.

Claire Topp structures healthcare joint ventures, navigates tax-exempt organization compliance, and negotiates physician employment agreements so that health systems, nonprofits, and standards development organizations can move from regulatory uncertainty to operational reality.

Claire brings a rare trifecta of focus to her Minneapolis practice: healthcare transactions and regulatory compliance, tax-exempt organization law, and laws, procedures and governance related to standards development organizations. Where many attorneys pick one lane, Claire has spent her career building deep fluency across all three — and the clients who benefit most are those whose work sits at the intersection of business objectives and a heavily regulated environment.

On the healthcare side, Claire advises multi-hospital systems, physician groups, and advanced practice providers on joint ventures, professional services agreements, management agreements, and physician employment contracts. She has structured joint ventures between health systems and physician groups related to ambulatory surgery centers and imaging centers, helped regional health systems create cardiovascular service line institutes spanning multiple states, and represented healthcare systems in forming cancer alliances with radiation oncology groups. She also advises individual physicians — across specialties from ophthalmology and cardiology to emergency medicine and neurosurgery — on their first employment contracts out of residency or fellowship, a practice area where the stakes are personal and the regulatory landscape is unforgiving. Her work on Stark Law and Anti-Kickback Statute compliance, including fair market value support for transactions, call coverage arrangements, and acquisition strategies, reflects her command of federal fraud and abuse law.

For tax-exempt organizations, Claire advises nonprofit corporations, private foundations, and company-sponsored foundations on a wide range of matters: obtaining and maintaining Internal Revenue Service (IRS) tax-exempt status, responding to state Attorney General civil investigative demands, structuring cause-related marketing and fundraising counsel relationships across all 50 states, designing scholarship and disaster relief programs and formation of for profit subsidiaries. She has successfully reversed IRS denials of tax-exempt status on appeal and has advised foundations affiliated with medical device companies and health plans on shared value initiatives.

Claire also serves as counsel to standards development organizations throughout the lifecycle of the standards process — from formation and governance to intellectual property rights policies, patent pools, conformance programs, and appeals.

A frequent lecturer on nonprofit governance best practices, private foundation excise taxes, Stark Law, Medicare and Medicaid fraud and abuse, and physician employment contracting, Claire translates regulatory complexity into practical guidance her clients can act on.

Select Experience

Featured Matters

  • Represented a Midwest and a Northwest hospital system to create a cardiovascular service line institute spanning both regions, structuring professional services and management services arrangements for each system's cardiovascular service line.
  • Represented numerous multi-hospital healthcare systems on joint ventures with physicians related to diagnostic imaging and ambulatory surgery centers.
  • Represented a variety of small physician practices (two to 15 physicians) across specialties including cardiology, OB-GYN, ENT, anesthesiology, and radiology on sale of practice to multi-hospital systems, creating governance structures allowing physicians to continue governing their practices as hospital employees.
  • Represented numerous healthcare systems in obtaining fair market value support for utilization reviews, call coverage, acquisitions, joint ventures, and other integration strategies.

Education

  • University of Minnesota Law School (J.D., 1992)
    • magna cum laude
    • Order of the Coif
  • University of Minnesota (B.S., 1988)
  • Carleton College (B.A., 1986)
    • cum laude

Professional Affiliations

  • Adjunct Professor, Nonprofit Law, University of Minnesota Law School, Fall Semester, 2011 to 2014, 2016 to current
  • Chair, Nonprofit Corporations Committee of the Minnesota State Bar Association, 1997 – 2003
  • Member of 2005 Public Trust Task Force of Minnesota Council on Foundations
  • Director, Charities Review Council, 2004 – 2010
  • Chair, Community Health Charities, 2010 – 2012; Director, 2004 – 2012
  • Director, NPH-USA (formerly known as Friends of the Orphans), 2004 – 2010; 2011 – 2012
  • Director, Nuestros Pequeños Hermanos International (a Virginia nonstock corporation), 2011 – 2012
  • Director, Nuestros Pequeños Hermanos y Hermana, International (a Mexican charitable organization), 2013-2025
  • Member, American Health Law Association and Minnesota State Bar Association, Health Law and Nonprofit Law Section

Bar Admissions

  • Minnesota

Accolades

  • Best Lawyers in America®, 2019-2026 (Health Care Law and Nonprofit/Charities Law)
  • Best Lawyers® Lawyer of the Year, Nonprofit/Charities Law, Minneapolis, 2019, 2021, 2024, 2026
  • Minnesota Lawyer, Legal 250, 2026
  • Minnesota Monthly, “Top Lawyers in Minnesota,” 2024-2026
  • MSBA, North Star Lawyer, 2012-2025
  • Consistently providing pro bono legal assistance to those in need through Dorsey’s Pro Bono program
  • Contributed more than 50 Diversity hours, 2023
  • Dorsey & Whitney – Scales of Justice Team Award (The World Ventilator Foundation), 2021
  • Mpls. St. Paul Magazine, "One of the Top 100 Women Lawyers in Minnesota," 2015, 2021
  • Minnesota Super Lawyers®, 2003-2020
  • Minnesota Super Lawyers® Women's Edition, 2020
  • Minnesota Law and Politics, “Rising Star”
  • Minnesota Law and Politics, "Top 100 Women Lawyers in Minnesota," 2007
  • Minnesota Physician, Leading Health Care Attorney, 2005
  • Minnesota Law and Politics, "Who's Who in Health Care Law," 2004

