to make public:
A machine-readable file containing a list of all standard charges for all items and services.
A consumer-friendly list of standard charges for 300 “shoppable” services. (A hospital that maintains an internet-based, prominently displayed, free-to-use price estimator tool is deemed to have met this requirement.)
Under the hospital price transparency regs, a hospital’s “standard charges” include gross charges, discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges.
Health plans are required to:
Make detailed pricing information available to the public, including negotiated rates services between the plan and in-network providers, historical payments to and billed charges from out-of-network providers, and in-network negotiated rates and historical net prices for all covered prescription drugs. This requirement became effective on January 1, 2022.
Offer an online shopping tool that will allow consumers to see the rate negotiated by their provider and plan and an estimate of their out-of-pocket cost for 500 of the most shoppable items and services. This requirement became effective on January 1, 2023. Since January 1, 2024, health plans have been required to offer online shopping tools showing costs for remaining procedures, drugs, durable medical equipment, and other services.
As these requirements went into effect, stakeholders raised concerns regarding compliance among hospitals. In response, CMS underwent rulemaking in the CY 2022 and 2024 outpatient prospective payment system (OPPS) final regs to beef up penalties for noncompliance and lay out steps it would take to make sure that hospitals were complying.
The recent price transparency executive order indicates that the Trump administration believes that even more direct action needs to be taken. The president states that “progress on price transparency at the Federal level has stalled since the end of my first term. Hospitals and health plans were not adequately held to account when their price transparency data was incomplete or not even posted at all.” In order to make “more meaningful price information available to patients to support a more competitive, innovative, affordable, and higher quality healthcare system,” the executive order calls on the HHS secretary, working in conjunction with the secretaries of the US Departments of Labor and the Treasury, to take the following actions within 90 days:
Require the disclosure of the actual prices of items and services, not estimates.
Issue updated guidance or proposed regulatory action ensuring that pricing information is standardized and easily comparable across hospitals and health plans.
Issue guidance or proposed regulatory action updating enforcement policies designed to ensure compliance with the transparent reporting of complete, accurate, and meaningful data.
One question to consider is what additional steps the departments need to take to comply with the directive. Put simply, what’s new here that would require new regs to effectuate? Hospitals and health plans already must comply with definitive reporting requirements, and CMS has already issued guidance on the requirements and taken enforcement actions. However, it is apparent that the Trump administrative wants to do more, including issuing more regulations.
Immediately after the executive order was issued, CMS stated in an email to stakeholders that it is planning a “more systematic monitoring and enforcement approach.” We could also see changes, through rulemaking, to the requirements themselves and to the enforcement policies. These changes could be included in the Medicare payment regs affecting hospitals – either the fiscal year 2026 inpatient prospective payment system proposed reg (potentially to be released in April 2025, which would meet the executive order’s call for action within 90 days) or the CY 2026 OPPS reg. The proposed OPPS reg could be released in June or July 2025; this reg is where CMS has addressed hospital price transparency changes in the past. For either of these regs, the public, including hospitals, would have 60 days to provide feedback on the feasibility of implementing these changes.
With respect to the price transparency requirements, the first action required by the executive order (mandating “the disclosure of the actual prices of items and services, not estimates”) suggests a potentially substantial regulatory change. Currently, hospitals are permitted to include in their machine-readable files formulas for their negotiated rates that are a percentage of their gross charges (i.e., estimates). In the CY 2024 OPPS final reg, CMS clarified that:
It is generally appropriate for a hospital to display a payer-specific negotiated charge as a standard algorithm, to the extent a standard algorithm is the manner in which the hospital establishes its standard charges with third-party payers.
The hospital must include a description of that algorithm in its machine-readable file.
As of January 1, 2025, if a hospital’s standard charge is based on a percentage or algorithm, its machine-readable file must also specify the estimated allowed amount for that item or service.
The executive order seems to signal that the Trump administration believes these requirements are insufficient and that it plans to require that actual dollar amounts be listed.
