Overview | Regulatory Compliance | Sullivan & Worcester

Sullivan's Regulatory Compliance Group is a unique interdisciplinary practice advising primarily smaller public issuers, broker dealers, investment funds and institutional investors on the challenges facing the small-cap, micro-cap and mid-market segments of the market.

The practice focuses on regulatory compliance, white-collar criminal defense, government investigations, corporate internal investigations, and investigations and proceedings before administrative, legislative, and self-regulatory agencies. The Group works closely with the Firm’s Special Investigations & Compliance Group and its Capital Markets practice areas to assure regulatory compliance, the foundation on which our clients operate.

Sullivan's transactional attorneys are experienced in assisting clients in a wide range of matters including: the acquisition or sale of businesses; banking and secured lending transactions; workouts; capital markets; financial services; and international or cross-border transactions. Sullivan's Capital Markets practice represents underwriters and issuers in public and private offerings of equity, equity-linked securities, and debt. We have particular experience in private investment in private offerings, initial public offerings, self-underwritings, registered direct offerings, and offerings of convertible and other hybrid securities. Our capabilities include the ability to represent clients large and small domestically or on cross-border matters. We represent many of the leading small to medium-sized investment banks, while maintaining a focus on our extensive base of corporate clients. Our lawyers regularly participate in transactions involving a wide variety of industries, including technology, manufacturing, media, telecommunications, energy/natural gas, biotech, and retail, as well as several other specialized financings. Significantly, we have experience in identifying emerging practice areas within the Capital Markets industry segment and counseling clients in understanding and navigating unchartered territories as they seek to advance their business, financial, and operational objectives. Our capital markets attorneys and litigators are routinely paired to effect compliance in the first instance and evaluate the merit of litigation claims and investigations if it comes to that.

Our success is predicated on our experience in conducting thorough and reliable internal investigations, using the investigative record effectively to persuade the government/enforcement agencies to decline prosecution or enforcement action against our clients where possible, and discreetly resolving government investigations on favorable terms for our clients. When these results are not possible, we use our extensive litigation and trial experience to defend our clients in court or the relevant agency forum. Our practice preference is to begin from a proactive position: we prefer to schedule a compliance session(s) to review our client’s policies, practices, and procedures and to work with our clients to anticipate and avoid regulatory traps and surprises. Similarly, with respect to our transactional practice, our special situations attorneys utilize our extensive regulatory and enforcement knowledge and experience to guide our clients throughout the entire transaction or process.

Unlike other firms, our transactional attorneys routinely work with our enforcement attorneys to better understand the compliance dynamic, develop oversight standards, and receive needed input about the workings of the Justice Department, Securities and Exchange Commission, and federal banking regulators, among others.

With our enforcement and subject matter attorneys routinely work together to advise and represent clients in internal investigations, grand jury investigations and trials involving allegations of securities fraud, bank fraud, insider trading, market manipulation, and other related violations.
Our experience in white-collar crime, complex civil litigation and regulatory enforcement makes us particularly suited to defending multifaceted cases involving parallel criminal, civil and regulatory actions arising out of the same events.
We regularly advise on the development and maintenance of compliance programs.
Additionally, we have experience in conducting investigations for large as well as small companies (public as well as private) and their boards into allegations of workplace harassment, as well as advising a variety of public and private clients on human resources best practices, including the implementation of policies relating to harassment, whistleblowers, employee relations, termination and conflict resolution.

Our practice is staffed by senior lawyers in New York, who provide experience and credibility with the federal and state governmental authorities across the country and around the world. Consistent with the firm’s client-centered approach, the team routinely draws upon the experience of many other partners, including transactional lawyers and commercial litigators as well as subject-matter experts who enable our team to understand the nuances associated with transactions and structures that are the subject of governmental scrutiny.