Select Presentations

  • Teaching ‐ University of Minnesota Law School, Fall Semester 2011‐2014 and 2017 - current; Spring Semester 2016
  • Private Funds Symposium, New York Office (September 27, 2017)
  • Threats Against Reserves and Strategies to Diversify Revenue While Protecting Tax Exempt Status, Delta Dental Plans Association Legal Meeting (September 14, 2017)
  • Navigating Legal Issues for Family and Private Foundations, Minnesota Council on Foundations (September 13, 2017)
  • Best Practices When Sitting on a Non-Profit Board, Dorsey U (August 31, 2017)
  • Social Impact Bonds, 2017 Nonprofit Law Conference – Minnesota CLE (March 14, 2017)
  • Social Impact Bonds, Dorsey’s Annual Des Moines Symposium on Public Private Partnership (October 27, 2016)
  • Navigating Legal Issues For Minnesota Foundations, Minnesota Council on Foundations (September 27, 2016)
  • Legal Update for Tax Exempt Organizations, Clifton Larson Allen Healthcare and Nonprofit Conference (May 2, 2016)
  • Pay for Success 2.0, Utah Innovation Summit (January 27, 2016)

Insights

Client Alert

Treasury and IRS’s Proposed Regulations Would Significantly Alter Racial Nondiscrimination Requirements for Tax-Exempt Private Schools, Including Colleges and Universities