Regarding enforcement, CMS increased the penalty for noncompliance with the hospital price transparency requirements in the CY 2022 OPPS final rule. In the CY 2024 OPPS final rule, CMS changed its methods for assessing hospital compliance and gave itself permission to publicize information about its assessments and any compliance actions taken against a hospital. The recent executive order indicates that the current administration may go even further to increase enforcement. For clues about what policies the administration may pursue, it may be instructive to look to the Lower Costs, More Transparency Act (LCMT), which passed the US House of Representatives last Congress. In addition to codifying then-current hospital price transparency regulatory requirements, LCMT would have required CMS to monitor each hospital’s compliance at least every three years and would have substantially increased the maximum penalties for noncompliance. LCMT also would have required (rather than simply permitting) CMS to publish information about its compliance assessments and enforcement actions taken against specific hospitals.
Even beyond the price transparency requirements themselves, another possible action the Trump administration could take (in the spirit of price transparency) would be the implementation of the No Surprises Act’s advanced explanation of benefit (AEOB) requirement. The law requires health plans to send enrollees an AEOB notification for certain services that includes:
(1) the network status of the provider or facility; (2) the contracted rate for the service, or if the provider or facility is not a participating provider or facility, a description of how the individual can obtain information on providers and facilities that are participating; (3) a good faith estimate received from the provider; (4) a good faith estimate of the amount the plan or coverage is responsible for paying, and the amount of any cost-sharing for which the individual would be responsible for paying with respect to the good faith estimate received from the provider; and (5) disclaimers indicating whether coverage is subject to any medical management techniques.
The AEOB requirement was supposed to go into effect on January 1, 2022, but has not yet been implemented. HHS and the Departments of Labor and the Treasury issued a request for information on September 16, 2022, that sought comments from interested parties on operational issues related to implementation. On April 23, 2024, the departments issued an update on implementation noting difficulties involved in sharing good-faith estimate information between providers, and between providers and health plans. The departments stated their intention to test industry-wide standards for data sharing, and stated that they were reviewing comments on the RFI and would work on a proposed reg to implement the AEOB requirement in the future. The departments issued another update on December 3, 2024, noting that they were making progress on developing and testing data-sharing standards, but did not indicate when the rulemaking process to implement the requirement might start.
Since the goal of the AEOB requirement is to tell patients what a service will cost before they receive it, the Trump administration could link this requirement to its overall efforts to improve price transparency. The executive order did not mention the AEOB requirement, however, so it remains to be seen when or if the Trump administration will implement that requirement.
Price transparency is a clear priority under the Trump administration, as it doesn’t go without notice that it was one of the first health policy priorities that the administration announced. Given the president’s directive in the executive order, we could see concrete regulatory action sometime within the next few months. We will keep you posted!
Until next week, this is Jeffrey (and Leigh) saying, enjoy reading regs with your eggs.
Faeneratores Caveant! The Ides Of March Are Nigh!
All lenders licensed under the California Finance Lenders Law as of the end of the preceding calendar year must file an annual report with the Department of Financial Protection and Innovation by March 15 of each year, even if the lender has done no business in California with the license. Cal. Fin. Code § 22159. The report must be completed online on the DFPI’s website at https://docqnet.dfpi.ca.gov/. CFL licensed lenders that fail to meet this deadline are likely to have their licenses summarily revoked. The DFPI uses this report primarily to:
Prepare its own annual report, Annual Report — Operation of Finance Companies, mandated by Cal. Fin. Code §§ 22160 & 22692;
To determine each licensee’s annual assessment is based on income reported by the licensee as earned from activities conducted under the CFL license; and
To assess the licensee’s compliance with the applicable statutory net worth requirement.
Separately, legislation enacted in 2023 requires any person engaged in the business of offering or providing commercial financing or another financial product or service to a small business, nonprofit, or family farm, as defined by California Code of Regulations, title 10, sections 1060(f), (h), and (i), whose activities are principally directed or managed from California is required to file an annual report by March 15 with the DFPI pursuant to the authority under the California Consumer Financial Protection Law. This is the first year in which a report is due. Importantly, a lender is not required to file this report if it is not a “covered provider” as defined in 10 CCR § 1060(e)(2) to the extent that it conducts its commercial financing under the authority of its CFL license. Cal. Fin. Code § 90002(b)(2). See also 10 CCR § 1062(d) (“A covered provider who is licensed under division 9 ( commencing with section 22000) of the Financial Code shall not include in the report required under this section information for activity conducted under the authority of that license.”). CCFPL commercial financing annual reports must be submitted electronically through the DFPI Self-Service portal.
