2024 Year in Review

With the calendar flipped to 2025, this week provides an ideal opportunity to recap some of the key themes in regulation and corporate compliance over the last year and look ahead to what the coming year might bring. We begin today with our 2024 recap and will wrap things up on Thursday with our 2025 outlook.

Artificial Intelligence

We must start with the topic that seemed to dominate last year’s conversations about the future of business in every sector of the economy. Although some academics, policymakers and social commentators continue to harbor misgivings about unleashing the power of AI on the public, it remains a subject of fascination in C-suites and investing shops.

A round-up of our AI-focused blog posts from 2024 details the mounting pressure for authorities to get a handle on properly regulating applications of the evolving technology. For instance, the Securities and Exchange Commission began pursuing charges against investment advisors for “AI washing,” a colloquialism for overinflating their credentials in artificial intelligence when marketing their services. Outgoing SEC Chair Gary Gensler also warned companies to avoid overstating the ways in which they’re applying AI to their own businesses.

Other AI risks on the SEC’s radar included monitoring potential conflicts of interest and ensuring AI models were producing accurate information. Meanwhile, regulators continued to mull over the relationship of concepts such as negligence to unanticipated harms resulting from AI.

Interestingly, an Intelligize survey published last year showed securities compliance professionals don’t seem to share commonly held concerns about AI.

ESG

It was a challenging year for proponents of environmental, social and governance programs.

The SEC’s long-anticipated climate disclosure rule went through the wringer in the courts as business interests lined up to challenge it. The current stay left the rule in legal limbo. Not surprisingly, the incoming Trump administration has shown no interest in maintaining the agency’s current orientation towards ESG issues.

In terms of enforcement, however, the SEC did announce a series of ESG-related actions. In one prominent example, the SEC pursued charges against Keurig Dr. Pepper Inc. for making “inaccurate statements regarding the recyclability of its K-Cup single use beverage pods.”

ESG advocates may have to rely in the short run on regulatory progress at the state level. California has passed its own climate disclosure rules, which include expansive reporting requirements for companies with more than $1 billion in revenues. The state is delaying enforcement of the new disclosure rules, but should they survive ongoing court challenges, nothing would suggest it won’t move forward with them.

Cybersecurity

In December 2023, an SEC rule went into effect requiring companies to disclose cybersecurity incidents to the public within four days of determining their materiality. Companies filed nearly six dozen disclosures in the following 11 months, according to an audit conducted by BreachRx. The total seems tiny relative to the universe of publicly traded companies subject to the rule and the number of attempted hacks likely taking place every day. Additionally, the disclosures that are made tend to lack crucial details that would be useful to end users, according to BreachRx’s report.

Cryptocurrency

The future of cryptocurrency came to the forefront during the 2024 presidential election, with the industry investing heavily in the campaign of eventual Republican President-elect Donald Trump. For its part, the SEC continued to focus on crypto-related enforcement actions during the year.

In one notable case, the SEC brought charges against two individuals alleged to have orchestrated a crypto pyramid scheme that raised $1.7 billion from investors. Additionally, the agency reached a settlement with Silvergate Capital over charges it misled investors about subsidiary Silvergate Bank’s Bank Secrecy Act/Anti-Money Laundering compliance program and monitoring of crypto customers. The SEC also settled with Barnbridge DAO over charges it failed to register its structured crypto assets as securities.

Mergers & Acquisitions

You could call 2024 a dud on the transactions front. In an evaluation of the M&A market for the year, Bain Capital noted the “macroeconomic tailwinds that M&A practitioners had hoped for during the first 11 months of 2024” never materialized. Instead, overall M&A activity reached a “middling” $3.5 trillion.

Did the Biden administration’s aggressive stance on antitrust law have anything to do with the lull in dealmaking? The federal government scored one of its biggest legal wins of the year in December when the Federal Trade Commission successfully challenged the proposed $24.6 billion merger between the Kroger and Albertsons grocery chains.

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Will 2025 feature a continuation of 2024’s trends? Perhaps on some level. However, as is typically the case with leadership changes at the top of the federal government (not to mention a change in political party control), President-elect Trump is certain to have his own agenda, which will likely influence 2025’s regulatory and compliance landscape. Check back with us on Thursday for our full outlook.