FEDERATED HERMES, INC.

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On April 9, 2026, Federated Hermes completed the acquisition of an 80% interest in FCP. See Note (4) to the Consolidated Financial Statements for additional information.

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SEC and Commodity Futures Trading Commission (CFTC) Propose Amendments to Form PF. On April 20, 2026, the SEC and CFTC proposed amendments to Form PF to: (1) eliminate filing requirements for smaller advisors by raising the Form PF filing threshold for all filers from $150 million in private fund assets under management to $1 billion in private fund assets under management and raising the reporting threshold for large hedge fund advisors from $1.5 billion in hedge fund assets under management to $10 billion in hedge fund assets under management; (2) eliminate certain reporting requirements for smaller hedge fund advisors; and (3) eliminate, streamline and simplify certain other reporting requirements by, among other proposed changes, eliminating certain “look through” requirements, eliminating certain performance volatility reporting requirements, simplifying certain large hedge fund counterparty exposure reporting, eliminating certain current reporting for large hedge fund advisors, and eliminating quarterly event reporting for all private equity fund advisors. SEC-registered investment advisors that satisfy Form PF’s filing thresholds must file Form PF, which is intended to provide the SEC, CFTC and FSOC with confidential information about the operations and strategies of private funds and their investment advisors. The proposed amendments repeal certain enhanced reporting requirements promulgated by the SEC in 2024. The public comment period for the proposed amendments will end 60 days after the proposed amendments are published in the Federal Register.

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SEC Publishes Concept Release on Consolidated Audit Trail and Other Audit Trails and Data Sources. On April 16, 2026, the SEC published aconcept release soliciting comments in support of a comprehensive review of the Consolidated Audit Trail and other audit trails and related data sources currently used in the regulation of U.S. securities markets, including comments regarding the funding mechanisms for these audit trails and/or related data sources. The Consolidated Audit Trail is

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SEC Announces Enforcement Results for Fiscal Year 2025. On April 7, 2026, the SEC announced enforcement results for the fiscal year ended September 30, 2025. During fiscal year 2025, the SEC filed 456 enforcement actions, including 303 standalone actions and 69 “follow-on” administrative proceedings seeking to bar or suspend individuals from certain functions in the securities markets based on criminal convictions, civil injunctions or other orders, and obtained orders for monetary relief totaling $17.9 billion. The total fiscal year 2025 enforcement actions represented a 22% decrease from fiscal year 2024. The 2025 enforcement actions addressed a broad range of misconduct and prioritized cases involving direct harm to investors and the integrity of the U.S. securities markets, including offering frauds, market manipulation, insider trading, issuer disclosure violations and breaches of fiduciary duty by investment advisors. The SEC Chairperson commented that the SEC’s new enforcement emphasis represents an end to “regulation by enforcement” and is aimed at misconduct that creates the greatest harm to investors.

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Texas Stock Exchange Propose to Exempt Closed-End Funds (CEFs) from Requirement to Hold Annual Shareholder Meetings. On April 6, 2026, the Texas Stock Exchange (TXSE) filed a proposed rule change with the SEC, SR TXSE 2026-005, establishing listing and continued listing standards for CEFs and interval funds on its new exchange. As part of this proposal, the TXSE proposed to eliminate the exchange-level requirement that listed CEFs hold annual shareholder meetings. The TXSE proposal follows the Cboe Global Markets Inc. (Cboe) withdrawal on December 12, 2025 of its May 20, 2025 proposal that would have exempted newly-listed CEFs from the requirement to hold annual shareholder meetings and, subject to shareholder approval, also would have exempted previously listed CEFs from the annual shareholder meeting requirement, and the New York Stock Exchange withdrawal on January 5, 2026 of a similar June 6, 2025 proposal. Federated Hermes fully supports efforts to eliminate annual shareholder meetings for exchange listed CEFs. In Federated Hermes’ view, CEFs are more akin to registered mutual funds, which are not required to have annual meetings, than listed operating companies and the annual shareholder meeting requirement subjects them to attack by activist shareholders who buy discounted shares and then take action to force the CEFs to incur liquidity events (such as tender offers, reorganizations or open-ending of the CEFs) to realize or arbitrage the difference between the discounted purchase price and the CEFs’ NAV, all to the detriment of the CEFs and their long-term investors.

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DOL Proposes Safe Harbor for Alternative Assets in 401(k) Plans. On March 31, 2026, the DOL issued proposed rules establishing a safe harbor framework that allows for the inclusion of alternative assets, such as private market investments, in 401(k) plans. The proposal responds to a Presidential executive order and would provide legal protections for plan sponsors that follow a defined fiduciary process when evaluating and selecting investments, without regard to whether the asset is “traditional” or an “alternative.” Under the proposal, fiduciaries would be required to assess six factors in making investment decisions: performance, fees, liquidity, valuation, benchmarks and complexity. The proposal emphasizes an asset‑neutral, process‑driven approach, allowing selection of higher‑fee or less‑liquid options if these characteristics are justified by anticipated returns and overall value to participants. Industry stakeholders widely supported the proposal, noting that a formalized fiduciary‑process safe harbor may reduce Employee Retirement Income Security Act of 1974 (ERISA) litigation risk and expand access to private‑market strategies. The public comment period for the proposed rule ends on June 1, 2026.

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State Laws Governing Proxy Advisors. Two states have recently enacted laws like Texas S.B. 2337, which was enacted in 2025 to regulate proxy advisor firms that provide recommendations involving governance, environmental and social factors or diversity, equity and inclusion factors. For instance, on March 31, 2026, the Kentucky General Assembly passed S.B. 183, which is intended to provide transparency and accountability standards for proxy advisory firms that influence shareholder voting decisions. S.B. 183 requires disclosure by covered firms in two circumstances. First, if a proxy advisor provides a service that isn’t based solely in the financial interests of shareholders. This disclosure must explain that the advice is based in whole or in part on nonpecuniary factors and briefly describe the rationale. Second, if a proxy advisor gives materially different advice to different clients (e.g., suggests to one client to vote “for,” while suggesting to another client to vote “against” or “abstain”). This disclosure requires notice of the materially different vote and clarification as to which of the conflicting voting suggestions are provided solely in the interest of shareholders and supported by an economic analysis.

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On March 3, 2026, the State of Indiana enacted Indiana House Bill 1273, which has an effective date of July 1, 2026. Indiana House Bill 1273 imposes one multi-layered disclosure requirement and applies broadly to proxy advisors providing services to any person located in Indiana with respect to a proxy vote pertaining to an entity (i.e., an issuer) even if the entity is out-of-

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state. The disclosure requirement is triggered if a proxy advisor recommends voting against management (including if the “recommendation” is based upon a default policy). The disclosure must state whether the recommendation is backed by a written financial analysis (and state the analysis is available upon request). The proxy advisor must also provide a copy of the analysis to entity management. If there is no supporting financial analysis, a proxy advisor must disclose this fact to the client and the entity plus make the disclosure publicly available. On April 13, 2026, an investor services and proxy advisory company filed a lawsuit against the Indiana Attorney General in the U.S. District Court for the Southern District of Indiana challenging the constitutionality of Indiana House Bill 1273. Among other things, the complaint argues that Indiana House Bill 1273 violates free speech by targeting only anti-management recommendations and asks the court to grant a preliminary injunction preventing the law from coming into effect.

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New ERISA Fiduciary Breach Lawsuit. In a complaint filed on March 3, 2026 in the U. S. District Court for the Western District of Washington, a participant in a 401(k) plan of a global commercial real estate firm alleges that plan fiduciaries breached their ERISA duties by selecting and retaining an investment fund that failed to consider or manage climate-related financial risks, resulting in excessive risk, inferior performance and higher fees for participants. A core theory of the complaint is that climate change presents financially material risks to investment portfolios, and that these are precisely the types of risks ERISA requires fiduciaries to prudently evaluate and monitor.

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This case follows last year’s Spence v. American Airlines litigation (in which a plaintiff successfully argued that their employer breached their ERISA duty of loyalty by allowing corporate interests in governance, environmental and social objectives to influence the management of an employee retirement plan) and represents the second recent ERISA lawsuit involving governance, environmental and social-related theories of fiduciary breach, though the claims arise from the alleged failure to account for climate risk rather than from the use of governance, environmental and social-focused investment strategies. Together, these cases highlight how climate and governance, environmental and social issues are increasingly appearing in ERISA litigation involving defined contribution plan investment menus.

