Welcome to “SERC’ling Up,” your resource for staying ahead in today’s fast-evolving financial landscape. This newsletter delivers perspectives on the latest enforcement trends, regulatory updates and high-stakes developments affecting broker-dealers, investment advisers, financial institutions and corporate clients. Drawing on the firm’s blend of government and industry experience, “SERC’ling Up” provides actionable intelligence to help clients anticipate risks, respond effectively to scrutiny and remain resilient in a shifting regulatory environment.
Newly confirmed Securities and Exchange Commission Chairman Paul Atkins opened the annual SEC Speaks Conference recently held in Washington, D.C., declaring “It is a new day at the SEC.”[1] Chair Atkins, Commissioners Hester M. Peirce and Mark T. Uyeda, and senior officials in the SEC’s Division of Enforcement[2] discussed their intent to shift the Commission’s approach to regulation and enforcement. They promised a more accessible and transparent regulatory and enforcement process and pledged to refocus the Commission’s efforts on facilitating capital formation, protecting retail investors and punishing fraudulent actors.
Chair Atkins signaled a move away from what he described as “overly politicized” regulations that have, in his view, hindered market efficiency and capital formation. Chair Atkins advocated for the Commission to champion innovation and called for a “rational, coherent, and principled” regulatory framework around digital assets. He criticized the previous administration’s “shoot-first-and-ask-questions-later” approach of regulation through enforcement and emphasized the need for clear guidelines to foster innovation while protecting investors. Chair Atkins stated that he has directed the staff to maintain transparent interactions with the public and to collaborate fairly with market participants as opposed to leading discussions from an enforcement perspective.
In their remarks, Commissioners Peirce and Uyeda agreed with Chair Atkins and confirmed that when market participants seek to engage, the Commission should provide assurances that it will not result in regulation by enforcement.[3] Commissioner Peirce criticized what she described as the Commission’s prior reliance on enforcement as a substitute for notice and comment rulemaking and emphasized the need for collaboration with the cryptocurrency industry, as opposed to enforcement-led interactions. She called for a rational and transparent approach to crypto regulation that supports innovation.[4] Commissioner Uyeda noted that the Commission’s resources and policy should be deployed in ways that minimize policy drift and overreach.
Senior Enforcement Division leaders expressed views that supported and expanded on Chair Atkins’ plans for enforcement. Together they underscored the importance for open and transparent interactions with defense counsel; advocated for rewarding meaningful cooperation, self-reporting and remediation; promised a robust, substantive Wells process, even for settled cases; and signaled a move away from enforcement actions based on novel theories that push the boundaries of existing law. The Enforcement panelists affirmed the Enforcement Division’s longstanding focus on protecting retail investors, with special attention on senior citizens, and emphasized holding individuals accountable for knowing and intentional misconduct.
A Unified Approach to Enforcement
Acting Enforcement Director Sam Waldon described the current strategic restructuring of the Enforcement Division. To accomplish a more unified approach to enforcement, the Enforcement Division now will have four Deputy Enforcement Directors instead of one. Three Directors will oversee the enforcement efforts of specific regions — Northeast, Southeast and West. The fourth Director will oversee the Division’s Specialized Units. This marks a change in the Commission’s historical structure in which each Regional Office previously oversaw its own enforcement efforts and reported directly to the Division Director or Deputy Director. By reducing reporting lines, the Division intends to create a more consistent and unified nationwide enforcement program. Acting Director Waldon also announced a newly created National Enforcement Liaison position that will coordinate enforcement efforts with local, state and other federal enforcement regimes.