September 8, 2026

On September 4, 2026, the Department of Treasury (“Treasury”) and Internal Revenue Service (“IRS”) published proposed regulations under § 1.501(c)(3)-2(b) (the “Proposed Regulations”) that, if finalized, would significantly change the existing rules on the racial nondiscrimination requirements for tax-exempt private schools. This includes the approximately 18,000 primary and secondary schools, colleges, universities, professional schools, and trade schools in the United States that currently qualify for tax-exempt status as organizations described in Sections 501(c)(3) and 170(b)(1)(A)(ii) of the Internal Revenue Code of 1986, as amended (the “Code”). The Proposed Regulations adopt an absolute rule that a private school is not operated exclusively for exempt purposes if it adopts, maintains, or enforces any policy or practice that discriminates on the basis of race, color, or national or ethnic origin in administering any educational, admissions, scholarship or loan, athletic, or other school-administered or school-supported policy or program, clarifying that discrimination “for any purpose” is disqualifying. The stated basis for the rule change is that there is a fundamental public policy of the United States against racial discrimination in education, and that schools engaging in such discrimination are not eligible for section 501(c)(3) status. The preamble to the Proposed Regulations cites various antidiscrimination laws as well as U.S. Supreme Court cases such as Bob Jones University v. United States, 461 U.S. 574 (1983) and the more recently decided Students for Fair Admissions v. President and Fellows of Harvard College, 600 U.S. 181 (2023), as demonstrating this fundamental public policy. The Proposed Regulations would apply to tax-exempt private schools in taxable years beginning after May 31, 2027. Existing Nondiscrimination Requirements The IRS’s current racial nondiscrimination requirements for private schools are described in Revenue Procedure 75-50, 1975-2 C.B. 587, as modified by Revenue Procedure 2019-22, 2019-22 I.R.B. 1260 (“Rev. Proc. 75-50, as modified”). The Revenue Procedure establishes guidelines and recordkeeping requirements for private schools to ensure they have and operate under a “racially nondiscriminatory policy as to students.” Under Rev. Proc. 75-50, as modified, a “racially nondiscriminatory policy as to students” means: the school admits the students of any race to all the rights, privileges, programs, and activities generally accorded or made available to students at that school and that the school does not discriminate on the basis of race in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs. Section 3.02 of Rev. Proc. 75-50, as modified, clarifies that “discrimination on the basis of race” includes discrimination on the basis of color and national or ethnic origin. In addition, if a school selects students on the basis of membership in a religious denomination or unit, the school will not be deemed to have a discriminatory policy as long as membership in the denomination or unit is open to all on a racially nondiscriminatory basis. Most notably, Rev. Proc. 75-50, as modified, allows favoring minority groups to promote nondiscrimination. The second sentence of section 3.02 provides: A policy of a school that favors racial minority groups with respect to admissions, facilities and programs, and financial assistance will not constitute discrimination on the basis of race when the purpose and effect is to promote the establishment and maintenance of that school’s racially nondiscriminatory policy as to students. To this end, the third sentence of section 4.05 of Rev. Proc. 75-50, as modified, states that scholarships and loans that are made pursuant to financial assistance programs favoring members of one or more racial minority groups that are designed to promote a school’s racially nondiscriminatory policy will not adversely affect the school’s exempt status. Similarly, the fourth sentence of section 4.05 provides that financial assistance programs favoring members of one or more racial groups will not adversely affect tax-exempt status if they do not significantly derogate from the school’s racially nondiscriminatory policy. The requirements under Rev. Proc. 75-50, as modified, are currently enforced by requiring existing tax-exempt private schools to maintain certain records and information showing compliance with the requirements and to annually certify compliance in Schedule E to IRS Form 990, Return of Organization Exempt From Income Tax. New tax-exempt private schools must demonstrate fulfillment of the requirements in Schedule B to IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, to receive tax-exempt status. What’s Changed The key difference in the Proposed Regulations from the existing nondiscrimination requirements set forth in Rev. Proc. 75-50, as modified, is what actions count as “racial discrimination.” The Proposed Regulations contain an absolute rule that a private school is not operated exclusively for exempt purposes if it adopts, maintains, or enforces any policy or practice that discriminates on the basis of race, color, or national or ethnic origin in administering any educational, admissions, scholarship or loan, athletic, or other school-administered or school-supported policy or program, clarifying that discrimination “for any purpose” is disqualifying. According to the preamble, a disqualifying purpose includes race-based policies or programs with the intent to ameliorate the effects of past racial discrimination, a practice that is expressly permitted by Rev. Proc. 75-50, as modified. In addition, the Proposed Regulations would delete the allowances in Rev. Proc. 75-50, as modified, for minority-favoring policies and scholarships/loans by deleting the second sentence of section 3.02 and the third and fourth sentences of section 4.05 of Rev. Proc. 75-50, as modified, described above. Of note, the Proposed Regulations leave the exception for religious denomination intact, providing that selecting students based on religious affiliation or membership is not race discrimination if the criterion is based solely on religion and not on shared ancestry or ethnic characteristics. Further, the Proposed Regulations still permit private schools to consider characteristics such as first-generation status, individual hardship (demonstrated financial or personal struggle), family income, and geographic location. Finally, similar to Rev. Proc. 75-50, as modified, the Proposed Regulations apply to schools as described in Section 170(b)(1)(A)(ii) of the Code and not those exempt as a governmental unit or under Code Section 509(a)(2). If finalized, the standard set forth in the Proposed Regulations is intended to bind tax-exempt private schools effective for tax years after May 31, 2027. This means schools’ tax-exempt status, including eligibility for tax-exempt bonds, could be impacted as early as fiscal year 2028. What’s Still Unclear The Proposed Regulations leave many unanswered questions for tax-exempt private schools. Eliminating Prejudice and Discrimination Standard The preamble to the Proposed Regulations indicates that tax-exempt private schools may continue to take actions or adopt policies intended to eliminate prejudice and discrimination; provided that the organization achieves these purposes by means other than actions or policies that discriminate on the basis of race, color, or national or ethnic origin. This is an important carveout, since the definition of “charitable” for purposes of section 501(c)(3) of the Code includes eliminating prejudice and discrimination. See Treas. Reg. 1.501(c)(3)-1(d)(2)(ii). What’s unclear under the Proposed Regulations, however, is how the elimination of prejudice and discrimination may be accomplished by private schools given that decades of IRS rulings expressly permit practices that are now considered contrary to the Proposed Regulations. Revising Eligibility Criteria The preamble to the Proposed Regulations acknowledges that private schools may revise eligibility criteria for scholarships and loans to conform to the Proposed Regulations, including using geographic or income-based criteria in lieu of racial or ethnic criteria to accomplish substantially similar outcomes. It generally minimizes, however, the compliance costs and impacts making these changes would have on private schools, stating the Treasury Department and the IRS do not have “readily available parameters or models” to assess these things. It is therefore unclear how far private schools must go under the Proposed Regulations to revise eligibility criteria of existing programs to be considered in overall compliance with the requirements and whether there could be circumstances where the IRS would consider such changes a proxy for race-based determinations. There is also virtually no acknowledgement of the competing donor considerations in making such changes. Such considerations include, but are not limited to, laws regarding respecting donor intent such as the Uniform Prudent Management of Institutional Funds Act (UPMIFA), and donor free-speech rights under the First Amendment. State Law The preamble states that the Proposed Regulations do not have federalism implications, do not impose substantial direct compliance costs on State and local governments, and do not preempt State law within the meaning of Executive Order 13132. Nowhere in the document, however, do the Treasury Department and the IRS acknowledge that States may have antidiscrimination laws for private schools that are contrary to the Proposed Regulations or that State laws could impact the ability of private schools to revise eligibility criteria in the manner suggested by the preamble. Fundamental Public Policy The stated basis for the rule change is that there is a fundamental public policy of the United States against racial discrimination in education, and that schools engaging in such discrimination are not eligible for section 501(c)(3) status. The fundamental public policy standard stems from the U.S. Supreme Court’s decision in Bob Jones University v. United States, 461 U.S. 574 (1983) where the Court upheld the IRS’s revocation of tax-exempt status for schools that maintained racially discriminatory policies promoting racial segregation based on a fundamental public policy in the United States against such practices. Citing Students for Fair Admissions v. President and Fellows of Harvard College, 600 U.S. 181 (2023), the preamble to the Proposed Regulations states that all forms of racial discrimination in education, regardless of intent, are now against a fundamental public policy of the United States and preclude tax exemption. The question is whether the Treasury Department and the IRS have the authority to announce, through these Proposed Regulations, what a fundamental public policy of the United States is, and then use that fundamental public policy standard to make decisions on tax-exempt status. The fundamental public policy standard does not appear in Section 501(c)(3) of the Code and goes beyond the Bob Jones University decision involving the practice of racial segregation. The use of this standard to deny tax-exempt status also potentially raises First Amendment concerns, a discussion of which is beyond the scope of this update. Enforcement Neither the Proposed Regulations, nor the preamble to the Proposed Regulations address how the IRS intends to enforce the requirements under the Proposed Regulations. Presumably, tax-exempt private schools would continue to be required to show compliance on IRS Form 1023 and Schedule E to Form 990. The IRS also could create an audit initiative or campaign to address the new requirements. Given the procedural safeguards built into the Code, any such audits could take years to play out. What’s Next A number of groups have already publicly announced they intend to challenge the Proposed Regulations on a variety of grounds, such as statutory authority, administrative law, and constitutional claims. It is also possible that Congress could take action in this area. In the meantime, tax-exempt private schools should review existing policies and programs to determine whether any changes would be needed to comply with the Proposed Regulations. This could include review of educational program criteria and policies, admissions criteria and policies, scholarship or loan-related agreements and application documents, donor and gift agreements, athletic programs and policies, website information, and existing records to show compliance with racial nondiscrimination requirements. Schools should also continue to monitor the status of the Proposed Regulations and potential challenges, any changes to IRS forms related to reporting compliance with the nondiscrimination requirements, and any IRS audit initiatives for private schools. The Treasury Department and the IRS have asked for comments on all aspects of the Proposed Regulations. All comments should be submitted in writing, either electronically or by paper, to the Treasury Department and the IRS by November 3, 2026, following the procedures provided in the notice. For schools that wish to submit comments or that have questions or need assistance regarding the Proposed Regulations, please contact Katrina Wessbecker or Claire Topp from Dorsey’s Nonprofit and Tax-Exempt Organizations practice group.