Another CTA Freeze: Treasury Department Announces Suspension of Enforcement Against Domestic Reporting Companies
If you have been following our reports on the subject, you know that the Corporate Transparency Act (CTA) had a tumultuous end to 2024 and start to 2025, with a series of court actions leading to oscillating reports about whether the CTA was enforceable. Now, the elements of the executive branch of government that were pushing courts to allow for enforcement of the CTA have announced a self-initiated freeze on enforcement until the CTA reporting regime can be reformed through their further rulemaking.
FinCEN’s February 27 Release
On February 27, 2025, the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department of Treasury (Treasury), announced: “that it would not issue any fines or penalties or take any other enforcement actions against any companies based on any failure to file or update beneficial ownership information (BOI) reports pursuant to the Corporate Transparency Act by the current deadlines…until a forthcoming interim final rule becomes effective and the new relevant due dates in the interim final rule have passed.”
FinCEN also stated that it intends to issue an interim final rule no later than March 21, 2025, that extends BOI reporting deadlines and recognized “the need to provide new guidance and clarity as quickly as possible, while ensuring that BOI that is highly useful to important national security, intelligence, and law enforcement activities is reported.”
Treasury’s March 2 Release
Then, on March 2, 2025, Treasury went a step further than FinCEN, stating that it will not enforce any penalties or fines against US citizens or domestic reporting companies or their beneficial owners after the forthcoming FinCEN interim rule takes effect.
Treasury also stated that it will issue a proposed rule that will narrow the scope of the CTA to foreign reporting companies only. The CTA defines a foreign reporting company as a corporation, limited liability company or other entity formed under the law of a foreign country and registered to do business in any state or tribal jurisdiction by filing of a document.
As of the time of this release neither FinCEN’s interim final rule nor Treasury’s proposed rule had been made publicly available.
State Corporate Transparency Laws
As a reminder, certain states have adopted regimes modeled on, and in some cases referencing, the provisions of the CTA. For example, the New York LLC Transparency Act will start requiring beneficial ownership reporting as of January 1, 2026, for limited liability companies organized or registered to do business in New York. It will be interesting to see what, if any, changes are made by New York and other states based on future CTA rulemaking.
The Bracewell CTA Task Force will continue to monitor and report on developments regarding the CTA.
Trust But Verify (With A Minimum Investment Amount)
On 12 March 2025, the SEC staff issued a no-action letter for offerings under Rule 506(c) of Regulation D. In the letter, the Staff concurs that an issuer will have taken “reasonable steps to verify” a purchaser’s accredited investor status in an offering conducted under Rule 506(c) if the issuer requires purchasers to agree to certain minimum investment amounts, subject to a few additional conditions:
The minimum investment amount would be accompanied by written representations from the purchaser as to:
Their accreditation (under Rule 501(a)(5) or (a)(6) if they are a natural person, or under Rule 501(a)(3), (7), (8), (9) or (12) if they are a legal entity); and
The fact that the purchaser’s minimum investment amount (and, for purchasers that are legal entities accredited solely from the accredited investor status of all of their equity owners, the minimum investment amount of each of the purchaser’s equity owners) is not financed in whole or in part by any third party for the specific purpose of making the particular investment in the issuer.
The issuer would have no actual knowledge of any facts that indicate that:
Any purchaser is not an accredited investor; or
The minimum investment amount of any purchaser (and, for purchasers that are legal entities accredited solely from the accredited investor status of all of their equity owners, the minimum investment amount of any such equity owner) is financed in whole or in part by any third-party for the specific purpose of making the particular investment in the issuer.
The incoming letter to the Staff includes a condition that requires a minimum investment amount of at least US$200,000 for natural persons and at least US$1,000,000 for legal entities.