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FSOC Proposes Interpretive Guidance and Request for Public Comment on Systemically Important Financial Institutions (SIFI) Designations. On March 25, 2026, the FSOC issued proposed interpretive guidance, and request for public comment, regarding its process for identifying, assessing and responding to potential risks to U.S. financial stability, including through potential designation of nonbank financial companies as SIFI’s. The proposal would rescind the FSOC’s 2023 guidance and restore the structure of the guidance initially issued in 2019 regarding the procedural processes and substantive analytic framework used by the FSOC in considering a nonbank financial company for potential designation. The proposed guidance would re‑establish a two‑step activities‑based approach under which the FSOC would first work with primary regulators to address identified risks before considering a firm‑specific designation. The proposed guidance would also update the FSOC’s analytic methodologies by expanding the set of vulnerabilities considered, such as asset‑valuation risks and broader measures of economic security. Additionally, the proposal would enhance analytical rigor by requiring a cost‑benefit analysis and an assessment of the likelihood of a firm’s material financial distress before designation, while introducing a pre‑designation “off‑ramp” that identifies steps a company or its regulators could take to mitigate risks. The SEC Chairperson indicated support for the proposal but cautioned that it cannot resolve what he views as structural deficiencies in the nonbank designation framework, emphasizing that only Congress can address the underlying issues. On April 15, 2026, Federated Hermes submitted a comment letter to the FSOC expressing: (1) Federated Hermes continued belief that the FSOC’s 2023 guidance was substantively and procedurally defective and should be withdrawn; and (2) the inappropriateness of nonbank SIFI designation of mutual funds generally and particularly money market funds because designating mutual funds generally and particularly money market funds under Section 113 of The Dodd‑Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) is inconsistent with the statutory text and in direct conflict with the stated intent of Congress in adopting the Dodd-Frank Act. The public comment period for the proposal ends on May 14, 2026.

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SEC Issues Exchange Act Exemptive Relief to Supplement 1940 Act Exchange-Traded Fund (ETF) Share Class Relief for Multi-Class Funds. On March 17, 2026, the SEC issued exemptive relief under the Exchange Act to a number of applicants providing broker-dealer and market structure relief necessary to permit open-end management investment companies registered under the 1940 Act to functionally operate when offering one class of ETF shares that operates as an exchange-traded fund and one or more classes of shares that are not exchange-traded. The relief granted under Exchange Act Section 36 allows broker‑dealers and other market participants to engage in transactions in ETF share classes without triggering restrictions under Rules 10b‑10, 14e‑5, or Section 11(d)(1) of the Exchange Act, provided that the ETF share class operates in accordance with existing ETF requirements. This action follows earlier relief under the 1940 Act enabling registered investment companies to offer both mutual fund and ETF share classes within the same portfolio. As of March 17, 2026, approximately 100 applications had been filed requesting exemptive relief to operate multi‑class ETF structures. Federated Hermes is still evaluating whether to file a similar application.

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SEC and CFTC Issue Joint Interpretive Release on Crypto Assets. On March 17, 2026, the SEC and CFTC issued a joint final rule and interpretive release clarifying that most crypto assets are not securities and providing guidance on when transactions involving crypto assets are securities transactions. The interpretive release, which became effective on March 23, 2026: (1) establishes a five-part token taxonomy for crypto assets based on their characteristics, uses and functions, and analyzes each category under the “security” definition; (2) addresses how a non-security crypto asset may become subject to, and cease to be subject to, an “investment contract;” and (3) clarifies the application of federal securities laws to certain crypto activities including airdrops, protocol mining, protocol staking and the “wrapping” of a non-security crypto asset, consistent with existing SEC staff guidance. While most crypto assets are not themselves securities under the new guidance, the SEC reiterates its view that a non-security crypto asset may be sold as part of an “investment contract” (and, therefore, become subject to the securities laws) depending on the representations and promises made to purchasers to undertake future managerial efforts. The interpretive release also provides guidance as to when a crypto asset that was initially offered and sold as part of an investment contract may cease to be subject to an investment contract.

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SEC Proposes to Limit Rule 15c2-11 to Equity Securities. On March 16, 2026, the SEC proposed amendments to Exchange Act Rule 15c2‑11 that would formally limit the rule’s scope to equity securities, replacing all references to “securities” with “equity securities” as defined in Exchange Act Rule 3a11‑1. Rule 15c2‑11 historically required broker‑dealers to gather and review specified issuer information before publishing quotations in an over-the-counter (OTC) quotation medium, a framework originally designed to combat fraud in thinly traded OTC equity markets. The SEC noted that the proposal responds to several years of industry feedback following the staff’s unexpected 2021 interpretation that the rule extended to fixed‑income securities, contrary to decades of market practice. Under the proposed amendments, fixed‑income instruments and other non‑equity securities would no longer fall within the rule’s requirements, though convertible bonds, warrants, options and forwards linked to equity securities would continue to be treated as equity securities and remain subject to Rule 15c2‑11. The SEC also proposes conforming changes to recordkeeping and information‑review provisions and clarifies that the amended rule would apply to crypto assets only to the extent a particular crypto asset qualifies as an “equity security” under Rule 3a11‑1. The SEC stated that the amendments are consistent with the rule’s original anti‑fraud purpose and would remove outdated exceptions, such as the municipal‑securities exemption, which become unnecessary if the rule is limited solely to equity securities.

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Second Circuit Rejects Reliance on SEC Definition of Investment Advisor in Enforcement Action. On February 27, 2026, the U.S. Court of Appeals for the Second Circuit (Second Circuit) issued a summary order in SEC v. Amah holding that courts must independently interpret the statutory definition of “investment advisor” under the Advisers Act and may not defer to the SEC’s interpretation simply because the statutory text is ambiguous. The SEC had argued that an individual’s “expectation” of receiving compensation could satisfy the statutory requirement that an advisor receive compensation, even if no compensation was actually paid by the allegedly defrauded investors. Traditionally, the SEC has advanced this view through guidance and rulemaking preambles. The Second Circuit rejected this approach, emphasizing that the Supreme Court’s ruling under Loper Bright Enterprises v. Raimondo requires courts to exercise their own judgment when a statute lacks judicial construction.

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In SEC v. Amah, the Second Circuit vacated a district court decision imposing liability on an investment advisor under the Advisers Act because the district court appeared to treat the SEC’s interpretation as controlling without analyzing whether the statutory definition is consistent with the SEC’s expansive interpretation. The ruling is among the first to apply the ruling from Loper Brightin the SEC enforcement context, citing that judges may not defer to agency interpretation just because a statute is ambiguous. The Second Circuit decision signals that the SEC must be prepared to ground its interpretations more firmly in statutory text and provides defendants with an avenue to challenge even long‑standing agency positions.

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SEC Adopts Final Amendments for Foreign Private Issuers Holding Foreign Insiders Accountable Act (HFIAA). On February 27, 2026, the SEC adopted final amendments implementing the HFIAA, eliminating the longstanding exemption that previously shielded directors and officers of foreign private issuers (FPIs) from Section 16(a) reporting obligations. As a result, directors and officers of FPIs with a class of equity securities registered under Section 12 of the Exchange Act must begin filing Forms 3, 4 and 5 to disclose their beneficial ownership and transactions in the issuer’s equity securities starting March 18, 2026. The final amendments revise Rule 3a12‑3(b) to remove the full exemption from Section 16 and replace it with exemptions only from Section 16(b) short‑swing profit rules and Section 16(c) short‑sale prohibitions and amend Rule 16a‑2 to continue excluding 10% beneficial owners of FPIs from Section 16(a) reporting.

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The SEC also updated Forms 3, 4 and 5 to include optional fields for foreign trading symbols and more precise address information to better accommodate foreign insiders. In a related action on March 5, 2026, the SEC issued an exemptive order allowing FPI insiders in certain qualifying jurisdictions, including Canada, Chile, the European Economic Area, Korea, Switzerland and the U.K., to satisfy Section 16(a) obligations through home‑country filings if those regimes provide

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substantially similar reporting. These amendments collectively align foreign‑issuer insider reporting obligations more closely with those applicable to U.S. domestic companies.