Blog Post

New Minnesota Health Care Transaction Oversight Law Imposes Additional Requirements on Nonprofit Health Care Entities

June 7, 2023

On May 26, 2023, the Governor of Minnesota signed into law Minnesota bill HF 402 to increase government oversight of health care transactions that occur in Minnesota or involve Minnesota-based health care entities. A general overview of the new law’s oversight provisions can be found in a previous Dorsey Health Law blog post. The new law also contains provisions specific to nonprofit health care organizations, including additional transaction requirements and extension of the moratorium on certain conversion transactions. Given the prevalence of nonprofit health care organizations in Minnesota, we expect this new legislation to materially impact both payors and providers in the State. This blog post summarizes those provisions, all of which have already gone into effect. Additional Transaction Requirements for Nonprofit Health Care Entities In addition to the general notice requirements now effective under this new law and summarized in our previous post, HF 402 imposes further requirements on (1) nonprofit health care entities that are either incorporated under the Minnesota Nonprofit Corporation Act or organized as a Minnesota nonprofit limited liability company, and (2) the subsidiaries of such nonprofit entities, regardless of their incorporation or organizational status. These entities are now required to ensure the following before proceeding with a transaction: The transaction complies with the Minnesota Nonprofit Corporation Act, the charitable trusts statutes, and other applicable laws; The transaction does not involve or constitute a breach of charitable trust; The transferring nonprofit entity will receive the full and fair value for its public benefit assets, unless the discount between the full and fair value of the assets and the value received for the assets will further the nonprofit purposes of the entity or is in the public interest; The value of the public benefit assets to be transferred has not been manipulated in a manner that causes or has caused the value of the assets to decrease; The proceeds of the transaction will be used in a manner consistent with the public benefit for which the assets are held by the nonprofit health care entity; The transaction will not result in a breach of fiduciary duty; and There are procedures and policies in place to prohibit any officer, director, trustee, or other executive of the nonprofit health care entity from directly or indirectly benefiting from the transaction. Currently, it is not entirely clear how or to what extent these additional transaction requirements for nonprofit health care entities will be reviewed in conjunction with the general notice requirements for health care entities. Moratorium on Conversion Transactions A moratorium on conversion transactions involving nonprofit health plan entities operating under the Minnesota Nonprofit Health Service Plan Corporations Act or Health Maintenance Act that was set to expire July 2023 has been extended through July 2026. The moratorium was initially enacted in response to concerns of some lawmakers that nonprofit assets could be transferred to for-profit carriers in a merger or acquisition. These nonprofit health plan entities “may only merge or consolidate with; convert; or transfer, as part of a single transaction or a series of transactions within a 24-month period, all or a material amount of its assets to” an entity that is incorporated under the Minnesota Nonprofit Corporation Act; “or to a Minnesota nonprofit hospital within the same integrated health system as the health maintenance organization.” A “material amount” is defined as the “lesser of ten percent of an entity’s total admitted net assets as of December 31 of the previous year, or $50,000,000.” The moratorium does not apply if the nonprofit health plan entity files an intent to dissolve due to insolvency of the corporation or if insolvency proceedings are commenced. Related Study and Recommendations HF 402 requires that the Minnesota commissioner of health study and develop recommendations on the regulation of conversions, mergers, transfers of assets, and other transactions primarily affecting Minnesota-domiciled nonprofit health maintenance organizations (HMOs). These recommendations must address the following: Monitoring and regulation of Minnesota-domiciled for-profit HMOs; Issues related to public benefit assets held by a nonprofit HMO, including identifying the portion of the organization’s assets that are considered public benefit assets to be protected, establishing a fair and independent process to value the assets, and determining how public benefit assets should be stewarded for the public good; Providing a state agency or executive branch office with authority to review and approve or disapprove a nonprofit HMO’s plan to convert to a for-profit organization; Establishing a process for the public to learn about and provide input on a nonprofit HMO’s proposed conversion to a for-profit organization; and Issues, including statutory language and regulatory implementation, related to a potential statutory requirement that nonprofit HMOs licensed under Minnesota Statutes chapter 62D, and health systems organized as a charitable organization, upon the sale or transfer of control to an out-of-state or for-profit entity, return to the state’s general fund an amount equal to the value of any charitable assets the HMO or health system received from the state. The commissioner is required to seek public comment on the regulation of conversion transactions involving nonprofit HMOs no later than October 1, 2023. A final recommendations report must be submitted to the appropriate legislative committees by June 30, 2024. If you have any questions regarding HF 402 and how your organization or transaction may be impacted, please contact the authors or your regular Dorsey attorney. Summer Associate Lindsey VerMurlen provided substantial assistance researching and drafting this blog post.