FinCEN Suspends Enforcement of CTA Against U.S. Citizens and Domestic Reporting Companies
Article highlights:• Treasury Dept. will no longer enforce CTA reporting requirements against U.S. citizens and domestic companies• Future rule changes expected to limit reporting requirements to foreign entities• March 21, 2025, filing deadline no longer relevant for U.S. businesses
The Corporate Transparency Act (CTA) has taken yet another dramatic turn. As previously reported, the final nationwide injunction against enforcement of the CTA was lifted on February 17th. Days later, FinCEN announced another 30-day extension of the filing due date, making the new deadline March 21, 2025. However, on March 2, 2025, the Treasury Department announced it would suspend enforcement of the CTA’s beneficial ownership information (BOI) reporting requirements for U.S. citizens and domestic reporting companies, even if those companies failed to meet the previously extended March 21st filing deadline. The agency said that it intends to issue new rulemaking proposals to focus the CTA’s enforcement solely on “foreign reporting companies.” It remains to be seen whether enforcement would include foreign individuals/entities holding ownership interests in domestic reporting companies — as presumably intended by the original law.
What does this mean?Because FinCEN will not enforce the CTA reporting rules against domestic businesses, the March 21 deadline for BOI filings is effectively no longer relevant for most entities. The Treasury Department has not yet provided a timeline for issuing its proposed rule changes. However, even though the Treasury has decided not to enforce the CTA right now, the underlying statute remains in effect — meaning Congress will still need to take some action to repeal or modify the existing law. How and when that might happen remains to be seen.
We will continue to monitor and provide updates as new information becomes available. In the meantime, for those who still have questions about their reporting obligations, stay up to date by monitoring the Chuhak Newsroom regularly or contact a member of our CTA team for the latest guidance.
The Salaried Members Rules and the ‘Significant Influence’ Test – Does the BlueCrest Case Affect Me (As a Partner) or My Firm?
Salaried Members Rules
Limited liability partnerships or “LLPs” are common corporate vehicles utilised by the financial services sector to establish UK investment management operations and other financial businesses and, more recently, implement carried interest structures or act as fund investment/feeder vehicles. The most contentious aspect, and the subject of this client alert, has been the use of LLPs as business operating vehicles. As well as being more flexible than limited companies, in that it is easy to admit members and for them to leave the LLP, they are also commercially competitive since members (colloquially referred to as “partners”) of LLPs benefit from self-employed tax status.
When the Limited Liability Partnership Act 2000 introduced LLPs, it was relatively straightforward to become a member and benefit from self-employment status for tax purposes. The principal tax benefit was that partnership profit drawings are not subject to the employer’s national insurance contributions (NICs), currently 13.8 percent and rising to 15 percent on 6 April 2025, which applies to employee and director remuneration.
The Salaried Members Rules (Rules) were introduced in 2014 to tackle what HM Revenue and Customs (HMRC) perceived as widespread avoidance of employer NICs via “disguised employment” through LLPs. The Rules are intended to ensure that members of LLPs who provide services on terms more like those employees rather than self-employed partners are treated as employees for tax purposes.
Under the Rules, LLP members are deemed to be “disguised employees” of an LLP if an individual meets all three of the following conditions:
Condition A – 80 percent of the member’s profit share is “disguised salary,” i.e., remuneration that is fixed, or variable without relation to the overall profits of the LLP, or not in practice affected by those profits;
Condition B – the member does not have significant influence over the affairs of the LLP; and
Condition C – the member’s capital contribution to the LLP is less than 25 percent of their “disguised salary.”
If all the conditions are met, the member will be treated as a disguised employee or “salaried partner,” subject to the normal income tax and NICs deductions under Pay As You Earn (PAYE). Critically, the LLP itself will be obliged to pay the employer’s NICs with respect to that “disguised employee” or salaried partner.
On the other hand, if an individual fails any one or more of the above conditions, they will be treated as a partner (i.e., as self-employed) for tax purposes, and no employer’s NICs will be payable by the LLP, so somewhat counter-intuitively, it is a “good thing” to fail a condition if the aim is to be taxed as self-employed.
HMRC v BlueCrest Capital Management (UK) LLP
The interpretation of the Rules has been the subject of ongoing disagreement between industry and HMRC. One principal area of contention related to Condition B which relates to the “significant influence” over the affairs of the partnership. Given that the LLP legislation does not define the meaning of “significant,” HMRC has been issuing fairly extensive guidance setting out its view of the concept mainly via practical examples. However, on several occasions, HMRC has subsequently amended its guidance, which has generally created a disadvantage for the taxpayer.