Formal Orders
In a further effort to improve consistency across the enforcement program, Nekia Jones, Deputy Director, Enforcement Southeast, discussed the Commission’s recent rescission of its delegation of formal order authority to the Enforcement Director. Formal orders will now be authorized directly by the Commission. In August 2009, the Commission delegated authority to issue formal orders of investigation to the Enforcement Director, and in March 2025, the Commission rescinded that authority. The March 2025 rule release stated that the change “is intended to increase effectiveness by more closely aligning the Commission’s use of its investigative resources with Commission priorities.”[5]
Investigative Transparency and Robust Wells Process
Deputy Enforcement Director (Northeast Region) Antonia Apps and Fort Worth Associate Regional Director Jaime Marinaro emphasized the Enforcement Division’s commitment to promoting a transparent and robust Wells process. Deputy Director Apps confirmed that the Enforcement Division staff will grant Wells meetings with Division leadership, and Deputy Director Apps and Associate Regional Director Marinaro each separately emphasized the importance of providing defense counsel with meaningful access to the investigative record and holding meetings to provide substantive opportunities to discuss and debate the evidentiary record and legal theories before enforcement recommendations are finalized. Deputy Director Apps affirmed that Enforcement Division staff are now encouraged to share relevant legal theories and supporting evidence with defense counsel by permitting defense counsel to review the record evidence including testimony, transcripts or key documents in advance to facilitate informed Wells submissions. However, Deputy Director Apps emphasized that this transparency has limits — statutory restrictions, parallel criminal proceedings or other sensitivities may constrain what can be disclosed.[6]
Associate Regional Director Marinaro cited Chair Atkins’ longstanding advocacy for those under investigation to have greater access to the staff’s investigative file, highlighting that this openness supports due process and enhances the integrity of enforcement outcomes. Associate Regional Director Marinaro noted that the Division expects increased use of reverse proffers[7] and the sharing of favorable and unfavorable evidence, allowing defense counsel to better assess the case and provide meaningful responses in their Wells submissions. Associate Regional Director Marinaro and Deputy Director Apps noted that the practice of this Commission is to carefully review Wells submissions before authorizing enforcement actions, even in matters in which the recommendation is that the Commission approve a settled enforcement action. This is meant to ensure that settlements reflect actual violations of the law and that the settlement is not a result of a party trying to cut short an investigation or to make something go away. Acting Director Waldon noted that during the Wells process he anticipated that the Commission will ask the staff how the enforcement recommendation ties back to the case law, statute or rule, and whether the recommendation is in line with precedent and comparable cases. The industry can expect robust review of proposed remedies ensuring that the settlement reflects sound enforcement policy rather than procedural convenience.
Principles of Cooperation
Katherine Zoladz, Deputy Director, Enforcement West, and Associate Regional Director Marinaro discussed how self-reporting and remediation can impact enforcement referrals. For example, Deputy Director Zoladz noted that for entities that fully remediate issues discovered during SEC exams, the examination staff may decide not to make an enforcement referral. Deputy Director Zoladz also commented that the staff will be less focused on violations that don’t involve fraud, especially when the conduct was fully remediated. Associate Regional Director Marinaro explained that the staff will evaluate self-reporting and remediation when deciding whether to pursue an enforcement action, as well as what remedies may be requested in a potential settlement. She expected that public declinations and decisions not to pursue enforcement actions may become more common in instances in which entities self-report and take meaningful corrective action early in the process.
Associate Regional Director Marinaro also discussed Chair Atkins’s longstanding view that cooperation credit should not be given for the waiver of the attorney-client privilege or work product protections because offering such credit effectively punishes those who choose not to waive privilege. Decisions on whether to waive should not be motivated by a belief that this will impact their ability to obtain cooperation credit.
Corporate Penalties and Disgorgement
As to remedies, Associate Regional Director Marinaro discussed Chair Atkins’s position that corporate penalties should be calculated based on the presence or absence of a direct benefit to the corporation as a result of the violation and the degree to which the penalty will further harm shareholders. Large corporate penalties are effectively paid by the corporation’s current shareholders. According to Chair Atkins, if corporate wrongdoers are not concerned for their company and its shareholders when they commit the fraud, it is doubtful that they are deterred by the threat of imposing a penalty on that company and shareholders. Associate Regional Director Marinaro noted that the Commission’s 2006 Statement Concerning Financial Penalties provides additional guidance on when corporate penalties are appropriate.[8]
