When Paul Atkins assumed the role of Chairman of the US Securities and Exchange Commission (SEC) last April, we anticipated a significant transformation in the Commission’s enforcement strategy, as a leaner, more streamlined organization prioritized traditional enforcement areas such as fraud targeting retail investors and insider trading. Now, eight months into his tenure, these predictions have largely materialized.
The SEC enforcement activity in fiscal year 2025 dropped to levels not seen in over a decade. According to a report by Cornerstone Research, the SEC brought 313 cases in fiscal year 2025, compared to 431 cases the previous year. Though 56 enforcement actions were brought against public companies or their subsidiaries, only four of those cases were initiated after Inauguration Day on January 20, 2025. The financial impact of these actions was similarly reduced: the SEC collected $808 million in monetary settlements, less than half the average amount from the past ten years and the lowest since 2012.
Several factors likely contributed to the decline in SEC enforcement activity, as discussed below. The SEC lost about 15% of its staff due to retirement and other offers at the beginning of the year.1 Additionally, the 43-day government shutdown in the fall—the longest in history—as well as various organizational and procedural changes within the SEC over the last year, have likely played a role. Internal headwinds in obtaining Commission approval (e.g., in cases that may have involved novel legal theories or that sought to address programmatic or policy concerns as opposed to actual investor harm) may have also contributed to this decline in activity.2 Further contributing to the slowdown, the Commission has delayed naming replacements for senior staff who have left, leaving the agency without adequate staffing to make decisions.
For example, the agency’s new Director of Enforcement, Judge Margaret Ryan, was not appointed until September and two of her new Deputy Directors were just named in January 2026.3 Judge Ryan’s arrival, along with recent appointments of other senior staff, indicates that the SEC is now filling those positions, albeit not at the same level as in prior administrations, and this may stabilize the agency’s ability to move cases forward.
With respect to the decrease in corporate monetary penalties, several Commissioners, including Chairman Atkins, are vocal critics of corporate penalties that may unfairly harm shareholders.4 Along these lines, senior Enforcement staff have stated that the Commission is now following the framework set forth in the 2006 Statement of the Securities and Exchange Commission Concerning Financial Penalties.5 Under this framework, the agency will hold individuals accountable where appropriate, with staff emphasizing that companies act through individuals. The Commission will only seek monetary penalties against issuers when a violation results in an improper benefit to shareholders. This will avoid penalizing shareholders who have already been victimized by corporate officers/employees.
“Back to Basics” Enforcement
2025 saw the SEC shift its focus back towards its “core mission” of protecting investors, with a renewed emphasis on cases involving breaches of fiduciary duty by investment advisers, insider trading, accounting fraud, and market manipulation.6 The agency moved away from pursuing novel legal theories like shadow trading and technical violations, and instead concentrated on established forms of misconduct. This shift is reflected in the types of cases brought by the SEC in 2025: nearly one-third of all enforcement actions in fiscal year 2025 involved offering fraud or insider trading, an increase from 26% the previous year.7 For example, in August the SEC charged a former director of a biopharmaceutical company, along with his family and friends, with insider trading before a merger announcement, generating over $500,000 in profits.8 And in December the SEC charged three brothers with allegedly manipulating two pharma company stocks and carrying out a $41 million insider trading scheme with three friends.9
By contrast, the SEC moved to dismiss several pending litigated cases that apparently do not align with its current enforcement priorities, such as those involving technical, non-fraud violations, and those based on novel legal theories.10 The most high-profile of these dismissals were in the crypto space, as discussed below. The agency also targeted cases related to alleged violations of broker-dealer registration requirements and the “liquidity rule,” as well as matters relating to the dissemination of material nonpublic information.11 Additionally, in July, the SEC dismissed bribery charges against two former executives, stating that the dismissals were “appropriate as a policy matter.”12 As a matter of practice, the SEC has typically not sought to dismiss charged matters in active litigation absent some significant change in the facts or the law specific to the case. Many of these recent dismissals appear to be driven primarily by policy considerations directed by SEC leadership, further reinforcing the messaging coming from the SEC that its efforts will be focused on traditional “bread and butter” enforcement cases.
