Last week, we blogged about 10 questions you might consider asking in the wake of the midterm elections. We heard from many of you asking us to look at our crystal balls to try to glean where we might be headed – here are some thoughts from Cooley’s Beth Sasfai, with the caveat that this is merely guesswork:
- Keep Business Strategy Grounded in Long-Term Priorities: Regardless of election outcomes, responsible business strategy needs to continue to be grounded in enduring business priorities rather than shifting political winds.
- The Administration’s Regulatory Framework Remains in Place: Even with a blue wave, the current Administration continues to govern the executive branch. It is important to remember that the legal and regulatory considerations that informed earlier decisions have not fundamentally changed overnight.
- Avoid Overcorrecting Disclosures and Commitments: Remain cautious about overcorrecting and interpreting election results as a signal to immediately reinstate disclosures or commitments that were scaled back for legitimate legal and regulatory reasons.
- Expect Growing Investor Demands for Transparency: Some companies are already seeing outreach from socially responsible investors seeking more fulsome disclosure on board diversity, human capital and climate. These expectations may intensify going forward.
- Balance Investor Expectations Against Legal Risks: Be careful as you navigate growing investor demands for transparency alongside continued legal, regulatory and litigation risks. Having previously pulled back on certain disclosures, reversing course too quickly risks reinforcing perceptions that commitments are driven more by politics than by business strategy. Providing investors with decision-useful information does not necessarily require reinstating every prior target, metric or public commitment.
- Adopt Durable Responsible Business Objectives: Consider objectives that align with responsible business approaches that can withstand changes in Presidential administrations, regulatory priorities and stakeholder expectations without requiring constant recalibration.
- Find a Sustainable Middle Ground: A challenge for the coming year is not to simply swing the pendulum back but to find a sustainable spot that recognizes today’s legal and regulatory realities, responds thoughtfully to investor expectations and reinforces the credibility and durability of responsible business strategy.
- Expect a Surge in Congressional Investigations: With Democrats taking control of both chambers of Congress, companies should anticipate aggressive investigations beginning in January 2027. Congressional committees will regain subpoena authority, expand investigative staffing and pursue inquiries into corporate conduct, government relationships and the Trump Administration’s policies. Leading up to January, companies who already engaged with Congress may receive renewed inquiries as well as requests to preserve documents.
- Corporate Dealings With the Trump Administration May Face Scrutiny: Companies that received regulatory approvals, merger clearances, tariff relief, federal funding, government contracts and/or other favorable treatment may become investigative targets. Congressional inquiries could also examine corporate donations, participation in Administration initiatives and relationships with individuals connected to the President.
- Financial Services and Other High-Profile Industries May Be in the Crosshairs: Congressional oversight is expected to intensify regarding financial institutions, private equity, cryptocurrency, prediction markets, artificial intelligence, executive compensation, shareholder buybacks and retail investor access to private markets. Other potential targets include technology companies, health insurers, pharmaceutical manufacturers, defense contractors and energy companies.
- State Attorneys General May Become More Aggressive: Democratic victories in several state Attorney General races, including Texas, could produce additional investigations into corporate conduct and dealings with the federal government. State officials may revisit matters previously dismissed or settled by federal agencies, since federal resolutions generally do not preclude independent state enforcement actions.
- Congressional Investigations Pose Unique Reputational and Litigation Risks: Unlike traditional regulatory investigations, congressional inquiries are often politically motivated, highly public and not necessarily premised on legal violations. Documents and testimony may become public, potentially triggering shareholder litigation, whistleblower complaints, internal investigations, regulatory referrals and reputational damage.
- Companies May Face More Subpoenas and Aggressive Investigative Tactics: Congressional committees are increasingly willing to accelerate investigations, shorten response deadlines, record depositions and publicly release testimony. Under House Rule XI, rank-and-file committee members can force votes on subpoenas, potentially expanding investigative activity beyond the priorities of committee leadership.
- Companies Should Assess Their Exposure and Prepare Their Boards: You should proactively review potentially sensitive government interactions, significant transactions, internal communications and board materials. Companies should assess document preservation capabilities, identify potential witnesses and brief senior management and appropriate board committees about investigative risks and response readiness.
- Early Engagement and a Coordinated Response Strategy Are Essential: Companies should integrate their legal, government affairs, compliance and communications functions when preparing for congressional oversight. Constructive engagement with Congressional staff may help narrow document requests and avoid unnecessary escalation. Companies should also carefully evaluate privilege issues – particularly where communications with the White House are involved – and establish protocols for responding to inquiries before they arrive.
Authored by
Broc Romanek