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CFTC Staff Preserves Commodity Pool Operator (CPO) Delegation Structures Relief. On February 26, 2026, the CFTC’s Market Participants Division issued an updated no‑action position confirming that CPO delegation structures may remain intact even when a CPO that has been delegated CPO responsibilities by a non-registrant relies on recent no‑action relief and is therefore no longer registered as a CPO. This clarification addresses uncertainty created by earlier relief that allowed certain registered CPOs to deregister; market participants questioned whether a non-registrant could continue delegating regulatory responsibilities if the CPO was no longer formally registered, as previously required under CFTC No‑Action Letter 14‑126.

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The updated CFTC position makes clear that a non-registrant does not need to register so long as (1) it delegates CPO responsibilities to a CPO relying on the new relief (i.e., a non‑registered CPO); and (2) all other conditions of No‑Action Letter 14‑126 remain satisfied, such as the CPO accepting full responsibility for CPO obligations and the non-registrant not engaging in solicitation or management activities. This ensures that long‑standing delegation arrangements for private funds, including those involving offshore fund boards or general partners, are not unintentionally disrupted by the deregistration of the CPO and that fund complexes may continue operating under pre‑existing, CFTC‑sanctioned delegation models.

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Initial Implementation Regulation Adopted for California Climate Disclosure. On February 26, 2026, the California Air Resources Board (CARB) approved initial implementing regulations for the Climate Corporate Data Accountability Act (SB 253) and the Climate‑Related Financial Risk Act (SB 261). The regulations establish applicability criteria, fee structures, reporting timelines and key definitions, marking the first formal regulatory framework for California’s mandatory climate‑disclosure regime. CARB confirmed that entities are considered to be “doing business” in California if they are organized or commercially domiciled in the state or if their California sales exceed a threshold set by the Franchise Tax Board. The regulations also adopt a flat‑fee structure for covered companies, with program fees allocated based on total annual program costs divided by the number of regulated entities.

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The first reporting deadline under SB 253 is August 10, 2026, and applies initially only to Scope 1 and Scope 2 greenhouse‑gas emissions, with Scope 3 reporting beginning in 2027. CARB clarified that insurance companies, nonprofits, government entities and certain limited‑activity businesses are exempt from reporting requirements. Although the regulations also apply to SB 261, CARB emphasized that enforcement of SB 261 remains stayed pending ongoing Ninth Circuit litigation, and the agency will not enforce SB 261 until the injunction is lifted. CARB noted that these implementing rules advance California’s broader effort to standardize climate‑risk disclosure and align the state with similar global frameworks adopted in the EU, U.K. and Japan.

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SEC Overhauls Enforcement Manual. On February 24, 2026, the SEC Division of Enforcement announced the first substantial overhaul of its Enforcement Manual since 2017, adopting changes designed to make enforcement proceedings more efficient, transparent and less punitive for cooperative parties. The revised manual restores a prior policy that allows simultaneous SEC consideration of an offer of settlement and related waiver requests from automatic disqualifications and other collateral consequences from the settlement terms. This change reduces the likelihood of duplicative “follow‑on proceedings,” and provides respondents with clearer visibility into the full implications of a proposed settlement. Under the new process, if the SEC accepts the settlement but rejects the waiver request, the respondent must decide whether to proceed with or withdraw the settlement.

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The SEC also revised the Wells process, which is the procedure by which potential defendants can provide substantive argument after the Division of Enforcement staff preliminarily decides to recommend that the SEC bring charges. Among other things, the changes standardized a four‑week period for respondents to submit Wells responses and require that any requested Wells meeting occurs within four weeks thereafter, with participation by a senior SEC official. Additional updates aim to incentivize meaningful cooperation: the Division of Enforcement may recommend reduced or waived civil penalties for entities that demonstrate effective self‑policing, self‑reporting, remediation and cooperation, including actions such as enhancing internal controls, taking remedial personnel measures, clawing back compensation and improving training. For individuals, penalty mitigation will consider the quality of assistance provided, the importance of the matter, the public‑interest factors involved and the individual’s personal and professional profile. These updates come amid a noted decline in enforcement‑action volume over the SEC’s past fiscal year and reflect the SEC’s refocused priority on fraud prevention and misconduct that threatens market integrity.

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Proposed Amendments to Form N-PORT Reporting; Extension of Compliance Dates for Names Rule Reporting. On February 18, 2026, the SEC proposed amendments to certain registered investment company reporting requirements on Form N-PORT to: (1) provide funds with an additional 15 days to file monthly reports of portfolio-related information; (2) reduce

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the publication of reports from monthly to quarterly; (3) streamline or remove certain reported information and (4) require certain additional information for funds, including certain identifying information and information about funds with share classes that operate as ETFs. The SEC also extended the compliance dates for amendments to Form N-PORT that relate to the Names Rule to November 17, 2027, for fund groups, such as the Federated Hermes Funds, with net assets of $10 billion or more as of the end of their most recent fiscal year, and to May 18, 2028, for fund groups with less than $10 billion in net assets as of the end of their most recent fiscal year. The public comment period on the proposed Form N-PORT amendments ended on April 24, 2026.

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On April 24, 2026, Federated Hermes submitted a comment letter to the SEC regarding the proposed amendments to Form N-PORT. In its comment letter, Federated Hermes strongly supported the proposal and commended the SEC for reassessing the 2024 amendments to Form N-PORT and proposing new amendments designed to reduce reporting burdens without significantly affecting the SEC’s use of the data and the public’s ability to assess relevant information about a fund. Among other comments, Federated Hermes supported: (1) extending the Form N‑PORT filing deadline from 30 days to at least 45 days (preferably 60 days) after month‑end to strengthen accuracy, validation, reliability and internal review processes; (2) restoring the quarterly public disclosure framework for Form N‑PORT information to limit the public release of fund information to the third month of each fiscal quarter because it appropriately mitigates the risk of predatory trading, reverse engineering and front running a fund while preserving transparency for investors; (3) streamlining Form N‑PORT by narrowing portfolio‑level risk metrics, simplifying return reporting, eliminating data elements of limited regulatory or investor utility, and removing the requirement to file a Regulation S‑X‑compliant Schedule of Investments, which is duplicative and costly for funds and their shareholders and (4) eliminating adopted‑but‑not‑yet‑effective reporting items related to the Names Rule compliance and other subjective portfolio classifications that could confuse investors or inadvertently disclose proprietary investment perspectives.

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SEC Releases Additional Staff FAQs on the Names Rule. On February 18, 2026, the SEC issued additional FAQs on the Names Rule. The FAQs related to: (1) shareholder notice of certain changes to non-fundamental 80% investment policies; (2) Names Rule’s treatment of unfunded commitments for certain funds; (3) the use of “Growth” or “Value” in certain fund names and (4) the use of “Merger” or “Merger Arbitrage” in fund names.

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Financial Crimes Enforcement Network (FinCEN) Issues Beneficial Owner Relief. On February 13, 2026, the FinCEN issued Order FIN‑2026‑R001, providing significant exceptive relief from the 2016 Customer Due Diligence (CDD) Rule’s requirement that financial institutions identify and verify the beneficial owners of legal‑entity customers at each new account opening. Instead, institutions may now limit beneficial‑owner identification and verification to three circumstances: (1) at the initial account opening; (2) when facts arise that reasonably call into question the reliability of previously obtained beneficial‑ownership information and (3) as otherwise required under the institution’s risk‑based ongoing CDD procedures. The order further clarifies that when reverification is triggered under a risk‑based program, institutions may rely on previously obtained information so long as the customer certifies or confirms that the information remains current, with institutions required to maintain records of this certification. FinCEN explicitly reaffirmed that all other anti-money laundering obligations and financial crime requirements under the Bank Secrecy Act remain fully in effect, including suspicious‑activity monitoring, risk‑based due‑diligence procedures and internal controls. FinCEN noted that the updated approach aligns more closely with a risk‑based framework while still ensuring that institutions maintain accurate, reliable beneficial‑ownership information and remain vigilant against financial‑crime risks.