Commission Solicitor Tracey Hardin and Senior Appellate Counsel Paul Alvarez[9] discussed the views of the Office of General Counsel regarding when disgorgement is appropriate in enforcement actions. According to Solicitor Hardin and Counsel Alvarez, the ability to obtain disgorgement does not require a showing of pecuniary harm to investors. Rather, the core inquiry is whether the alleged violator obtained unlawful gains. This position aligns with the Commission’s briefing in Navellier v. SEC that successfully urged the U.S. Supreme Court to deny a petition for review. In its briefing, the Commission argued that disgorgement remains an equitable remedy even if direct investor losses are not shown, so long as the amount does not exceed the wrongdoer’s net profits and is directed to benefit victims.[10] In the Commission’s view, the Supreme Court’s decision in Liu v. SEC, 140 S. Ct. 1936 (2020), did not impose a new requirement of proving specific financial harm but reaffirmed long-standing equitable principles that prevent disgorgement from becoming punitive.[11]
The Supreme Court’s decision in Liu triggered divergent interpretations among the federal courts of appeals on when the Commission is entitled to disgorgement. This resulted in considerable debate between the staff and the industry as to when disgorgement is appropriate. In SEC v. Navellier, the U.S. Court of Appeals for the First Circuit upheld the SEC’s authority to seek disgorgement without requiring proof of pecuniary harm to investors.[12] The court emphasized that disgorgement serves to prevent unjust enrichment by stripping wrongdoers of ill-gotten gains, regardless of direct financial loss to clients. However, in SEC v. Govil, the Second Circuit adopted a narrower reading of Liu, holding that disgorgement must be tethered to actual investor harm; otherwise, it risks exceeding its equitable scope and becoming a de facto penalty.[13] The Fifth Circuit reached the opposite conclusion in SEC v. Hallam, emphasizing that Congress’s 2021 enactment of 15 U.S.C. § 78u(d)(7) authorized disgorgement as a legal remedy, thereby freeing it from the equitable constraints emphasized in Liu, including the need to benefit victims.[14]
Revamping Administrative Proceedings
Commissioner Uyeda advocated for a new direction for administrative adjudication as Chair Atkins recently announced that Commissioner Crenshaw will assist him in reviewing the Commission’s administrative law framework and procedure.[15]
Critics of the Commission’s administrative proceedings argue that the current system lacks impartiality and fairness. Critics believe that the dual role of the Commission as prosecutor and adjudicator raises concerns about potential biases and conflicts of interest. In SEC v. Jarkesy, the Supreme Court resolved at least some of this tension, holding that the Seventh Amendment prohibits the Commission from seeking civil penalties in certain enforcement actions when the Commission chooses to proceed in-house before its own administrative law judges (ALJs), rather than in federal court.[16] The Court held that the Seventh Amendment requires, at a minimum, that any enforcement action for fraud involving civil penalties be tried in front of a jury in federal court.
In light of Jarkesy, Commissioner Uyeda proposed several reforms aimed at enhancing the accountability and independence of ALJs within the Commission’s framework. For example, to ensure accountability, he proposed that ALJs operate under the direct oversight of the Commission, rather than solely under the Chair’s direction. The Commission may also consider assigning oversight responsibilities of ALJs to a non-Chair commissioner, as this change of oversight could enhance the independence of ALJs and mitigate concerns about undue influence from the Commission’s prosecutorial arm.
Commissioner Uyeda suggested that any administrative proceeding be subject to de novo review in U.S. district courts. This approach differs from the current practice of Commission cases being reviewed directly by the U.S. courts of appeals, which utilize a “substantial evidence” standard that is highly deferential to the Commission’s findings. Allowing for de novo review would provide an additional layer of judicial scrutiny, enhancing the fairness of the proceedings.
Commissioner Uyeda suggested that forum selection be based on the nature of the remedies sought. Some remedies are more appropriate for administrative adjudication, whereas other remedies raise constitutional concerns. For example, according to Commissioner Uyeda, actions seeking non-monetary remedies, such as cease-and-desist orders, orders requiring an accounting and orders to prohibit a person associated with registered entities from serving as an officer or director, are appropriately handled in administrative proceedings.
Commissioner Uyeda also advocated for limitations on civil penalties imposed in administrative proceedings where permitted under Jarkesy. Commissioner Uyeda emphasized that the Commission should not seek claims for disgorgement and civil penalties in an amount that exceeds a Tier 1 violation, the lowest level of penalties available to the staff in enforcement actions.[17]
What to Expect Moving Forward
The industry should expect a “back to basics” approach at the Commission as described by Chair Atkins. Under his leadership, the Commission intends to usher in an era of accessibility and transparency, eliminating unnecessary and burdensome rulemaking and, in his view, a heavy-handed approach to enforcement. The Crypto Task Force has wrapped up its initial series of roundtables and, over the next several months, may generate proposals for exemptive relief or draft regulations regarding tokenization, market structure or custody. Industry participants can expect a more open dialogue with the Enforcement Division staff during investigations and the Wells process, as well as increased transparency as to what constitutes creditworthy cooperation. Corporate penalties will be carefully reviewed. Moving forward, the Enforcement Division staff will continue to police the securities markets with a focus on protecting retail investors and holding culpable individuals accountable for fraudulent conduct. The debate around disgorgement will continue, with the Enforcement Division staff likely to continue seeking disgorgement even in cases in which there is no investor harm. The Commission’s use of administrative proceedings going forward remains under debate, with Commissioner Crenshaw tasked with reviewing options and Commissioner Uyeda advocating for reforms around the types of matters and remedies appropriate for that venue.