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SEC Approves Nasdaq's New $5 Million Market Capitalization Threshold for Continued Listing

On July 22, 2026, the Securities and Exchange Commission (the “SEC”) approved Nasdaq's amended proposed rule for a new continued listing requirement requiring Nasdaq-listed companies to maintain a minimum Market Value of Listed Securities (“MVLS”) of $5 million. The SEC approved the proposal as modified by Amendment No. 1 following a lengthy process that generated significant comments from market participants, issuers, investors, exchanges, law firms, and industry groups. The new rule will have a particularly pernicious impact on micro-cap, small-cap and development-stage public companies. Companies that fail to maintain an MVLS of at least $5 million for 30 consecutive business days will be subject to immediate suspension and delisting procedures, without the benefit of the traditional cure period available for many other Nasdaq continued listing deficiencies. Overview of the New Requirement Under the approved rule, Nasdaq-listed companies on the Nasdaq Capital Market, Nasdaq Global Market and Nasdaq Global Select Market must maintain an MVLS of at least $5 million. MVLS is generally calculated as the consolidated closing bid price multiplied by the number of listed securities outstanding. If a company's MVLS remains below $5 million for 30 consecutive business days: Nasdaq will issue a Staff Delisting Determination (“Staff Delisting Determination”). The company will not receive a compliance or cure period. Trading in the company's securities will be suspended from Nasdaq. The company will generally trade on the over-the-counter market while pursuing any appeal rights. This represents a significant departure from Nasdaq's traditional approach to continued listing deficiencies, many of which provide issuers with a compliance period to regain compliance while remaining listed. Amendment No. 1: Limited Relief Through Hearings Panel Review In response to comments received during the rulemaking process, Nasdaq amended its proposal to provide a limited avenue for relief. Under new Nasdaq Rule 5815(c)(1)(I), a Nasdaq Hearings Panel may grant an exception of up to 180 days from the Staff Delisting Determination if the company demonstrates that it can satisfy Nasdaq's initial listing standards. The Hearings Panel also retains authority to reverse a delisting determination if Nasdaq staff acted in error. Importantly, however: The exception is discretionary. Suspension from Nasdaq trading is not automatically stayed during the appeal. The issuer generally must demonstrate compliance with Nasdaq's initial listing standards, which are more stringent than Nasdaq's continued listing standards. Accordingly, while Amendment No. 1 provides a modest additional procedural mechanism, companies should not view it as a substitute for proactively addressing potential listing compliance concerns. SEC's Rationale for Approval The SEC concluded that the new rule is consistent with Section 6(b) the Securities Exchange Act of 1934 and agreed with Nasdaq's position that issuers with an MVLS below $5 million may present heightened risks of manipulation and challenges to maintaining fair and orderly markets. In approving the rule, the SEC relied in part on its own historical analysis, which found that many issuers that remained below the $5 million threshold for 30 consecutive business days continued to trade below that level for extended periods and were frequently later delisted for other quantitative listing deficiencies. Although the SEC acknowledged comments noting that some issuers ultimately recover after temporarily falling below the threshold, it determined that the investor protection benefits of the rule, together with the limited relief provided by Amendment No. 1, supported approval. Practical Considerations for Nasdaq Issuers The new rule creates a material compliance risk for many smaller public companies, particularly those operating in capital-intensive industries such as biotechnology, life sciences, technology, energy transition and other emerging growth sectors. Companies should consider implementing enhanced monitoring procedures to track MVLS on an ongoing basis and evaluate potential corrective actions before a deficiency develops. Potential considerations may include: Capital raising transactions. Strategic transactions or business combinations. Balance sheet recapitalizations. Alternative listing or trading strategies. Other corporate actions designed to improve compliance with Nasdaq's quantitative standards. Because the MVLS calculation is based on market capitalization, often coupled with other listing metrics such as bid price, stockholders' equity, market value of publicly held shares and public float requirements, compliance planning should be evaluated holistically and on a company-specific basis. What Public Companies Should Do Now Nasdaq-listed companies, particularly those with market capitalizations approaching the $5 million threshold, should evaluate the potential impact of the new rule immediately. Companies should consider: Reviewing their current and projected MVLS levels. Assessing compliance with all Nasdaq continued listing standards. Evaluating available capital markets and corporate finance alternatives. Developing contingency plans for potential listing deficiencies. Understanding the implications of a suspension and OTC market transition. Evaluating whether actions can be taken now to strengthen listing compliance and capital market flexibility. The final rule did not set an effectiveness date nor advise issuers whether there would be a phase-in period for complying with the rule, the assumption being that it is effective immediately. For More Information Sullivan & Worcester LLP has been actively involved in advising issuers regarding Nasdaq listing standards, continued listing compliance, capital raising transactions, recapitalizations, exchange matters and SEC regulatory developments. Questions regarding the new MVLS requirement, its potential impact on an issuer's continued Nasdaq listing, the impact on a portfolio company, or available alternatives to address potential compliance concerns, may be directed to your regular Sullivan & Worcester attorney or any member of our Corporate and Securities Practice Group. This Client Alert has been prepared by David Danovitch, a Partner, Angela Gomes, a Partner, Brendan O'Brien, a Partner, and Phillip Carnevale, an Associate, in the Corporate and Securities practice group of the international law firm of Sullivan & Worcester LLP. For more information, Mr. Danovitch may be reached in our New York office by calling +1 (212) 660-3060 or by email at ddanovitch@sullivanlaw.com; Ms. Gomes may be reached in our Boston office by calling +1 (617) 338-2957 or by email at agomes@sullivanlaw.com; Mr. O'Brien may be reached in our New York office by calling +1 (212) 660-3013 or by email at bobrien@sullivanlaw.com; and Mr. Carnevale may be reached in our New York office by calling +1 (212) 660-3002 or by email at pcarnevale@sullivanlaw.com. This Client Alert is provided for general informational purposes only and does not constitute legal advice.