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FINRA Gifts Rule Increased To $300. On February 12, 2026, the SEC approved and FINRA adopted amendments to FINRA Rule 3220, raising the annual per‑recipient gift limit from $100 to $300 and codifying long‑standing guidance regarding the treatment of gifts and business entertainment. The amendments, which were first proposed by FINRA on May 29, 2025, clarify that while gifts incidental to a business‑entertainment event count toward the $300 limit, the entertainment event itself remains outside the valuation, and ordinary business entertainment, such as meals, sporting events or theater outings, continues to be permissible so long as it is not so frequent or extensive as to raise concerns about propriety. The revised rule also incorporates prior FINRA interpretations and creates a formal exemptive‑relief mechanism, while expressly identifying several categories of exempt gifts, including de minimis items, nominal promotional items with firm logos, deal toys, personal gifts for infrequent life events paid personally by the giver, bereavement gifts and certain disaster‑related donations. These amendments modernize the gift framework, provide clearer compliance parameters and require firms to update supervisory procedures, tracking systems and training programs to align with the new $300 limit and codified exemptions. The amended FINRA Rule 3220 became effective on March 30, 2026.

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SEC Chairperson Testifies that the SEC is Open for Certain Additional Money Market Fund Reforms. On February 11, 2026, the SEC Chairperson testified before the U.S. House of Representatives Financial Services Committee in respect of the mandatory redemption fee required under the SEC’s 2023 money market fund reforms that “[a]ll these things are open” and

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“[y]es, we’re looking at all of these things.” In response to a letter from a member of the Financial Services Committee, the SEC Chairperson indicated that the SEC Staff is working with the fund industry on provisions in Rule 2a-7 under the 1940 Act that require liquidity fees on institutional prime and institutional municipal (tax-exempt) money market funds when they reach a certain threshold of investor redemptions. Federated Hermes previously submitted letters to the SEC Chairperson on April 28, 2025 and July 11, 2025, in which Federated Hermes expressed its view that the SEC’s adoption of the 2023 amendments to Rule 2a-7 under the 1940 Act related to the mandatory liquidity fee framework for institutional prime and institutional municipal (tax-exempt) money market funds violated the Administrative Procedures Act and should be repealed. Federated Hermes believes this violation stems from the SEC’s failure to conduct a proper cost-benefit analysis, the establishment of an arbitrary threshold for mandatory liquidity fees, the absence of an analysis of less restrictive alternatives, and the lack of adequate notice and opportunity for public comment.

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SEC FAQs on Net Performance and Promotor Disqualification. On January 15, 2026, the SEC published two new FAQs aimed at addressing challenges faced by investment advisors complying with Rule 206(4)-1 under the Advisers Act (Marketing Rule). The Marketing Rule permits investment advisors to calculate net performance applying either actual or model fees. Despite this apparent flexibility in the rule, footnote 590 of the Marketing Rule Adopting Release states that if the fees charged to the intended audience of an advertisement are anticipated to be higher than the actual fees used to calculate net performance, the investment advisor “must use a model fee that reflects the anticipated fee to be charged in order not to violate the rule’s general prohibitions.” The new FAQ clarifies that the guidance in footnote 590 should be interpreted through the lens of the Marketing Rule’s general prohibitions, which are intended to “provide appropriate flexibility and regulatory certainty for investment advisors considering how to market their investment advisory services” and “[i]n applying the general prohibitions, an investment advisor should consider the facts and circumstances of each advertisement.” In the SEC Staff’s view, whether the use of actual fees violates the general prohibitions depends on all the facts and circumstances of a specific advertisement, including, but not limited to, relevant disclosures. The SEC Staff’s view is that investment advisors can use various means to illustrate the effect of differences between actual fees and anticipated fees on performance. This guidance provides welcome relief for investment advisors that have struggled to apply the prescriptive language in footnote 590 to various forms of investment performance. The second FAQ provides guidance on circumstances in which investment advisors can engage certain persons to provide testimonials or endorsements.

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SEC Chairperson Issues Statement on Reforming Regulation S-K. On January 13, 2026, the Chairperson of the SEC stated that: “[t]oday, the disclosure that companies provide in response to the myriad requirements of Regulation S-K does not always reflect information that a reasonable investor would consider important in making an investment or voting decision.” Towards the goal of eliminating requirements to disclose “undisputably immaterial information,” the Chairperson has instructed the SEC’s Division of Corporation Finance to undertake a comprehensive review of Regulation S-K. He noted that this process began in May 2025, with the solicitation of public comments on the executive compensation disclosure requirements of Regulation S-K, Item 402. The SEC Staff is evaluating the comments received with respect to Item 402 of Regulation S-K and is preparing revision recommendations. The SEC will now focus on the other Regulation S-K disclosure requirements “with the goal of revising the requirements to focus on eliciting disclosure of material information and avoid compelling the disclosure of immaterial information.” As part of this effort, the SEC requested that public comments be submitted by April 13, 2026. Federated Hermes submitted a comment letter expressing, among other comments, its support for modernizing Regulation S-K to ensure that registrants provide clear, decision-useful and material disclosures while avoiding unnecessary reporting burdens.

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managers and investment offerings; (7) EU and U.K. sustainability reporting requirements for corporations and (8) the EU Savings and Investments Union (SIU) and Retail Investment Strategy (RIS).

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U.K. FCA and EU ESMA Regulatory Priorities. In the U.K., the FCA has replaced its practice of issuing ‘portfolio letters’ with annual Regulatory Priorities reports for different sectors. The first such reports were published in February and March of 2026. The 2026 Regulatory Priorities for the consumer investments sector include: (1) building a stronger investment culture; (2) strengthening trust by working with firms to ensure strong governance, robust risk systems and responsible innovation; (3) customer outcomes and (4) strengthening financial crime controls. The 2026 Regulatory Priorities for wholesale buy side firms include seeking to ensure firms deliver good outcomes to customers, and evolving regulations to foster growth and innovation and serve changing customer needs. On March 26, 2026, the FCA published its annual work program for 2026/27, marking the second year of its five-year strategy to "deepen trust, rebalance risk, support growth and improve lives.” Key themes are the FCA’s continued commitment to becoming a more efficient and proportionate regulator while supporting U.K. economic growth and competitiveness.

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In the EU, ESMA published its 2027 to 2029 programming document on January 29, 2026. The strategic priorities identified by ESMA include: (1) fostering effective markets and financial stability; (2) strengthening supervision of EU financial markets and (3) enhancing the protection of retail investors. ESMA also identified enabling sustainable finance and facilitating technological innovation and the effective use of data as key thematic drivers. ESMA indicates that further planned policy actions will consider and be aligned with the ongoing legislative initiatives regarding the SIU and continuing work on changes to simplify the reporting burden under the Corporate Sustainability Reporting Directive (CSRD) (which sets out sustainability reporting requirements for certain EU and non-EU entities), the Corporate Sustainability Due Diligence Directive (CSDDD) (which imposes a due diligence duty on certain large EU/non-EU companies to address adverse human rights and environmental impacts in their own operations, their subsidiaries and their supply chains) (known as the Omnibus I package).

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U.K. and EU Anti-Money Laundering (AML) Requirements. The AML regulations in the U.K. and EU continue to be reviewed and developed. In the U.K., on March 26, 2026, HM Treasury published a draft regulation proposing amendments to the Money Laundering Regulations 2017. The draft regulations propose various amendments including changes to the customer due diligence and enhanced due diligence requirements regarding crypto asset businesses and unusually complex or large transactions, high-risk jurisdictions and pooled client accounts. In the EU, on February 9, 2026, the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) published three consultation papers addressing: (1) penalty measures for AML breaches; (2) customer due diligence and harmonizing its application across the EU and (3) the criteria for identifying business relationships, occasional and linked transactions, as well as lower thresholds.

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On April 7, 2025, FHL acquired a majority (60%) equity interest in Rivington, a U.K.-based renewable energy project development business. See Note (4) to the Consolidated Financial Statements for additional information.