The first time that the interpretation of Condition B came before the English courts was in the case of HMRC v BlueCrest Capital Management (UK) LLP. BlueCrest sought to claim that a number of its members should not be taxed as employees, while HMRC sought to invoke the “salaried member” legislation to claim that they should be. It is fair to say that in both tax tribunals, the taxpayer prevailed in its challenge of HMRC’s guidance on Condition B, including that influence over the LLP’s affairs did not mean the LLP as a whole.
The case was most recently heard by the Court of Appeal (CoA), which considered the scope of Condition B. The CoA focused on whether an individual member has “significant influence” over the affairs of the LLP and whether Condition B could be failed if the member only had influence over a part of the affairs of the LLP (as opposed to the whole affairs of the LLP). The CoA stated that significant influence over the whole affairs of the LLP is likely to be had in cases where the individual is part of the strategic decision-making function of the LLP. By contrast, if the individual only has influence over the financial matters of the LLP, for example, then this is likely to be controlled only over part of the LLP, and therefore, Condition B would not be failed.
The CoA judgment stated that Condition B would only be failed if (i) a member has significant influence over the whole affairs of the LLP; and — critically — (ii) that authority must be rooted explicitly in the LLP agreement itself.
This decision overturned that of the lower courts by confirming that the scope for failing Condition B is much narrower than previously thought. Notably, the CoA rejected the parties’ agreed interpretation of Condition B, which was that significant influence could include de facto influence outside the provisions of the LLP agreement. In other words, the CoA ignored the position which — notwithstanding disagreements as to certain aspects — both industry and HMRC had been labouring under via the HMRC guidance since the legislation came into force. The case has now been remitted to the First Tier Tribunal for another review of the facts in light of the CofA’s construction of Condition B, and BlueCrest has requested leave to appeal to the Supreme Court. As a result, this issue likely has a long way to go before it is finally resolved.
What Should LLPs Do In the Meantime?
This case will be particularly important for those LLPs who have relied on failing Condition B in their assessment of whether the LLP’s members are true members.
In our experience, professional services firms have tended to rely predominantly on failing Condition A or C, so this decision may not require you to revisit your assessment of the Rules. However, if failure of Condition B has been central to your analysis (as is often the case of larger investment management firms), we recommend the following next steps:
Review your LLP agreement to understand how significant influence is articulated in the agreement;
Consider whether it is possible or necessary to rely on either Condition A or C being failed instead of Condition B; and/or.
Consider whether any shares or partnership interests have been issued to LLP members in any investment vehicles because “salaried member” treatment could turn these into employment-related securities (which may have different tax treatment).
Defence – A Sustainable Investment? A View From The UK’s Financial Conduct Authority
On 11 March 2025, the Financial Conduct Authority (the “FCA”) published a statement clarifying that their rules, including with regards to sustainability, do not prevent investment in or financing of defence companies. The FCA confirmed that it is at the discretion of investors or lenders as to whether they provide capital to defence companies.
The UK’s Sustainability Disclosure Requirements (“SDR”) introduced in 2023 aim to ensure that information about investments claiming to be sustainable can be trusted and readily understood. The SDR has never explicitly addressed the defence sector in SDR.
However, asset managers commonly apply exclusionary screening of investments related to weapons, typically limited to “controversial weapons” whose production and use have been deemed unacceptable under international conventions and even illegal within certain jurisdictions. Examples of such weapons include cluster munitions, anti-personnel landmines and chemical weapons. The clarity on weaponry exclusions came into sharp focus following the Russian invasion of Ukraine, prompting many to tighten their exclusionary criteria on cluster munitions in particular.
The FCA announcement follows lobbying from several Members of Parliament seeking clarity on defence investments and FCA sustainability rules. It also follows on from the statement from the previous government that directly confirmed “investing in good, high-quality, well-run defence companies is compatible with ESG considerations as long-term sustainable investment is about helping all sectors and all companies in the economy succeed”. Whilst the current Prime Minister has committed to increase defence spending recently, so far there is no statement from him or the Chancellor, Rachel Reeves, on their perspective on whether defence investments could be sustainable investments.