Firm Highlights

Insights

Minnesota Consumer-Fraud Enforcement: Disclaimers Won’t Cure Deception, and Penalties Can Add Up

Misleading advertising claims can lead to costly consequences. In State of Minnesota ex rel. Ellison v. Wall & Associates, Inc., No. A25-2064, 2026 WL 3118291 (Minn. App. Oct. 19, 2026), the Minnesota Court of Appeals recently affirmed a bench trial verdict against a tax-relief company and two executives for violations of the Minnesota Consumer Fraud Act (“MCFA”) and the Minnesota Deceptive Trade Practices Act (“MDTPA”). The decision, which affirmed a substantial restitution and civil penalty judgment, underscores the broad power of the Minnesota Attorney General to act against deceptive sales practices. The decision also offers practical lessons for businesses seeking to reduce liability risks in consumer-facing communications. Background Wall & Associates (“W&A”), a Virginia-based tax-relief company, marketed assistance to taxpayers seeking relief from outstanding federal and state tax liabilities, often with offers in compromise—agreements to settle tax liabilities for less than the amount owed. In its extensive advertising campaigns, W&A represented that its average client received a 90% reduction in their tax debt, that it was a local company with Minnesota offices, that it provided legal services, and that it would “Solve ALL Tax Problems.” In reality, W&A’s promises bore little resemblance to what many clients received. Most of W&A’s clients saw just a 9.5% reduction in federal tax debt and 1.2% in state tax debt. W&A had no permanent Minnesota offices. And W&A provided neither legal representation nor assistance with filing tax returns—those services required referrals to separate firms for an additional fee. All the while, W&A clients paid upfront and recurring fees, including during periods when W&A did no work on their cases. Minnesota Attorney General Keith Ellison sued W&A, its founder and owner Ernest Kenneth Wall, and its president and CEO Patrick Mark Yates, alleging violations of, among other laws, the MCFA and the MDTPA. Following a 12-day bench trial, the district court determined that W&A violated the MCFA and MDTPA through its false and embellished advertising. The district court also held Wall and Yates individually liable for those violations because they directed, participated in, and acquiesced in the violations. The district court ordered injunctive relief, $2.7 million in restitution (with Wall and Yates jointly and severally liable for $1.3 million), and civil penalties of $786,517 against W&A, $415,500 against Wall, and $207,750 against Yates. The district court also awarded over $2.5 million in attorneys’ fees and costs to the state. W&A, Wall, and Yates appealed to the Minnesota Court of Appeals, which affirmed the district court’s decision on October 19, 2026. Although W&A, Wall, and Yates challenged the judgment on numerous grounds, several highlights of the decision provide important takeaways for consumer-facing businesses. Individual Reliance Is Not Required for Statutory Liability W&A argued that Attorney General Ellison had to prove a causal nexus between each violation of the MCFA and MDTPA and the injury to a particular consumer to establish liability. In W&A’s view, this required proof that each injured consumer had personally relied on W&A’s false representation. The Court of Appeals rejected this argument based on the MCFA’s and MDTPA’s plain language, which requires no proof of actual deception or confusion by consumers. The Court of Appeals finally pointed to the Minnesota Supreme Court’s decision in State v. Minnesota School of Business, Inc., which held that when a defendant’s misrepresentations are directed at and affected “a broad group of consumers, proof of direct individual reliance is not required to establish a causal nexus between MCFA violations and the harm suffered by consumers.” 935 N.W.2d 124, 135 (Minn. 2019). The Court of Appeals affirmed, however, that a causal nexus is necessary to support an award of damages under the MCFA and MDTPA. In making that determination, district courts look to various factors, including whether the misrepresentations were “longstanding, pervasive, and widespread in communications directed to consumers,” whether the seller intended and understood that consumers would rely on the misrepresentations, and whether the information was of a kind on which consumers would typically rely. The Court of Appeals’ decision continues Minnesota School of Business’s broad interpretation of liability under the MCFA and the MDTPA. Coordinated marketing campaigns to a “broad group of consumers” may expose businesses to MCFA and MDTPA liability without customer-by-customer proof of injury. That said, a causal nexus remains an element of an MCFA and MDTPA claim, and businesses involved in litigation should build a clear record at trial and on appeal showing how each of the relevant factors bears on the causal-nexus inquiry. Contractual Disclaimers Are Not an Automatic Defense to a Misleading Pitch W&A next argued that disclaimers in its client contracts prevented consumers from claiming they had been misled by its advertising. Reiterating that individual reliance is not required under the MCFA and MDTPA, the Court of Appeals held that a contractual disclaimer does not necessarily defeat a claim based on a conflicting oral representation. And on the facts of this case, the Court of Appeals agreed with the district court that W&A’s contractual disclaimers were insufficient given the extensive misrepresentations by W&A and the unequal bargaining power between it and its customers. This holding confirms that contractual disclaimers are not a cure-all for misleading advertising or sales practices. Businesses should review the entire customer journey, including pre-contract representations, as those representations may survive a contractual disclaimer to the contrary. And if faced with litigation, businesses should build a strong record, both at trial and on appeal, showing why any disclaimer is effective in context. The State Has Broad Authority to Seek Restitution W&A also challenged Attorney General Ellison’s authority to seek restitution under the state’s parens patriae authority to protect residents’ collective interests, arguing that injury to only 228 Minnesotans did not affect a sufficiently substantial segment of the population. The Court of Appeals rejected a simple headcount approach, instead explaining that the state had a legitimate interest in protecting residents’ economic well-being as a whole. In any event, the Court of Appeals held that if restitution was not appropriate under the state’s parens patriae authority, then it would still be appropriate under the Attorney General’s enforcement powers under Minn. Stat. § 8.31. The decision reinforces that the broader and more sustained the deceptive advertising, the stronger the case for restitution to protect Minnesotans’ economic interests. Civil Penalties Accrue Per Violation, Not Per Defendant The Court of Appeals finally rejected W&A’s claim that the Attorney General’s enforcement powers under Minn. Stat. § 8.31 permit only civil penalties of up to $25,000 for each defendant. Rather, the Court of Appeals explained that penalties are limited to $25,000 per violation. Multiple violations can therefore produce substantially greater penalties. The Court of Appeals also rejected the argument that restitution made penalties unnecessary: repaying consumers does not eliminate the need to address gains from deceptive conduct and deter future violations. Final Takeaways Align every consumer-facing communication. Broad and extensive marketing campaigns can expose businesses to stronger enforcement standards under the MCFA and MDTPA, making it critical that consumer communications remain accurate and consistent from the first advertisement through the final sale. Plan for layered enforcement exposure. Penalties under the MCFA and MDTPA can add up quickly: W&A, Wall, and Yates ultimately faced more than $6 million in civil penalties, restitution, and attorneys’ fees. The decision continues a line of Minnesota cases recognizing the Attorney General’s broad consumer-protection authority. Details matter. Although the Attorney General’s enforcement power is broad, it is not boundless. As the Court of Appeals explained, issues of causation, the effectiveness of contractual disclaimers, and the availability of restitution and civil penalties all turn on the specific facts of the case. Effective advocacy at trial and on appeal is critical to developing the facts relevant to liability and damages.