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Federated Hermes continued its regulatory engagement efforts in the third quarter 2025. On July 9, 2025, Federated Hermes met in person with the SEC Chairperson, certain other SEC Commissioners and certain SEC staff members. After these meetings, on July 11, 2025, Federated Hermes submitted a letter to the SEC Chairperson regarding various topics discussed during the meetings, including, among others: (1) the elimination or modification of the mandatory liquidity fee requirement under amended Rule 2a-7 under the 1940 Act; (2) the amendment of New York Stock Exchange Rule 452(e) to allow broker-dealers greater discretion to vote proxies on behalf of their customers for purposes of achieving quorum for mutual fund shareholder meetings; (3) lowering quorum requirements under the 1940 Act for mutual fund shareholder meetings; (4) eliminating tailored shareholder reports based on a lack of utility, and, if not eliminated completely, eliminating the requirement to prepare tailored shareholder reports on a class-by-class basis, which increases operational and shareholder costs; (5) eliminating the requirement under the amended Names Rule for a mutual fund to sell portfolio securities within 90 days of falling out of compliance with the 80% threshold under the amended Names Rule; and (6) allowing electronic delivery

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of required regulatory documents to shareholders as the default option for delivery, unless a shareholder affirmatively elects to receive mailed copies of such documents.

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SEC Regulatory Flexibility Agenda. On September 4, 2025, the SEC published its Spring 2025 Regulatory Flexibility Agenda (SEC Spring 2025 Reg Flex Agenda). The SEC Spring 2025 Reg Flex Agenda focuses on deregulation and simplification of disclosure requirements to facilitate capital formation and reduce compliance burdens consistent with investor protection, and modernization to address marketplace challenges, including implementing a market-driven crypto oversight regime. Absent from the SEC Spring 2025 Reg Flex Agenda are various governance, environmental and social framework-related proposals, such as board diversity, disclosure of governance, environmental and social-related investment practices and human capital management disclosure. The SEC Spring 2025 Reg Flex Agenda identified 23 short-term agenda items, including 18 proposed rules and three final rules, and represents a significant shift in the SEC’s priorities following the change in Presidential Administration with direct implications for the asset management industry. For example, the SEC Spring 2025 Reg Flex Agenda carries over only four items from the SEC Fall 2024 Regulatory Flexibility Agenda, including final or proposed rules related to foreign private issuer eligibility, amendments to the Rule 144 safe harbor, Financial Data Transparency Act joint data standards and customer identification programs for registered investment advisors and exempt reporting advisors. Other proposed rulemaking initiatives in the SEC Spring 2025 Reg Flex Agenda relating to the asset management industry include, among others: (1) amendments to the Rule 17a-7 under the 1940 Act (the cross trading rule); (2) amendments to the custody rules under the Advisers Act and the 1940 Act; (3) amendments aimed at reducing disclosure burdens, such as amending Form N-PORT to address portfolio information disclosures; (4) a broad initiative to update the exempt offering pathways to facilitate private investment; and (5) certain crypto market structure amendments. Each of these proposals is categorized in the SEC Spring 2025 Reg Flex Agenda as a “deregulatory” rulemaking, in accordance with President’s Executive Order 14192 “Unleashing Prosperity Through Deregulation.”

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SEC Enforcement Trends Under the New Presidential Administration. It has been reported that during the first six months of the new Presidential Administration, only 56 SEC enforcement actions have been initiated, which represents an approximate 40% reduction from the 94 SEC enforcement actions that were initiated during the first six months of the prior Presidential Administration. It also has been reported that only 11 administrative actions have been publicly announced by the new Presidential Administration, compared to 55 such announcements during the first six months ofthe prior Presidential Administration. Many of the new enforcement actions have involved areas such as insider trading, market manipulation and offering fraud, which is consistent with the SEC Chairperson’s public statements that “[p]olicymaking will be done through notice and comment rulemaking, not through regulation-by-enforcement” and that the SEC’s enforcement focus will be on protecting investors from market fraud and manipulation.

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SEC Extends Compliance Date for Disclosure of Order Execution Information. On September 30, 2025, the SEC extended the compliance date for the amendments to Rule 605 of Regulation NMS from December 14, 2025 to August 1, 2026. On March 6, 2024, the SEC adopted amendments to the disclosure requirements of Rule 605 of Regulation NMS for executions on covered orders in national market system stocks, whichare stocks listed on a national securities exchange. The adopted rule amendments expand the scope of entities subject to Rule 605, modify thecategorization and content of order information reported under the rule and require reporting entities to produce a summary report of execution quality. The amendments expand the scope of reporting entities subject to Rule 605 to include broker-dealers who introduce or carry 100,000 or more customer accounts. The amendments also specify that broker-dealers operating single dealer platforms must prepare a separate report for activity specific to these platforms.

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SEC Issues Concept Release on Residential Mortgage-Backed Securities (RMBS) Disclosure and Enhancements to Asset-Backed Securities (ABS) Registration. On September 29, 2025, the SEC issued a concept release soliciting public comment on potential changes to its rules governing ABS, with particular focus on RMBS. RMBS and ABS play an important role in the U.S. capital markets and the U.S. economy, allowing companies and financial institutions to access lower-cost capital to make loans to borrowers and finance operations. In 2004, the SEC established a comprehensive registration, disclosure and ongoing reporting regulatory framework for RMBS and ABS offerings, with subsequent amendments in 2014. The SEC’s action is in response to the fact that there have been no registered RMBS offerings since the adoption of Regulation AB II in 2014, with all activity instead occurring in the registration-exempt private market, largely pursuant to Rule 144A under the 1933 Act. The concept release examines, and requests public comment on, any steps needed to facilitate more public RMBS offerings and increase liquidity in the public RMBS market, which could potentially lead to benefits for the U.S. housing

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SEC Approves Generic Listing Standards for Commodity-Based Trust Shares. On September 17, 2025, the SEC approved proposed rule changes by three national securities exchanges to adopt generic listing standards for exchange-traded products (ETPs) that hold spot commodities, including those that hold digital assets such as crypto assets. As a result, the exchanges may list and trade commodity-based trust shares, which are a type of ETP that allows investors to invest in commodities, that meet the requirements of the approved generic listing standards. This approval will allow national securities exchanges to list and trade qualifying ETPs holding spot commodities without requiring each product to undergo the previously mandatory, individualized SEC rule filing process under Section 19(b) of the 1934 Act. As a result, exchanges such as NYSE Arca, Nasdaq and Cboe BZX can now bring eligible commodity- and crypto-based ETPs to market more quickly. The approval signals a shift toward a more streamlined, transparent and efficient rules-based listing process that offers both clarity and opportunity for market participants.

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The approved rule changes follow the SEC’s Division of Corporate Finance issuing guidance, on July 1, 2025, on the application of certain federal securities law disclosure requirements to offeringsof crypto asset ETPs. The guidance represented a dramatic shift in how the SEC regulates the cryptocurrency sector.

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Extension of Compliance Date for Form PF; Reporting Requirements. On September 17, 2025, the Commodity Futures Trading Commission (CFTC) and SEC further extended the compliance datefor the amendments to Form PF that were adopted on February 8, 2024, from October 1, 2025 to October 1, 2026. Form PF is the confidential reporting form for certain SEC-registered investment advisors to private funds, including those that also are registered with the CFTC as a commodity pool operator or a commodity trading advisor.

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SEC No-Action Letter on Exxon’s Auto-Proxy Voting Program for Retail Investors. On September 15, 2025, the SEC staff issued a no-action letter stating that the SEC staff would not recommend enforcement action against Exxon Mobil Corporation for implementing an auto-voting program for its retail shareholders, subject to certain conditions. The proposed retail shareholder voting program would allow Exxon’s non-institutional investors to opt in to have their ballots automatically cast as recommended by the board of directors for proposals to be voted on at shareholder meetings, with the election to apply either to all matters or to all matters other than contested director elections and mergers and acquisitions. Under the program, shareholders are entitled at any time to override the standing election and vote their own shares or otherwise opt out of the program entirely. While the use of auto-voting in this manner has not been considered by courts, the SEC’s no-action relief may encourage other companies to try to utilize auto-voting to increase their retail investor turnout. Asset management industry participants are discussing with the SEC staff the ability to obtain similar SEC no-action relief that may be relied upon by open-end and closed-end investment companies, including exchange-traded funds (ETFs).