Artificial Intelligence
The SEC continues to prioritize cases involving “AI washing”—where companies misrepresent or exaggerate their artificial intelligence (AI) capabilities—with the rebranded Cyber and Emerging Technologies Unit tasked with investigating AI washing and other types of fraud involving AI and machine learning.13 Because the SEC’s focus will be on cases involving fraud, it is likely that many of these investigations will have a parallel criminal component. For example, in April 2025, the SEC and DOJ charged the founder and former CEO of an AI startup with fraudulently soliciting investments and raising over $42 million through the sale of stock by allegedly making false and misleading statements about the company’s use of AI.14
Crypto Cases
The federal government has overhauled its regulatory approach to crypto, resulting in a major shift in the SEC’s crypto enforcement program. In early 2025, the SEC dismissed an unprecedented number of filed enforcement actions, including several high-profile cases in active litigation, and closed several enforcement investigations.15 However, this shift does not mean the SEC has abandoned all oversight of the crypto sector; rather, the SEC will likely pursue cases with clear instances of fraud or market manipulation targeted at retail investors. For example, in December 2025 the SEC filed charges against three purported crypto asset trading platforms and four investment clubs alleging that they defrauded retail investors out of more than $14 million in an elaborate investment confidence scam.16 With this enforcement action, the SEC sent the message that “fraud is fraud” and signaled that it has not closed shop with regards to crypto enforcement.17 Still, much of the SEC’s efforts with respect to crypto have been, and will likely continue to be, on the rulemaking and policy sides, and not on enforcement.18
Process and Structural Reforms
Wells Process
In October 2025, Chairman Atkins announced reforms to the Wells process, the procedure the SEC staff use to notify potential respondents or defendants about potential charges at the end of an investigation.19 Under the new guidance, the SEC’s enforcement staff are generally required to provide more detailed evidence from the investigation, including access to testimony transcripts, and give recipients at least four weeks (not the two weeks generally provided in the past) to prepare and submit their responses.20 The reforms also encourage earlier engagement opportunities with SEC staff, including submission of “white papers” before a formal Wells notice is issued. Additionally, Chairman Atkins noted that Wells recipients will be provided more opportunities to meet with senior enforcement officials. Chairman Atkins also explained that these reforms are designed to avoid “gotcha game” tactics by SEC staff and promote due process, procedural integrity and transparency in enforcement proceedings. It remains to be seen to what extent these procedures are consistently adhered to by SEC staff.
Formal Order Process
Another structural reform that occurred in 2025 was the de-delegation of authority for issuance of formal orders of investigation—required for SEC staff to issue a subpoena for documents or testimony.21 In March, the SEC issued a rule amendment rescinding the 2009 delegation of authority to the Enforcement Division Director to issue formal orders of investigation without the approval of a majority of the SEC Commissioners.22 This means the Commission is now required to approve formal orders of investigation. While this change may create more administrative hurdles for SEC staff, it is unlikely to have a significant impact on Enforcement operations. As was the case before 2009, the staff can use voluntary requests in the first instance, and the Enforcement Division has already implemented an efficient process for requesting formal order authority from the Commission.
Organizational Restructuring
The first few months of 2025 saw notable organizational and staffing changes for the Enforcement Division at the SEC, with a more streamlined reporting structure resulting in a reduction of “senior officer” roles. Regional directors, who previously managed each of SEC’s ten regional offices, were reassigned to other high-level positions, including four new Deputy Director roles. Unlike the previous structure, which had only one Deputy Director reporting to the Director of Enforcement, the revised framework now includes Deputy Directors responsible for the Northeast, West, and Southeast regions, as well as a Deputy Director overseeing the Division’s specialized units. More recently, the Enforcement Division’s former Chief Counsel and Acting Director was appointed to the role of Deputy Director, bringing the total number of Deputy Directors to five.23 This reorganization came on the heels of a mass exodus of staff, with hundreds of attorneys, examiners, and specialists voluntarily leaving the agency through different programs offered by the administration as part of broad efforts to decrease the size of the federal government.
Looking Forward to the Year Ahead
We anticipate that the SEC will maintain its focus on the core enforcement areas discussed above, with a particular emphasis on individual accountability and wrongdoing in cases involving offering fraud, accounting fraud, market manipulation, and insider trading. Of note, as discussed in our prior alert, the SEC has announced the formation of a new task force to combat cross border fraud directed at US investors, such as “pump and dump” schemes involving Chinese issuers.24 There have already been several trading suspensions and other actions related to this effort.25 This development suggests that the SEC’s enforcement efforts will prioritize foreign issuers and their gatekeepers (e.g., underwriters and auditors), reflecting the current administration’s “America First” policies.
Additionally, we are seeing increased enforcement activity in private markets, with regulators and prosecutors closely monitoring disclosure, collateral, and fraud risks in private credit and pre-IPO shares.26 We also expect to see continuing activity in the AI space.
As mentioned above, it is unlikely that we will see the type of large-scale enforcement actions targeting crypto platforms, or other novel enforcement theories, absent some connections to traditional wrongdoing like fraud. The current enforcement approach appears more targeted, with the agency focusing its resources on egregious misconduct targeting retail investors. Finally, we do not expect much activity in the Foreign Corrupt Practices Act (FCPA) area. While the DOJ’s temporary pause to FCPA enforcement did not technically apply to the SEC, SEC leadership at the time indicated they would follow the Justice Department’s approach and moved to effectively disband the SEC’s FCPA unit.
It remains to be seen to what extent the administration’s priorities, and the structural and organizational changes at the SEC, will continue to drive a downward trend in enforcement activity. As always, external events may ultimately dictate whether the SEC ramps up enforcement activities in 2026 and beyond.
1 Paul Atkins, Opening Remarks at the SEC Town Hall, (May 6, 2025), available here.
2 Sam Waldon, Remarks to the ‘SEC Speaks in 2025’ Program of the Practicing Law Institute, (May 19, 2025), available here.