Insights

Observations on the SEC’s 2027 Examination Priorities

The SEC’s Division of Examinations (the “Division”) recently announced its examination priorities (“Exam Priorities”) for fiscal year 2027.1 Although many of the Division’s core areas of focus remain consistent with fiscal year 2026, the 2027 Exam Priorities include notable changes and refinements, which we discuss below, along with other key 2027 examination priorities. Dorsey Observations Renewed focus on economic conflicts of interest. After certain economic-incentive topics received less emphasis in the 2026 Exam Priorities2, the Division has again expressly identified economic conflicts as an examination focus. The 2027 Exam Priorities indicate that the Division will prioritize reviewing advisers’ fiduciary obligations relating to economic conflicts of interest raised by fee rebates, fee and expense calculations, cash management, quid pro quo arrangements, and deposits and withdrawals. Greater emphasis on private-fund practices. Building on the private-fund items in the 2026 Exam Priorities, the 2027 Exam Priorities indicate that the Division will assess private-fund disclosures and controls relating to investment allocations, leverage, affiliated service providers, and fees and expenses. The Division also identified investments in private companies through special purpose vehicles (“SPVs”) and loans provided by private funds and business development companies (“BDCs”) as products the Division will scrutinize. Advisers, particularly private-fund advisers, should evaluate whether their disclosures and compliance programs address these areas. Expanded focus on AI-related cybersecurity risks. While the 2026 Exam Priorities focused on advisers’ use of and representations regarding artificial intelligence (“AI”), the 2027 Exam Priorities specifically highlight AI-enabled cybersecurity threats, including AI-generated phishing and synthetic or “deepfake” voice and video used for social engineering. The shift signals that registrants should consider whether their cybersecurity policies and controls adequately address these evolving threats. New focus on proxy advisory firms. The 2027 Exam Priorities state that the Division will examine advisers that rely on proxy advisory firms, including how those advisers evaluate the firms’ recommendations, assess the bases for those recommendations, identify potential conflicts of interest, and determine whether that reliance satisfies applicable legal obligations. Advisers that rely on proxy advisory firms may wish to consider whether their compliance programs address these areas. Updated focus on Regulation S-P and Regulation S-ID. The 2026 Exam Priorities stated that the Division would engage firms during examinations regarding their progress in preparing incident response programs ahead of the compliance dates for the amendments to Regulation S-P and would examine compliance with the amended rule after those dates. The 2027 Exam Priorities indicate that examinations will focus on whether firms have developed, implemented, and maintained reasonably designed policies and procedures addressing administrative, technical, and physical safeguards to protect customer information and that, in accordance with the amended rule, staff will evaluate response program policies and procedures for unauthorized access to or use of customer information, including customer notification procedures and oversight of service providers. With respect to Regulation S-ID, the 2027 Exam Priorities indicate that examiners will assess whether firms are updating their Identity Theft Prevention Program to address emerging risks, such as those related to AI and stolen credentials. Advisers may wish to consider whether their compliance programs address these areas, as applicable. Summary of Other 2027 Examination Priorities Beyond the developments discussed above, many of the Division’s core examination priorities remain consistent with fiscal year 2026. These include investment adviser fiduciary obligations and compliance programs, examinations of never-examined and recently registered advisers, and cybersecurity and operational resiliency. The Exam Priorities are not exhaustive, and examinations will vary based on each registrant’s business, activities and risks. Advisers should consider the 2027 Exam Priorities in reviewing their compliance programs and preparing for potential examinations, including by: Reviewing risk disclosures and controls. The Division states that, when examining advisers to private funds, it will assess whether investment-related risk disclosures are consistent with fiduciary standards and whether compliance policies, procedures, and controls are designed to address both fund-level and investment-level risks. Reviewing disclosures on allocations, leverage, and affiliated service providers. The 2027 Exam Priorities identify disclosures related to certain investments and allocations, the use of debt and fund-level lines of credit, and the use of affiliated service providers as examples. Confirming the accuracy of fee and expense calculations. The Division states that it will assess the accuracy of fee and expense calculations at both the fund and investment levels, and it identifies fee rebates, cash management, quid pro quo arrangements, deposits, and withdrawals as areas in which economic conflicts of interest may affect the impartiality of advice. Reviewing recommendations of illiquid or hard-to-trade products. The Division states that it will prioritize advisers that recommend products that are difficult to trade, have unusual features, or are illiquid, including loans provided by private funds or BDCs and investments in private companies through SPVs. Confirming that the compliance program is implemented and reviewed. The Division states that it will review compliance program components such as marketing, valuation, and custody, as appropriate, and will typically analyze the annual compliance review. It will also focus on compliance practices when advisers have started advising new asset classes or clients or grown through mergers or acquisitions. 1 SEC Division of Examinations 2027 Examination Priorities. 2 See Dorsey’s Client Alert on the SEC’s fiscal year 2026 exam priorities.

