When Paul Atkins returned to the SEC this year to serve as its chair, he called for a “new day” — one, he said, in which “policymaking will be done through notice and comment rulemaking, not through regulation by enforcement.”
If the watchdog agency’s first-year enforcement figures are any indication, that day has most certainly dawned. A new “SEC Enforcement Activity” study, looking at the agency’s fiscal year 2025, paints a picture of two agencies: one under former Chair Gary Gensler and the other under Atkins.
Before Gensler left office in January amid the change in presidential administrations, the SEC had initiated 52 actions in the first few months of its fiscal 2025, according to the report by Cornerstone Research and New York University’s Pollack Center for Law & Business. Since then, there have only been four. In other words, of the 56 actions the SEC started from Oct. 1, 2024 to Sept. 30, 93% were under Gensler.
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Even before those numbers came out, industry lawyers and experts were expecting a lighter regulatory touch with Atkins. Previously an SEC commissioner under President George W. Bush, the new chair has frequently shown a willingness to work more closely with industries under SEC jurisdiction.
Read on for more on this year’s regulatory trends, and a preview on what 2026 is likely to hold.
Drop in SEC enforcement actions
Stephen Choi, a NYU law professor and an author of the latest SEC enforcement report, is hesitant to say yet that there’s a trend.
For one, Choi said, the SEC often logs a decline in enforcement actions in transition years when control is being handed from one presidential administration to another. Choi noted there were only 53 enforcement actions in the SEC’s fiscal 2021, when Gensler first took office. That’s even fewer than in the agency’s latest fiscal year (although a full 55% of the actions in fiscal 2021 were initiated under Gensler).
Choi said one reason for the falling numbers may be that the SEC really has moved into a deregulatory phase. But that doesn’t exhaust the possibilities.
“Another explanation could be that Gensler was rushing these actions out the door and the pipeline was dry by the time Atkins got into place,” Choi said. “So it’s hard to know whether it’s a policy change within the current SEC. Or was it something that the prior SEC did by pushing all these actions forward?”
Similar drop in SEC monetary settlements
Monetary fines were also down. The SEC collected just over $800 million from settled enforcement actions in its latest fiscal year. That’s far below any year going back to 2016, according to Cornerstone; the next closest was 2023, when the SEC brought in $1.3 billion.
Again, Choi stopped short of declaring a trend. He noted that the SEC has shown growing reluctance in recent enforcement cases to press for disgorgement, or for the return of allegedly ill-gotten gains.
He said federal district courts have reached varying opinions in recent legal challenges over the SEC’s authority to impose those monetary penalties.
“This possibly could be an issue that the Supreme Court may take up,” Choi said. “And in the meantime, the SEC is not even seeking disgorgement in many cases that in the past it may have.”
The SEC usually puts out its own annual report tallying up the financial remedies it imposed in a given year. For fiscal 2024, the SEC reported having collected a record $8.2 billion.
Choi explained the SEC’s tally is so much higher than the number in his and his co-authors’ report because it includes fines against not only public companies and their subsidiaries but also private firms and individuals. More than half (56%) of the fiscal 2024 haul came from the SEC’s case against the privately held Terraform Labs, a now defunct cryptocurrency firm, and its founder.
SEC mission drift or mission fulfillment
Critics have been quick to accuse the SEC of dereliction of duty. In a scathing analysis issued this month by investor advocacy group Better Markets, the authors said the regulator is stepping “decidedly away from its core historic mission of protecting investors and markets to protecting the financial industry and management.”
An SEC spokesperson declined to comment for this article.
Others see the SEC’s actions merely as a fulfillment of a promise to listen more closely to industry voices.
“I don’t think the enforcement staff are going home here,” said Steffen Hemmerich, the head of Mayer Brown’s broker-dealer regulatory and compliance practice in the firm’s New York office. “That’s not the case.”
“They want to come across I think as more open to industry engagement and developing regulation based on feedback from the industry,” he added. “That’s the message.”
Dropping a case, hitting the brakes on new regulation
One unusual step taken by the SEC in fiscal 2025 was its decision to end its case against Coinbase, a publicly traded marketplace for digital assets. Under Gensler, the SEC had accused the firm of running an unregistered securities exchange but dropped the charges in February after commissioners expressed a desire for clearer regulations.
Choi said he’s not aware of other example of the SEC setting aside an ongoing case against a public company in any year going back to at least 2009. And now there are two: The SEC announced this month that it’s also dropping charges against the software company SolarWinds over alleged cybersecurity violations.
Ongoing enforcement actions aren’t the only initiatives the SEC is stepping back from. Under Gensler, the SEC had released hefty new regulatory proposals touching on everything from AI to the custodying of assets to cybersecurity. Now with Atkins in charge, the regulator has not only abandoned most of those proposals; it has also largely confined its rulemaking authority to making it easier for producers and sellers of cryptocurrencies and other digital assets to know their regulatory obligations.
