Second Circuit Upholds the Validity of Contractual ‘Blockers’ and Holds They Are Not a ‘Scheme to Evade’ Reporting Requirements

On July 7, 2026, the U.S. Court of Appeals for the Second Circuit issued a decision in 20230930-DK-Butterfly-1, Inc. v. HBC Investments LLC, upholding the validity of contractual “blocker” provisions as a means to cap beneficial ownership and avoid liability under Section 16(b) of the Securities Exchange Act of 1934. Akin represented HBC Investments LLC and Hudson Bay Capital Management LP (together, “Hudson Bay”) in this matter before the Southern District Court of New York...... By: Akin Gump Strauss Hauer & Feld LLP