Event/Resource

Corporate Counsel Symposium 2026 Materials Hub

Materials Symposium Agenda Sessions 8:30 am - 9:30 am CT Session A: The Corporate Compass: Finding True North When Ethical Duties Conflict Philip Kaplan, Senior Legal Counsel, Howden Re Lucia Suljic, Vice President, Corporate Legal, Canon USA Nicole Stanton, Partner & Deputy General Counsel, Dorsey & Whitney LLP This panel addresses ethical obligations of in-house counsel, including balancing obligations and duties that may conflict with each other. How should a responsible in-house lawyer deal with those challenging situations? Rather than stick to an academic discussion, this panel will revolve around a series of practical scenarios that are designed to be realistic and timely, including situations where counsel is asked to represent both the company and an individual, how and when to disclose uncomfortable facts and inconvenient documents, issues involving changing firms and companies, and multijurisdictional practice. The panel will feature discussion from two experienced in-house lawyers and Dorsey’s Deputy General Counsel. Session B: Managing Rapid Regulatory Change in International Trade and Cross-Border Investment Nathan Brower, Executive Vice President, General Counsel, Nature’s Sunshine Greg Ogunsanya, Senior Vice President, General Counsel and Corporate Secretary, H.B. Fuller Kathryn Wood, Senior Vice President & General Counsel, DecoPac, Inc. Dave Townsend and Lawrence Ward, Dorsey & Whitney LLP This program is designed for attorneys advising on cross-border transactions, international trade, regulatory compliance, and corporate governance matters. Panelists will examine recent developments in U.S. trade and investment law and policy, as well as their impact on international collaborations, corporate compliance, and mergers and acquisitions. The discussion will explore how general counsel and in-house legal teams assess and manage evolving trade-related risks within their organizations. Particular focus will be given to developments during the first two years of the second Trump Administration, including changes in tariff policy, tariff refunds, export controls, economic sanctions, and national security reviews of foreign investment. Through a discussion of regulatory trends and practical case studies, attendees will gain a deeper understanding of the legal risks and compliance obligations associated with cross-border business activities, and hear about practical strategies for advising clients and managing compliance obligations in a rapidly changing trade and investment environment. 9:45 am - 10:45 am CT Session A: The Elon Musk Cases: What Tesla and Twitter Can Teach Your Board of Directors Loren Unterseher, Managing Partner, Oxbow Industries, LLC Shulamite White, Chief Legal Officer and Head of People, Motive Technologies Kirsten Schubert, Tom Swigert, and Jonathan Van Horn, Dorsey & Whitney LLP Recent cases involving Elon Musk and his businesses have had significant impact on principles governing board of directors’ fiduciary duties and corporate processes. This panel will examine recent litigation involving Elon Musk, Tesla, and Twitter, and its effects on the law governing the duties of directors and executives, including the executive compensation and director compensation processes, conflicts that may arise when a single executive has control over multiple businesses, and the ramifications of tweets or other public statements by an executive. Session B: All Eyes on DEI: Managing Diversity Efforts Amid Regulatory Scrutiny and Potential Litigation Maggie Dalton, Senior Commercial Attorney, Cargill; Board Co-Chair, Twin Cities Diversity in Practice Laura A. Vannelli, Legal Counsel, Mayo Clinic Susan Lorenc and Jack Sullivan, Dorsey & Whitney LLP The legal and regulatory landscape surrounding diversity, equity, and inclusion (DEI) initiatives has changed dramatically over the past two years. Law firms and legal departments are continuing to grapple with how to recruit, retain, and develop talent from a wide range of personal backgrounds, in a world where previously accepted recruiting and employment practices are facing increased scrutiny and litigation. This program will provide a practical overview of the current legal regime, including recent federal enforcement actions and litigation trends associated with DEI initiatives. Panelists will discuss practical ways in which organizations can pursue and retain legal talent and increase inclusion while minimizing legal, business, and reputational risk. 11:00 am - 12:00 pm CT Session A: Governance in an Age of Increasing Unpredictability James Chosy, Senior Executive Vice President and General Counsel, U.S. Bancorp Todd Hartman, Executive Vice President and Chief Legal and Risk Officer, Best Buy Co., Inc. Alan Rosselot, Associate General Counsel & Assistant Secretary, Delta Air Lines, Inc. Cam Hoang and Robert Rosenbaum, Dorsey & Whitney LLP More than ever, ensuring that boards are well-informed and forward-thinking is critical to a company’s success. Join our panel of corporate governance experts as they share their experiences advising boards through crisis and unpredictable events; capitalizing on, but also checking, disruptive technologies; and positioning the company to succeed in an environment of shifting government priorities. Session B: A Day in the Life of a Trademark, Copyright & Advertising Attorney: A Hypothetical Case Study Alexander Kim, Vice President and General Counsel, Binks Nate Whitaker, Chief Legal Officer and General Counsel, Crumbl Cathy Dahl and Tiffany Shimada, Dorsey & Whitney LLP What issues are companies facing daily while developing rights in intellectual property, protecting those rights, and staying in compliance with myriad potential issues related to advertising, social media, relationships with influencers, and environmental or governmental claims? This panel will feature two in-house counsel who are navigating these issues, utilizing a hypothetical case study, with the support of two Dorsey attorneys helping to develop a roadmap for meeting business objectives and minimizing the risk of claims. 12:00 pm - 1:15 pm CT Keynote Address Dr. Rebecca Heiss, Stress Physiologist Dr. Rebecca Heiss is a stress physiologist, author, and sought-after speaker who helps audiences transform fear and stress into fuel for greater performance and resilience. Her research has been recognized as “transformative” by the National Science Foundation, and she is the author of two books, Springboard and Instinct. Through her Fear(less) message, Rebecca inspires audiences with practical, science-based strategies to train our brains to work for us – not against us – and navigate change and uncertainty with greater confidence.