We wait to see if other regulators will make similar pronouncements as defence spending, and increases in it, becomes more and more in relevant to countries around the world.
SEC Expands Accommodations for Reviewing Nonpublic Registration Statements
On March 3, the US Securities and Exchange Commission’s (SEC) Division of Corporation Finance announced that it is expanding the accommodations available to issuers submitting nonpublic draft registration statements for staff review.
Initially, as part of the Jumpstart Our Business Startups Act, enacted in 2012, only emerging growth companies (EGCs) could take advantage of submitting nonpublic draft registration statements. Subsequently, in 2017, the SEC extended this accommodation to allow all issuers to voluntarily submit a draft registration statement for nonpublic staff review prior to the first year following their initial public offering (IPO).
In connection with the announcement, the Division stated that [it believed] further enhancing the accommodation to extend to any offering under the Securities Act of 1933, regardless of how much time has passed since the issuer’s IPO, would promote and facilitate capital formation without decreasing investor protections.
New Enhancements
Previously, the SEC would only review subsequent draft registration statements if they were submitted prior to the end of the 12-month period following the effective date of the initial registration statement. The expanded accommodation permits issuers to submit draft registration statements regardless of how much time has passed since originally becoming subject to SEC reporting requirements under Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended. The SEC will continue to limit its nonpublic review in these cases to the initial draft registration statement and an issuer responding to staff comments on such a draft registration statement will need to do so with a public filing, not with a revised draft registration statement. The SEC will also continue to publicly release staff comment letters and issuer responses on EDGAR, the SEC’s public filing website.
Issuers may omit the name of the underwriter(s) from their initial draft. However, the underwriter(s) must be named in any subsequent submissions and public filings. While issuers are encouraged to submit completed or substantially completed drafts, SEC staff will not delay reviewing drafts if financial information is omitted and the issuer reasonably believes that omitted financial information will not be required at the time of public filing.
In de-special purpose acquisition companies (SPAC) transactions where the target company is a private company and the SPAC is the surviving entity, nonpublic draft initial registration statements may be submitted. In some de-SPAC transactions, the target company may be required to be a co-registrant. If so, the co-registrant target must be otherwise independently eligible to submit a draft registration statement.
Foreign private issuers may submit nonpublic draft registration statements either per the enhanced accommodations or EGC procedures.
Cover Letter Requirements for Nonpublic Review
With respect to IPOs, in the cover letter submitted with the draft initial registration statement, issuers must confirm that it will publicly file on EDGAR its registration statement and nonpublic draft registration statement at least 15 days prior to any road show or the requested effective date of the registration statement.
With respect to subsequent draft registration statements submitted once an issuer is public, the cover letter must confirm that the issuer will file its registration statement and nonpublic draft registration statement on EDGAR for public review at least two business days prior to any requested effective time and date.
Key Takeaways
These changes are effective as of the date of the SEC’s announcement. The enhancements widen the scope of the accommodation to include de-SPAC transactions and allow for draft registration statements over a year after the issuer became subject to Exchange Act reporting requirements.
Issuers should carefully evaluate their eligibility to use the expanded procedures to avoid liability under the Securities Act and Exchange Act. If an issuer chooses to use the accommodation, it should follow all requirements carefully.
SEC Expands Nonpublic Review Process for All Companies Intending to Issue Securities
On March 3, 2025, the Securities and Exchange Commission’s Division of Corporation Finance announced that it has enhanced its accommodations for companies submitting draft registration statements for nonpublic review. The enhancements, which took effect immediately, arrive as the SEC recalibrates its regulatory approach under new leadership, signaling a broader shift toward enhancing capital formation by accommodating a broader range of issuers and transactions.
Here are the key changes, and we provide additional detail and each enhancement’s expected impact below:
nonpublic review now available for follow-on offerings;
underwriter names now not required initially in a draft registration statement;
greater flexibility for de-SPAC transactions and subsequent offerings; and
foreign private issuers now have more options as well.
What is the nonpublic SEC Staff review process?
The SEC Staff’s nonpublic review process allows eligible issuers to submit a confidential draft registration statement to the SEC Staff before making a public filing. This process helps companies refine their disclosures by addressing SEC Staff comments and delay public scrutiny until they are ready to proceed with their offering or listing.