For questions about this alert, contact the authors or your McGuireWoods contact.
McGuireWoods’ Securities Enforcement & Regulatory Counseling (SERC) Practice is a national leader in securities enforcement defense and broker-dealer and investment adviser regulatory counseling. Anchored by former SEC and FINRA attorneys from enforcement and trading and markets as well as prominent federal prosecutors, the team manages complex securities investigations at every stage — from informal inquiries and routine exams through investigations, litigation and appeals — all while staying at the forefront of developing issues confronting the securities industry.
[1] Prepared Remarks Before SEC Speaks, Paul Atkins (May 19, 2025).
[2] The Enforcement Division presentation was divided into two segments, an opening morning panel and an afternoon workshop. The opening panelists were Sam Waldon, Acting Director, Enforcement Division; Antonia Apps, Deputy Director, Enforcement Northeast; Nekia Jones, Deputy Director, Enforcement Southeast; Katharine Zoladz, Deputy Director, Enforcement West; Jason Burt, Deputy Director, Enforcement Specialized Units; Nick Grippo, Chief Litigation Counsel; and Silvestre Fontes, Enforcement Liaison. The workshop panelists were Pei Chung, Associate Director, Enforcement Division; Laura D’Allaird, Chief, Cyber and Emerging Technologies Unit; Jaime Marinaro, Associate Director, Fort Worth Regional Office; Joseph Sansone, Chief, Market Abuse Unit; Corey Schuster, Chief, Asset Management Unit; Rebecca Olsen, Deputy Chief, Public Finance Abuse Unit; and Eric Werner, Chief, Complex Financial Instruments Unit.
[3] New Paradigm: Remarks at SEC Speaks, Hester M. Peirce (May 19, 2025); Remarks at the “SEC Speaks” Conference 2025, Mark T. Uyeda (May 19, 2025).
[4] For more information on how the new Commission may bring fraud cases against crypto companies, please see McGuireWoods’ article “Crypto’s Next Compliance Challenge: Preparing for Regulatory Scrutiny of Manipulative And Insider Trading” published in The International Journal of Blockchain Law (https://assets.ctfassets.net/so75yocayyva/6tRFMomttDojUS3ml0VGB6/ 3a38a6bac80394f15eaa70bd5a35f1b0/IJBL_Volume_XI.pdf).
[5] SEC Release No. 33-11366 (March 10, 2025).
[6] Historically, the staff’s practice of permitting defense counsel access to the investigative record has been inconsistent among offices — some offices granted such access; others did not. The staff’s comments on this practice are consistent with Acting Director Waldon’s promise of a more unified approach to enforcement.
[7] Presentations by the staff to potential defendants in advance of enforcement recommendations that detail the evidence the staff believes establishes violations of securities laws.
[8] https://www.sec.gov/news/press/2006-4.htm
[9] Solicitor Hardin and Counsel Alvarez’s remarks were part of the Judicial and Legislative Developments panel during the conference.
[10] SEC’s Br. in Opp’n at 5, Navellier v. SEC, No. 24-949 (U.S.), certdenied June 6, 2025.
[11] For more information on post-Liu developments in disgorgement awards, see McGuireWoods’ article “SEC Speaks 2024: In Defense of Enforcement’s Aggressive Agenda.” https://www.subjecttoinquiry.com/2024/04/sec-speaks-2024-in-defense-of-the-enforcement-divisions-agenda/
[12] SEC v. Navellier & Associates, Inc., 108 F.4th 19, 41 (1st Cir. 2024).
[13] SEC v. Govil, 86 F.4th 89, 98 (2d Cir. 2023).
[14] SEC v. Hallam, 42 F.4th 316, 340 (5th Cir. 2022).
[15] Remarks at the “SEC Speaks” Conference 2025, Mark T. Uyeda (May 19, 2025).
[16] 603 U.S. 109, 121 (2024); for more information on SEC v. Jarkesy, see McGuireWoods’ article “SEC Speaks 2024: In Defense of Enforcement’s Aggressive Agenda”. https://www.subjecttoinquiry.com/2024/04/sec-speaks-2024-in-defense-of-the-enforcement-divisions-agenda/
[17] See 15 U.S.C. § 78u–2(b).