News

Dorsey & Whitney Advises Beijing Xunzhong on Two Consecutive H Share Placings Raising HK$418.5 Million

International law firm Dorsey & Whitney LLP acted as Hong Kong legal advisors to Beijing Xunzhong Communication Technology Co., Ltd. (“Xunzhong”) as to Hong Kong law in connection with two consecutive placings of new H shares under general mandate (the “First Placing” and the “Second Placing”, respectively, and together, the “Placings”). Xunzhong’s H shares are listed on the Main Board of the Hong Kong Stock Exchange (Stock Code: 2597). Winbull Securities International (Hong Kong) Limited acted as sole overall coordinator and placing agent on both Placings. The First Placing of 11,190,000 new H shares at HK$28.20 each was completed on September 17, 2026, followed by the Second Placing of 3,550,000 new H shares at HK$29.00 each on October 30, 2026. The Placings raised approximately HK$315.56 million and HK$102.95 million in gross proceeds, respectively, or approximately HK$418.51 million in aggregate (approximately HK$415.96 million in aggregate net proceeds). Both Placings were conducted under the same general mandate granted by shareholders at Xunzhong’s 2025 annual general meeting, and each was completed within one week of the signing of its placing agreement. Completing placings in consecutive months is relatively uncommon in the Hong Kong market, and doing so called on the technical depth of Dorsey’s Hong Kong Capital Markets team. Working closely with Xunzhong to understand its business needs and prepare the transaction documents, the team addressed in quick succession the remaining capacity under the general mandate, disclosure of the use of proceeds and the maintenance of Xunzhong’s public float, enabling both Placings to be completed seamlessly. “We are pleased to have advised Xunzhong on both Placings,” said Rachel Han, Partner and Co-Head of Dorsey’s Asia Capital Markets practice. “We appreciate the trust placed in our team and the close collaboration among all parties involved. We look forward to supporting Xunzhong as it continues to execute its growth strategy and pursue future capital markets opportunities.” Xunzhong is principally engaged in cloud-based communications services and enterprise digitalization services in the PRC. As disclosed in its announcements, the net proceeds of the First Placing are allocated to developing Xunzhong’s new computing power operation services business, while those of the Second Placing will be used to integrate model-as-a-service (MaaS) and AI agent capabilities into its existing cloud communications platform-as-a-service (PaaS) platform and software-as-a-service (SaaS) products. Approximately 55% of the net proceeds of the Second Placing will be used for computing power equipment upgrades for the MaaS system, approximately 35% for MaaS, PaaS and SaaS platform upgrades, and approximately 10% for working capital and general corporate purposes. With a single MaaS platform and shared computing power supporting its PaaS and SaaS offerings, Xunzhong intends for its MaaS, PaaS and SaaS capabilities to complement and reinforce one another, and to address customer needs from multiple angles, from embedding AI in customer communications and business workflows to maintaining stable performance at scale and keeping customer data within controlled environments. Partner and Co-Head of Dorsey’s Asia Capital Markets practice Rachel Han and Of Counsel in the Capital Markets and Corporate Compliance group Carlton Ng, along with Associate Kristy Ting, led the Dorsey Hong Kong Capital Markets & Corporate Compliance group in advising Xunzhong on both Placings.