Likewise under Gensler, a great deal of effort was put into taking firms to task for sending business-related messages via messaging services like WhatsApp. Before the administration change, the SEC and its companion watchdog agency, the Commodity Futures Trading Commission, had hit industry firms with more than $3 billion in fines for so-called off-channel communications.
These regulatory sweeps have now gone by the wayside amid increasing calls for the SEC to end what critics call “regulation by enforcement.” Only eight firms were fined this year for alleged off-channel violations, and those actions all came the last month Gensler was in office.
Deadline for Reg S-P compliance and questions over anti-money laundering
But some proposed regulations have survived. Come Dec. 3, investment advisors with $1.5 billion or more in assets under management, broker-dealers with $500,000 or more in total capital and other “large institutions” will have to comply with a recent amendment to the SEC’s data security rule known as Regulation S-P. (The deadline for smaller institutions is June 3 next year.)
The biggest change for investment advisors, brokers and other affected firms is a requirement calling on them to alert clients of any data breach that threatens to expose private data. The revisions to Reg S-P give firms 30 days to sound the alarm whenever a security lapse creates “a reasonably likely risk of substantial harm or inconvenience to an individual identified with the information.”
The Reg S-P further extends that reporting requirement to any third-party service provider that firms might contract with for various tasks. Investment advisors, brokers and other institutions are required to draw up contracts giving outside vendors no more than 72 hours to report data breaches.
There has been a long run-up to the fast-approaching compliance deadlines. The changes were first proposed under Gensler in March 2023 and adopted a little over a year later.
Advisors seem generally aware of what they need to do, said Christine Ayako Schleppegrell, a securities regulatory expert in Morgan Lewis’s Washington, D.C., offices.
“We’re hearing from people who are really trying to get the attention of vendors right now, and say, ‘I need you to agree that you will notify me within 72 hours so I can satisfy my Reg S-P obligations.'”
Meanwhile, the deadline has been pushed back for another rule adopted under the previous administration. The U.S. Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, adopted a rule in 2024 that brings RIAs and other advisory firms under the same anti-money laundering rules that now apply to banks and broker-dealers.
The original compliance deadline — Jan. 1, 2026 — has now been postponed by two years. That buys the current administration time to review the anti-money laundering rule in light of its “deregulatory policies focused on reducing any unnecessary or duplicative regulatory burden on Americans,” according to an order released in August.
Schleppegrell said the rule is really in FinCEN’s domain, “But of course, they coordinate with the SEC,” she said. “It has been put on pause, and it remains to be seen if there will be changes to the rule substantively.”
SEC examination priorities in 2026
What the SEC will do any given year is always anyone’s guess. But the agency usually tips its hand a bit by publishing a list of its examination priorities.
This year’s release stood out both for its lack of any mention of cryptocurrencies as well as the new interest it shows regulators are taking in mergers and acquisitions among RIAs. The priorities list also struck an industry-friendly note with Atkins’ pledge that the SEC won’t use its periodic examinations of firms as a “gotcha exercise.”
Hemmerich of Mayer Brown said the priority list’s omission of cryptocurrencies marks the first time those particular regulatory concerns have gone without a mention in years. The SEC has convened a special “crypto task force” charged with determining new regulations and investor protections needed for digital assets.
Hemmerich said advisors and brokers should not jump to the conclusion that regulators have lost interest in cryptocurrencies.
“We have existing regulations,” he said. “And other regulators have said that if you are doing business in this space, you’re subject to existing regulation.”
On the side of topics appearing for the first time, the SEC says it will be paying particular attention to the recurring phenomenon of big firms buying up smaller players in the RIA industry. Schleppegrell of Morgan Lewis said one priority is making sure that clients of acquired firms can transfer their assets and accounts over to the new owner without operational errors or other hiccups.
“There are also concerns about the targeted advisor saying good things about the acquiring advisor in order to encourage clients to move over,” Schleppegrell said.
Lori Weston, the head of compliance at the regulatory consultant STP Investment Services, said advisors, of course, are always under the fiduciary obligation to do what’s best for their clients. With M&A, that means any pondered acquisition deal has to fall demonstrably in line with client interests.
For that reason, asset management fees are likely to be a subject of concern. Some firms, Weston noted, have a practice of collecting fees in arrears, while others bring them in in advance.
“Say it’s the end of the quarter, and I just paid for the management that they did for the last three months,” Weston said. “And now I’m going to be hit again right away with a new fee, because this new firm charges in advance. It feels like a double whammy to me. So these kinds of things — advisory fees, the terms of advisory fees — are another sticky area.”
Hemmerich noted several reappearances of subjects listed in the SEC’s previous listings of exam priorities. Those include artificial intelligence, cybersecurity, firms dually registered as investment advisors and broker-dealers, the brokerage industry’s conduct standard known as Regulation Best Interest, and complex investment products like private equity and private credit.
But if some of the regulatory topics are familiar, the SEC is clearly on a different tack with enforcement, he said.
“With the 2026 priorities, the SEC is reassessing how to deploy their resources,” Hemmerich said. “They are reevaluating how to approach market trends and also, of course, how to engage with this industry and industry participants.”