3 Press Release, US Sec. & Exch. Comm’n, SEC Names Judge Margaret Ryan as Director of the Division of Enforcement, (Aug. 21, 2025), available here; Press Release, US Sec. & Exch. Comm’n, Paul Tzur and David Morrell Named Deputy Directors of the Division of Enforcement, (Jan. 12, 2026), available here.
4 Paul Atkins, Remarks Before the SIA Industry Leadership Luncheon, (June 8, 2005), available here.
5 Sam Waldon, SEC, CFTC Leaders Predict Shifting Priorities, Penalty Policies, Bloomberg (Mar. 24, 2025), available here.
6 Paul S. Atkin, Opening Remarks at the SEC Town Hall, (May 6, 2025), available here.
7 See Ben Miller, SEC Zeroes in on insider Trading and Offering Fraud Under Atkins, Bloomberg Law (Oct. 20, 2025), available here.
8 See Securities and Exchange Commission v. Robert Yedid, No. 1:25-CV-06704 (S.D.N.Y. filed Aug. 14, 2025).
9 See Securities and Exchange Commission v. Muhammad Saad Shoukat, et al., No. 2:25-cv-18864 (D.N.J. filed Dec. 22, 2025).
10 See Ladan F. Stewart, Recent Dismissals Offer Insights into SEC’s Current Enforcement Strategy, New York Law Journal, (Oct. 15, 2025), available here.
11 See Press Release, US Sec. & Exch. Comm’n, SEC Announces Dismissal of Three Civil Enforcement Actions and Claims in Fourth Civil Enforcement Action, (May 22, 2025), available here; Press Release, US Sec. & Exch. Comm’n, SEC Announces Dismissal of Civil Enforcement Action Against Pinnacle Advisors, LLC, Robert F. Cuculich, Benjamin R. Quilty, Mark E. Wadach, and Lawton A. Williamson, (Jul. 11, 2025), available here.
12 See Securities and Exchange Commission v. Coburn, No. 2:19-cv-05820 (D.N.J. filed Feb. 15, 2019).
13 See Press Release, US Sec. & Exch. Comm’n, SEC, SEC Announces Cyber and Emerging Technologies Unit to Protect Retail Investors, (Feb. 20, 2025), available here.
14 Press Release, US Sec. & Exch. Comm’n, SEC Charges Founder and Former CEO of Artificial Intelligence Startup with Misleading Investors, (Apr. 11, 2025), available here.
15 See e.g. Press Release, US Sec. & Exch. Comm'n, SEC Announces Dismissal of Civil Enforcement Action Against Coinbase (Feb. 27, 2025), available here.
16 Press Release, US Sec. & Exch. Comm’n, SEC Charges Three Purported Crypto Asset Trading Platforms and Four Investment Clubs with Scheme That Targeted Retail Investors on Social Media (Dec. 22, 2025), available here.
17 See id.
18 See Ladan Stewart and Shuhang Liu, The Path Toward a Market Structure for Crypto Assets, The National Law Journal, (Oct. 10, 2025), available here.
19 See Paul Atkins, Keynote Address at the 25th Annual A.A. Sommer, Jr. Lecture on Corporate, Securities, and Financial Law (Oct. 7, 2025), available here; see also, Andrews, Lew & Stark, SEC chairman announces reforms to wells process and settlement procedures, (Oct. 27, 2025), available here.
20 Paul S. Atkins, Address at the 25th Annual A.A. Sommer, Jr. Lecture on Corporate, Securities, and Financial Law, (Oct. 7, 2025), available here.
21 See Stewart et al., SEC Enforcement 2.0: Chairman Atkins Has Arrived, (Apr. 22, 2025), available here.
22 17 CFR 200.30-4(a)(13); Press Release, US Sec. & Exch. Comm’n, SEC Announces Formation of Cross-Border Task Force to Combat Fraud, (Sept. 5, 2025), available here.
23 Press Release, US Sec. & Exch. Comm’n, Paul Tzur and David Morrell Named Deputy Directors of the Division of Enforcement, (Jan. 12. 2026), available here; Press Release, US Sec. & Exch. Comm’n, SEC Names Judge Margaret Ryan as Director of the Division of Enforcement, (Aug. 21, 2025) available here.
24 See Press Release, US Sec. & Exch. Comm’n, SEC Announces Formation of Cross-Border Task Force to Combat Fraud, (Sept. 5, 2025), available here.
25 See e.g., Press Release, US Sec. & Exch. Comm’n, Trading Suspensions: QMMM Holdings Limited, (Sept. 26, 2025), available here.
26 See Paul Atkins, Remarks at the Investor Advisory Committee Meeting, (Sept. 18, 2025) available here; see also Joel Cohen and Ladan Stewart, Private Credit’s Boom Means Fund Managers Should Review Controls, Bloomberg Law (Oct. 30, 2025), available here; See e.g., Press Release, US Sec. & Exch. Comm’n, SEC Charges Seven Individuals and Five Entities in the New York Metropolitan Area for Perpetrating a $70 Million Pre-IPO Fraud Scheme (Jan. 31, 2025), available here.
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