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SEC Investment Advisory Committee (IAC) Signals Support for Expanded Retail Access to Private Markets. On September 11, 2025, the SEC’s IAC issued a draft joint report titled Retail Investor Access to Private Market Assets, which supported reform of the eligibility criteria for investors in private offerings and reform of the regulatory framework applicable to pooled investment funds. The report recognized the increasing size and importance of private markets while emphasizing the need for enhanced investor protections if retail access to these markets expands. On September 18, 2025, the IAC met and adopted recommendations concerning the regulatory framework that should govern retail investors’ access to private market assets. The report recommended that registered funds are the best way for retail investors to obtain such access because registered funds (i) “were developed specifically for retail use” and (ii) offer numerous protections not found in non-public offerings, such as SEC review, audited financial statement requirements, professional fund management and other protections found in the 1940 Act. The report also made several recommendations intended to enhance the ability of registered funds to invest in private market assets and better protect retail investors who invest insuch registered funds. The IAC also recommended that the SEC open a request for comment process to obtain additional input on how to best expand retail investments in private markets, as many of the recommendations would require SEC rulemaking.

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SEC Adopts Amendments Regarding Broker-Dealer FOCUS Reports. On September 8, 2025, the SEC amended the Financial and Operational Combined Uniform Single Report, SEC Form X-17A-5 (FOCUS Report), to harmonize it with other rules, make technical corrections and provide clarifications. FOCUS Reports are filed by broker-dealers and are intended to ensure transparency regarding a broker-dealer’s financial condition, ensure financial accountability through compliance with capital requirements, support regulatory oversight, facilitate audits and examinations of broker-dealers, and protect investors. Among other things, the SEC also: (1) permitted the use of electronic signatures; (2) amended its rules to require the information currently contained in Form 19b-4(e), which is used by self-regulatory organizations (SROs) to notify the SEC about the listing and trading of a new derivative securities product, to be publicly posted on the SRO’s website and remove the

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manual signature requirements for SRO proposed rule change filings; (3) required that clearing agencies post supplemental material to their websites; and (4) amended its rules under the 1934 Act and 1933 Act torequire the electronic filing or submission, using structured data where appropriate, of certain other forms, reports and notices provided by broker-dealers, security-based swap dealers and major security-based swap participants.

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Federal Trade Commission (FTC) Ends Defense of its Noncompete Ban and Announces Enforcement Initiatives. On September 5, 2025, the FTC announced that it would no longer defend the rule it previously issued in May 2024 that would have banned most noncompete agreements. In doing so, the FTC effectively withdrew the rule, which had been blocked from taking effect through a nationwide injunction issued by the U.S. District Court for the Northern District of Texas. As a result, the legality of noncompete agreements at the federal level will now be governed by application of the law in effect prior to the promulgation of the rule and will be enforced on a case-by-case basis. The FTC has indicated that, while ending its defense of the rule, it remains committed to using its enforcement authority to crack down onnoncompete agreements that it views as anticompetitive, especially those targeting lower-wage or nonexecutive employees. To this end, on September 4, 2025, the FTC ordered the largest pet cremation company in the U.S. to stop enforcing noncompete agreements with nearly 1,800 employees, concluding that they unfairly restricted worker mobility and reduced competition in the labor market.

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Fifth Circuit Court of Appeals Requires Reconsideration of the SEC’s Securities Lending and Short-Sale Rules. On August 25, 2025, the U.S. Court of Appeals for the Fifth Circuit remanded the SEC’s Reporting of Securities Loans rule (Securities Lending Rule) and Short Position and Short Activity Reporting by Institutional Investment Managers rule (Short Sale Rule) to the SEC to allow the SEC to consider and quantify the cumulative economic impact of the rules. In doing so, the court concluded that the SEC acted arbitrarily and capriciously when it did not consider the economic impact of the Short Sale Rule when adopting the Securities Lending Rule. The decision gives the SEC the opportunity to consider both rules and possibly rescind one or both.

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Democratizing Access to Alternative Assets for 401(k) Investors. On August 7, 2025, the President issued an Executive Order, Democratizing Access to Alternative Assets for 401(k) Investors (EO), encouraging the inclusion of alternative assets in 401(k) and other defined contribution plans. The EO states as the current Presidential Administration’s policy “that every American preparing for retirement should have access to funds that include investments in alternative assets when the relevant plan fiduciary determines that such access provides an appropriate opportunity for plan participants and beneficiaries to enhance the net risk-adjusted returns on their retirement assets.” The EO directs the DOL within 180 days to: (1) reexamine prior DOL guidance on a fiduciary’s duties in connection with including alternative asset investments in asset allocation funds, including considering whether to rescind prior DOL guidance that could be read to limit certain investments in private equity by ERISA-covered individual account plans (such as 401(k) plans); (2) clarify its position both on alternative assets and on the appropriate fiduciary process for offering as plan investment options asset allocation funds which include alternative assets; and (3) consulting, as appropriate, with other regulators, such as the U.S. Department of Treasury and the SEC, to determine whether any other regulatory changes are needed to carry out the EO’s policy objectives. On August 15, 2025, the DOL’s Employee Benefits Security Administration rescinded a December 21, 2021, supplemental statement that discouraged fiduciaries from considering alternative assets in 401(k) retirement plan investment menus. On September 23, 2025, the DOL issued DOL Advisory Opinion 2025-04A allowing an investment manager to include a fixed allocation portfolio investment option as the qualified default investment option in participant-directed defined contribution plans. In an accompanying press release, the DOL stated that the DOL is “continuing to take swift steps to implement [the President’s] Executive Order” and that the DOL “intends to issue a notice of proposed rulemaking that clarifies the duties that a fiduciary owes to plan participants under ERISA when deciding to make available an asset allocation fund that includes investments in alternative assets, including potential safe harbors.” The EO also directs the SEC to facilitate access to alternative assets for participant-directed defined contribution plans by revising applicable SEC regulations and guidance, specifically referencing regulations and guidance related to accredited investor and qualified purchaser status.

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U.S. District Court for the Western District of Texas Enjoins Texas Senate Bill 2337. On August 29, 2025, the U.S. District Court for the Western District of Texas enjoined the September 1, 2025 effective date for Texas Senate Bill 2337 (SB 2337), which was signed by Texas’ governor on June 20, 2025, with respect to two large proxy advisory firms. Texas SB 2337 was enacted to regulate proxy advisory firms that provide recommendations involving governance, environmental and social factors or diversity, equity and inclusion factors. The court enjoined the effectiveness of Texas SB 2337 on the basis that the law violates the First Amendment of the U.S. Constitution by compelling speech and discriminating based on viewpoint, is

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preempted by ERISA, which governs fiduciary duties to retirement plans and is void for vagueness, making compliance unclear and legally risky. A trial has been scheduled for February 2, 2026.

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Letter from 17 Democratic State and Local Financial Officers. On August 15, 2025, 17 state and local Democratic financial officers sent a letter to at least eight large asset managers criticizing a letter dated July 29, 2025 (discussed below) previously sent to them by 26 Republican state financial officers. The August 15 letter expressed the views that the July 29 letter misrepresented the true meaning of fiduciary duty and would require asset managers to take a passive approach to oversight while ignoring the nature of long-term value creation in modern capital markets, and that fiduciary duty calls for active oversight, responsible governance and the full exercise of ownership rights on behalf of workers and retirees. The August 15 letter further stated: “Fiduciary duty, as properly understood, requires—not prohibits—investor consideration of material risks and long-horizon opportunities.” The August 15 letter urged asset managers “to focus on empowering institutional investors and uphold an approach to fiduciary duty grounded in transparency, accountability, and long-term value creation,” and invited them to reaffirm their commitment to responsible stewardship and build a constructive dialogue around this topic.