SEC Establishes Retail Fraud Working Group to Combat Fraud Targeting Everyday Investors

The U.S. Securities and Exchange Commission (“SEC”) announced on July 7, 2026, the creation of the Retail Fraud Working Group, a new initiative within the Division of Enforcement designed to identify and combat fraud targeting main street investors. The announcement formalizes a priority that SEC Enforcement Director David Woodcock previewed in his May 13, 2026, remarks to the Managed Funds Association Legal & Compliance Conference, reflecting the current Commission’s broader back-to-basics enforcement posture. For issuers, broker-dealers, investment advisers, and private fund managers with retail exposure, the announcement signals that retail-facing enforcement will be a sustained focus of the Division’s work in the months and years ahead. Overview The Retail Fraud Working Group will leverage staff and resources across the Commission to identify fraud and other misconduct targeting retail investors, including offering frauds, pump-and-dump schemes, market manipulation, and breaches of duties owed to customers by investment advisers and broker-dealers. The Group’s initiative is threefold: (i) to serve as a dedicated resource to proactively generate cases; (ii) to work with the Commission’s domestic regulatory partners and foreign counterparts; and (iii) to assist with educating retail investors in coordination with the SEC’s Office of Investor Education and Assistance. The Group will be led by Kate Zoladz, Deputy Director, West, and Kim Frederick, Assistant Director of the Asset Management Unit. Ms. Frederick’s role in the Asset Management Unit suggests that adviser and private fund conduct affecting retail investors will be a focus area for the Group. Chairman Paul S. Atkins described the initiative as “a return to the core values and principles of the enforcement program,” and Director Woodcock emphasized the Group’s role in “generating cases, building partnerships with our regulatory counterparts, and using data and technology to find and stop those who seek to take advantage of retail investors.” About Our Small-Firm Task Force Sullivan & Worcester’s Small-Firm Task Force is actively engaged in advising clients on the implications of the Retail Fraud Working Group and can assist with responding to any related SEC inquiries. The Task Force unites the firm’s Capital Markets, Regulatory Compliance, Government Investigations, and Financial Services Litigation practices, each with deep experience advising issuers, broker-dealers, investment funds, and institutional investors in the small-cap, micro-cap, and mid-market segments. Our interdisciplinary team is well-positioned to help clients navigate the SEC’s renewed retail-fraud enforcement priorities and to develop practical, risk-based compliance strategies aligned with the current regulatory environment.

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SEC Turns the Spotlight On Nasdaq Delisting Standards

David Danovitch was quoted in the article "SEC Turns the Spotlight on Nasdaq Delisting Standards," published by Law360 [sub. req'd] on May 1, 2026. The article discusses the U.S. Securities and Exchange Commission’s decision to delay implementation of proposed Nasdaq delisting standards to allow for additional public comment, following concerns that the changes could expose smaller companies to market abuse and limit their ability to appeal delisting decisions. “It’s not the norm,” David says, referring to the SEC’s decision to pause its review. “And I think it reflects the fact that the comments, particularly the comments in opposition or expressing concern about the proposal’s implementation, gave the SEC quite a lot to think about,” he adds.