Originally introduced under the Jumpstart Our Business Startups Act of 2012 (JOBS Act) for Emerging Growth Companies (EGCs), the SEC Staff expanded the process in 2017 to include all issuers conducting initial public offerings (IPOs) and extended the accommodation to an issuer’s initial Exchange Act Section 12(b) registration statements.
What do the SEC Staff’s expanded accommodations mean for companies?
The latest changes build on the 2017 expansion of the availability of the nonpublic review process and now allow a broader range of issuers, for a broader range of transactions, to take advantage of nonpublic SEC Staff feedback before filing publicly.
What are the key changes and their impact?
Nonpublic Review Now Available for Follow-On OfferingsThe SEC Staff will now accept nonpublic draft submissions for subsequent securities offerings or Exchange Act registration, even if more than 12 months have passed since the issuer became an SEC-reporting company. Now, every company, regardless of when its IPO took place, gets the benefit of reducing market speculation before finalizing its intended transaction by privately submitting a draft registration statement for nonpublic review.
Omission of Underwriter Names in Initial DraftsCompanies may now omit underwriters’ names in their initial draft registration statement submissions, provided they include them in subsequent submissions and public filings. This change gives issuers more flexibility in structuring underwriting syndicates without prematurely signaling deal participants to the market.
Greater Flexibility for De-SPAC Transactions and Subsequent OfferingsWhen a SPAC, as a publicly traded entity, moves to finalize its de-SPAC transaction by acquiring a private company, it typically files a Form S-4 registration statement. Historically, if this filing took place more than a year after the SPAC’s IPO, it had to be submitted publicly from the outset. However, under the updated guidance, such registration statements may now qualify for nonpublic review (provided they meet certain criteria). Additionally, any operating company that became publicly traded through a de-SPAC transaction, regardless of its structural framework, can now submit a Form S-1 for nonpublic review within its first year as a public company, irrespective of the date of the original SPAC’s IPO.
Foreign Private Issuers Now Have More OptionsForeign private issuers registering securities under Section or 12(g) of the Exchange Act (on Forms 10, 20-F or 40-F) may now submit draft registration statements for nonpublic SEC Staff review. Now, a foreign private issuer preparing to list under Section 12(g) may privately submit its draft Form 20-F for SEC Staff review, delaying public disclosure while refining regulatory compliance. Such issuers may still choose between expanded accommodations or the existing EGC procedures if they qualify.
What else should issuers consider?
Consistent with prior guidance, the SEC Staff noted the following three points as well in the announcement:
Expedited Processing Requests: The SEC Staff is willing to consider “reasonable requests” to expedite processing for draft and filed registration statements. Issuers with tight deal timelines should engage the SEC early to discuss review timing.
Financial Information Flexibility: Companies do not need to delay submitting a nonpublic draft registration statement if certain financial information is incomplete, provided they reasonably believe the omitted data will not be required at the time of public filing.
No More Revised Draft Filings After SEC Comments: After the SEC Staff provides comments on a nonpublic draft registration statement, issuers must respond via a public filing, rather than through another confidential draft submission. Companies should prepare for transparency once SEC feedback is received.
What should companies do next?
Assess eligibility: If your company is considering an IPO, a follow-on offering or a de-SPAC transaction, determine whether taking advantage of these changes could offer strategic benefits.
Evaluate timing considerations: The ability to engage privately with the SEC Staff can help issuers control disclosure timing, but SEC review periods and investor expectations should still be factored into transaction planning.
Engage legal counsel early: Navigating SEC review timelines, disclosure requirements and capital market strategies requires careful planning and legal expertise. Consult experienced securities counsel to optimize your approach.
Important Reminder: Nonpublic does not mean permanent confidentiality
While the SEC Staff’s nonpublic review process provides issuers with the ability to submit draft registration statements privately, companies should remain aware that all nonpublic draft registration statement submissions must be made public at least two business days before the registration is finalized and becomes effective. Moreover, the SEC Staff will publicly release all comment letters and issuer responses no earlier than 20 business days after effectiveness of the registration statement. Companies should ensure that any information disclosed in nonpublic filings is prepared with the expectation of eventual public disclosure. Advance planning on investor relations and market positioning remains essential.