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Texas v. Blackrock. On August 1, 2025, the U.S. District Court for the Eastern District of Texas largely denied motions to dismiss in a case brought by a Texas-led coalition of state attorneys general against three asset managers for allegedly conspiring to reduce coal output. In this case, Texas and 10 other state attorneys general accused three asset managers of pressuring coal companies to reduce output because of alleged commitments to two climate change initiatives: the Net Zero Asset Managers (NZAM) initiative and Climate Action 100+ (CA100). In largely denying defendants’ motions to dismiss, the court concluded that the states had stated a claim under Section 7 of the Clayton Antitrust Act of 1914 and Section 1 of the Sherman Act and certain state laws. The court’s opinion is significant because of the effect it may have on ordinary investors that hold shares in competing firms and the implications it has for members of climate initiatives. A major point of contention among the parties was whether Section 7’s “investment only” safe harbor would immunize the asset managers for the ordinary activities of institutional investors, such as voting on governance matters. The court reasoned that merely casting proxy votes on governance matters should remain free from Section 7 scrutiny, but in this case, concluded the states had plausibly alleged that the asset managers had substantially lessened competition by joining climate initiatives where investors committed their assets to climate-based goals that naturally lead to decreased coal output, made public statements consistent with those goals, and proxy-voted or otherwise engaged with the coal companies to achieve those goals. The court concluded that those types of activities do not represent “typical asset manager behavior.”

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Letter from 26 Republican State Financial Officers. On July 29, 2025, a letter signed by 26 Republican state financial officers was sent to at least eight large asset managers to express their concern about the erosion of traditional fiduciary duty in American capital markets and criticize governance, environmental and social investment and engagement practices. In the letter, the asset managers were urged to: (1) stop framing speculative future risks (e.g., climate change) as justification for immediate corporate interventions; (2) avoid using passive investment vehicles (like index funds) for activist proxy voting or corporate engagement; (3) refrain from incorporating net-zero commitments, natural capital frameworks or EU sustainability directives into default investment strategies; and (4) disclose governance, environmental and social-related memberships and align proxy voting strictly with shareholder value. The letter reflected broader Republican-led efforts to push back against governance, environmental and social investing, including investigations and legislation in Republican states.

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Florida AG Investigation. On July 28, 2025, the Florida Attorney General announced an investigation into two prominent climate disclosure organizations—the Climate Disclosure Project (CDP) and the Science Based Targets initiative (SBTi)—for potential violations of state antitrust and consumer protection laws. The Florida Attorney General announced that Florida is scrutinizing whether these organizations “coerc[ed] companies into disclosing proprietary data and paying for access under the guise of environmental transparency.”

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These developments continue a broader trend of intensified legal and political scrutiny of governance, environmental and social frameworks, investing and engagement.

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SEC Permits In-Kind Creations and Redemptions for Crypto ETPs. On July 29, 2025, the SEC approved exemptive orders to permit in-kind creations and redemptions by authorized participants for crypto-asset ETP shares. The orders reflected a departure from other recent SEC approved spot bitcoin and ether ETPs, which were limited to creations and redemptions on an in-cash basis. Under these July 29 orders, bitcoin and ether ETPs, consistent with other commodity-based ETPs approved by the SEC, are permitted to create and redeem shares on an in-kind basis. The SEC also approved other exemptive orders that advance a merit-neutral approach to crypto-based products, including exchange applications seeking to list and trade an ETP that would hold mixed spot bitcoin and spot ether, options on certain spot bitcoin ETPs, Flexible Exchange (FLEX) options on shares of certain BTC-based ETPs, and an increase of position limits up to the generic limits for options (up to 250,000 contracts) for listed options on certain bitcoin ETPs. The SEC also solicited comments in support of, or in opposition to, the

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SEC Division of Trading and Market’s approval, pursuant to delegated authority, of a national securities exchange’s proposals to list and trade two large-cap crypto-based ETPs.

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SEC Extends Date for Covered Securities Loan Reporting. On July 28, 2025, the SEC published an order postponing the initial reporting date of Rule 10c-1a under the 1934 Act (Rule 10c-1a), which would, for the first time, require persons entering into covered securities loans (or their intermediary or reporting agent, where applicable) to report specific terms of the loan to FINRA’s Securities Lending and Transparency Engine on the same day the loan is either effected or modified. FINRA had formally requested such an extension from the SEC on April 29, 2025. The initial reporting date for Rule 10c-1a, originally set for January 2, 2026, is now delayed until September 28, 2026. Additionally, the date on which FINRA would begin its public dissemination of covered securities loan information has been extended from April 2, 2026 to March 29, 2027.

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SEC No-Action Letter Regarding ETFs with Foreign Holdings. On July 22, 2025, the SEC staff issued a no-action letter that provides that broker-dealers acting as authorized participants for ETFs holding foreign securities do not have to take a net capital charge under Rule 15c3-1 under the 1934 Act, subject to the following conditions being satisfied: (1) for an ETF creation transaction, the broker-dealer must receive the return of its collateral by the fourth business day after the day on which the broker-dealer initially delivered the collateral in respect of the ETF portfolio securities; (2) for an ETF redemption transaction, the broker-dealer must receive both the ETF portfolio securities and the return of its collateral by the fourth business day after the day on which the broker-dealer initially delivered the collateral in respect of the ETF shares; (3) during any ETF creation or redemption transaction and until completion of the transaction, the ETF’s U.S. bank custodian must continue to hold any collateral of the broker-dealer; and (4) the amount of the unsecured receivable does not exceed (a) 10% of the broker-dealer’s tentative net capital with respect to any single ETF creation or redemption transaction and (b) 25% of the broker-dealer’s tentative net capital in the aggregate across all ETF creation and redemption transactions. This no-action letter permits broker-dealers in these circumstances to avoid deducting these receivables from their net capital, thereby removing an impediment to broker-dealers participating as authorized participants in the market for ETFs with foreign holdings.

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Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) Enacted. On July 18, 2025, the President signed the GENIUS Act into law with the stated intentions of prioritizing consumer protection, strengthening the U.S. dollar and bolstering national security to make the U.S. a leader in digital assets and spur innovation. The GENIUS Act purports to protect consumers from bad actors in financial markets. It creates a U.S. federal regulatory system for stablecoins, which are a type of cryptocurrency designed to maintain a stable value by being tied to a reserve asset, most commonly the U.S. dollar. It endeavors to ensure the stability of stablecoins and consumer trust by requiring stablecoin issuers to: (1) maintain 100% liquid asset reserves like U.S. dollars or short-term U.S. Treasuries to back their stablecoins; (2) make monthly, public disclosures of the composition of reserves; (3) comply with strict marketing rules to protect consumers from deceptive practices, such as making misleading claims that their stablecoins are backed by the U.S. government, federally insured, or legal tender; (4) establish anti-money laundering and sanctions compliance programs with risk assessments, sanctions list verification and customer identification; and (5) establish the technical capability to seize, freeze and burn payment stablecoins when legally required to do so. It purports to improve the Treasury Department’s ability to combat illicit stablecoin activities by enhancing its sanctions evasion and money laundering enforcement capabilities. It also provides that, in the event of an insolvency of a stablecoin issuer, the claims of stablecoin holders are to be given priority over all other creditors. While the GENIUS Act seeks to drive growth in the stablecoin market, the GENIUS Act also creates a new opportunity for money market mutual funds that meet its criteria for use as liquid reserves to back stablecoins. It also has the potential to accelerate the tokenization of money market mutual funds, including those created for use as reserves to back stablecoins. Like other investment management industry participants, Federated Hermes is establishing a GENIUS Act-compliant money market mutual fund that will be eligible to be used to meet the GENIUS Act liquid reserves requirements, and is undertaking various initiatives involving offering and/or managing tokenized offerings.

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SEC Stops Defense of its 2016 Liquidity Rule. On July 11, 2025, the SEC filed a joint stipulation to dismiss with prejudice its case against an investment advisor, two of its officers and two independent trustees of a mutual fund advised by the investment advisor in which the SEC had alleged that the investment advisor violated Rule 22e-4 under the 1940 Act (“SEC Liquidity Rule”), which limits mutual funds from holding more than 15% of net assets in illiquid investments. The investment advisor allegedly failed to present a plan to reduce illiquid holdings and did not make required filings. It has been reported that the case was significantly impacted by the 2024 U.S. Supreme Court decision in Loper Bright Enterprises v. Raimondo, which overturned prior case law that gave deference to agency determinations or regulations and allows courts to independently interpret agency rules, weakening the SEC’s position. The dismissal can be viewed as a setback for the SEC’s regulatory authority, especially in enforcing newer rules like the Liquidity Rule, and is an example of the broader impact of the Loper Bright decision on federal agency enforcement actions.