Atkins Calls for Leaner Corporate Risk Disclosures, Says Filings Have Become Litigation Shields

Howard Berkenblit was quoted in the article "Atkins Calls for Leaner Corporate Risk Disclosures, Says Filings Have Become Litigation Shields" published by Law.com [sub. req'd] on February 19, 2026. The article discusses U.S. Securities and Exchange Commission Chair Paul Atkins’ call for more streamlined corporate risk disclosures and a potential safe harbor for certain nondisclosures. In the article, Howard noted that risk disclosures often serve as “cheap insurance” against litigation but emphasized that "[i]t's a balance—not only about warning investors about the material risk, but making sure that it’s a complete disclosure as well." "It's well and good for the SEC to say this is safe harbor but, if companies are still going to get sued by plaintiffs' lawyers or class actions, it's going to take a while for companies to get comfortable until it's tested and shown to work," said Howard.

Regulatory Compliance

Sullivan's Regulatory Compliance Group is a unique interdisciplinary practice advising primarily smaller public issuers, broker dealers, investment funds and institutional investors on the challenges facing the small-cap, micro-cap and mid-market segments of the market.

Regulatory Compliance

Regulatory Compliance

SEC Approves Nasdaq's New $5 Million Market Capitalization Threshold for Continued Listing

SEC Establishes Retail Fraud Working Group to Combat Fraud Targeting Everyday Investors

Sullivan & Worcester Submits Rebuttal Comment Letter to SEC on Nasdaq’s Proposed Market Value Listing Requirement

Sullivan & Worcester Submits Supplemental Comment Letter to SEC on Nasdaq’s Proposed Market Value Listing Requirement

Nasdaq Considers a New $5 Million Market Value Threshold for Continued Listing: What Issuers Need to Know

Sullivan & Worcester Submits Comment Letter to SEC on Nasdaq’s Proposed Market Value Listing Requirement

FINRA’s Small-Cap Sweep: Strategic Steps for Broker-Dealers

FINRA Launches Targeted Review of Small-Cap Foreign Offerings

Sullivan & Worcester Submits Comment to SEC on Foreign Private Issuer Definition

How I Made Partner: 'Focus on Being Excellent, Taking Responsibility and Ownership of Matters,' Says Meghan Rohan of Sullivan & Worcester

California Jury Stamps Its Approval on SEC’s Novel Shadow Trading Theory

“What? I’m a Dealer?”: New SEC Definitional Rules Add to the Confusion

SEC Adopts Rules for Cybersecurity Disclosures

The SEC’s Stacked Deck Is News to Unsuspecting 'Dealers'

SEC Changes Rules to Improve Deal Flow for Private Companies and Investors

Regulatory Compliance

SEC Turns the Spotlight On Nasdaq Delisting Standards

Atkins Calls for Leaner Corporate Risk Disclosures, Says Filings Have Become Litigation Shields

Sullivan & Worcester Achieves National and Regional Rankings in 2026 Best Law Firms® Listings

SEC, FINRA Cross-Border Crackdown Typifies Trump 2.0 Priorities

Sullivan & Worcester Announces Creation of Small-Firm Task Force to Address Latest FINRA Small-Cap IPO Sweep

Big Law Transactional Partner Hiring Picks Up in Series of Recent Laterals

Sullivan Continues Expanding Investment Management Team

Sullivan & Worcester Achieves National and Regional Recognition in the 2025 Best Law Firms® Rankings

Sullivan & Worcester Elevates Four to Partnership in U.S. & Israel

Sullivan & Worcester Ranked by Best Law Firms® in 2024

Sullivan & Worcester Names Corporate Partner David Danovitch New Office Managing Partner for New York City

Sullivan Receives Top Rankings in the 2023 U.S. News – Best Lawyers® "Best Law Firm" Rankings

Coronavirus: Survival Tips for Middle Office Fund Ops

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