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D.C. Circuit Court Limits SEC Regulatory Reach Over Proxy Advisory Firms. In July 2020, the SEC adopted amendments to its rules governing proxy solicitations. In addition to addressing changes to the procedure for submitting shareholder proposals, the amendments codified the SEC's interpretation that proxy voting advice generally constitutes a solicitation within the meaning of the proxy rules under the 1934 Act. The 2020 amendments meant that proxy advisory firms had to file their proxy recommendations with the SEC as proxy solicitations, unless the firm: (1) disclosed conflicts of interest and steps taken to address such conflicts; and (2) adopted procedures to make their proxy advice available to the companies that are the target of that advice at least by the time the advice is disseminated to the proxy voting firm’s clients and established a mechanism to inform clients of the company’s response to the proxy advisory firm’s advice before the applicable shareholder meeting (“notice and awareness conditions”). Institutional Shareholder Service, Inc. (ISS), a proxy advisory firm, challenged the SEC’s interpretation of the term “solicit” under Section 14(a) of the 1934 Act. On July 1, 2025, the U.S. Court of Appeals for the D.C. Circuit affirmed the district court’s grant of summary judgment to ISS, finding that the SEC’s expanded definition of “solicit” and “solicitation” went beyond the meaning contemplated by Congress in enacting Section 14(a) of the 1934 Act. Specifically, the court stated that contemporaneous dictionaries suggest that “to solicit” and “solicitation” entail seeking to persuade another to take a specific action. The court stated that, while it may be reasonable to say that a client (i.e., institutional investor) “solicits” a proxy advisory firm’s recommendation on how to vote, when the proxy advisory firm provides that recommendation, it has not “solicited” the client’s vote.

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Non-U.S. regulatory matters addressed in Federated Hermes’ 2024 Annual Report and First and Second Quarter 2025 Form 10-Qs included, among others: (1) the FCA’s consultation on consumer composite investments (CCI) and the disclosure requirements for CCIs; (2) money market fund reform in the U.K. and EU; (3) FSB and IOSCO reforms to address liquidity risk management requirements; (4) U.K. and EU changes to rules on how asset managers may pay for investment research; (5) EU and U.K. sustainability requirements for asset managers and investment offerings; (6) EU and U.K. sustainability requirements for corporations; (7) the EU Digital Operational Resilience Act; (8) ESMA common supervisory action on compliance and internal audit functions of EU Undertakings for the Collective Investment in Transferable Assets (UCITS) management companies and alternative investment fund (AIFs) managers (AIFMs) across the EU; (9) EU and U.K. regulation of governance, environmental and social ratings and sustainability requirements; (10) the transition to the T+1 settlement in the EU and the U.K.; (11) the U.K.’s digital securities sandbox; and (12) the U.K.’s digital gilt instrument.

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U.K. Overseas Funds Regime (OFR). The OFR sets the framework for marketing overseas investment funds to U.K. retail investors, as well as the marketing of overseas money market funds in the U.K. (whether to retail or non-retail investors). Following finalization of FCA rules pertaining to the OFR, on September 30, 2024, the FCA opened its ‘OFR gateway’ to EU UCITS to allow them to apply for OFR recognition. Starting July 1, 2025, Federated Hermes was eligible to apply for recognition under OFR. Following recognition in September 2025, the Federated Hermes’ Irish UCITS Funds that are eligible to be recognized under the OFR have now successfully transitioned to the U.K. OFR.

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U.K. Consumer Duty Requirements. The Consumer Duty refers to particular rules previously made by the FCA setting standards of consumer protection across regulated financial services. On September 29, 2025, the FCA announced its intention to consider streamlining the application of the Consumer Duty to firms primarily engaged in wholesale activity. The FCA plans to, among other things, provide further guidance on how the Consumer Duty should apply to firms within a distribution chain, assess whether additional exemptions are needed (e.g., for business-to-business activities), and consider removing businesses with non-U.K. customers from the scope of the Consumer Duty. Detailed proposals and consultations are scheduled to be published from the fourth quarter of 2025 through the end of 2026.

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T+1 Settlement. In relation to the EU, on June 18, 2025, the European Parliament and the Council of the EU reached political agreement on the necessary amendments to the Central Securities Depositaries Regulations to shorten the settlement cycle from T+2 to T+1. On September 17, 2025, the Council of the EU published the draft amendment legislation. The next step is for the Council to formally adopt the legislation which will subsequently be published in the Official Journal of the EU and apply effective October 11, 2027.

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EU High-Risk Third Jurisdictions under EU AML framework. The updated list of high-risk jurisdictions for the purposes of the EU anti-money laundering and counter-terrorist financing framework became effective on August 5, 2025. EU entities covered by the AML framework are required to apply enhanced due diligence in transactions involving these jurisdictions.

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U.K. Senior Managers and Certification Regime (SMCR). On July 15, 2025, the FCA published a consultation paper on measures to improve the efficiency and effectiveness of the SMCR. The SMCR refers to the rules previously made by the FCA setting standards of conduct and accountability for individuals who hold certain specified control functions at U.K. authorized firms. The consultation is Phase 1 of wider reforms to the SMCR intended to streamline processes and reduce the compliance burden on firms. The consultation focuses primarily on procedural requirements. Key proposals include, among others, streamlining the FCA approval process for the relevant control functions and providing further guidance on various aspects of the SMCR, including application of the FCA’s conduct rules. The consultation period ended on October 7, 2025. The FCA expects to finalize the Phase 1 rules in mid-2026.

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U.K. Sustainability Requirements for Corporations. While the consultation on the proposed U.K. Sustainability Reporting Standards (U.K. SRS) is ongoing, on July 15, 2025, the U.K. government stated in a response to its 2024 consultation on the U.K. green taxonomy framework that it will no longer move forward with the U.K. green taxonomy. As such, the U.K. SRS (if introduced) will not be accompanied by a U.K. specific taxonomy.

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U.K. Digital Gilt Instrument (DIGIT). On July 15, 2025, HMT published an update on the design of the DIGIT pilot to cover additional features including on-chain settlement, over-the-counter settlement and interoperability between traditional and Distributed Ledger Technology markets. On the same day, HMT published a policy paper setting out the digital strategy for the U.K.’s wholesale financial markets, which covers three broad areas: (1) market optimization, (2) market transformation and (3) market leadership.

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EU UCITS – Eligible Assets. The EU is considering changes to the requirements on the permissible investments for EU funds that are classified as UCITS. On June 26, 2025, ESMA published a final report containing ESMA’s technical advice following its review of the Eligible Assets Directive. Key proposals include: (1) applying a look-through approach to determine the eligibility of assets that UCITS may invest in with the aim to address divergent interpretations and market practices among EU member states; (2) requiring consideration of liquidity criteria when determining whether a security is an eligible transferable security; and (3) relaxing some aspects of the rule permitting up to 10% of assets to be invested in assets that do not meet the standard eligibility requirements in order to allow investment in derivatives and EU open-ended AIFs. The European Commission is considering ESMA’s technical advice and will decide whether to move forward with legislation.

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the highly regulated nature of the investment management business, management anticipates that aggregate expenditures for compliance and investment management personnel, compliance systems and technology and related professional and consulting fees can continue to increase.

Previous report — wording carried elsewhere

a result, Federated Hermes does not expect a material exposure to Pillar Two income taxes in those jurisdictions. This assessment will continue to be monitored and updated as additional guidance and/or legislation is released.

Previous report — wording carried elsewhere

Net income increased $112.7 million for the nine-month period ended September 30, 2025, as compared to the same period in 2024, primarily as a result of the changes in revenues, expenses, nonoperating income (expenses) and income taxes noted above. Diluted earnings per share for the nine-month period ended September 30, 2025 increased $1.55, as compared to the same period in 2024, primarily due to increased net income ($1.36) and a decrease in shares outstanding resulting from share repurchases ($0.19).