- Enforcement has collapsed to an 18-year low. The Securities and Exchange Commission obtained $1.1 billion in penalties from court orders and settlements in its latest fiscal year, which ended in September, the lowest tally in nearly two decades, according to figures released Tuesday and reported by The Wall Street Journal.
- Case counts fell nearly in half. The agency filed 348 enforcement actions, versus an average of 634 a year over the prior decade. The last time the SEC’s enforcement yield came in under $2 billion was amid the 2008 financial crisis, and during the Biden administration the agency averaged about $5.8 billion in penalties, including fines and disgorgement.
- Atkins says the numbers miss the point. “Enforcement actions and financial remedies are important measures of activity, but they are not the only or most telling measures,” SEC Chairman Paul Atkins said. The pullback reflects the Trump administration’s deregulatory agenda and its priority on making it easier for companies to raise capital and offer new ways to trade stocks, the WSJ said.
- Democrats plan to push back. Sen. Elizabeth Warren, expected to take over the Senate Banking Committee next year, criticized a “precipitous drop” in enforcement, saying, “The new Democratic majority in Congress will closely scrutinize whether the Atkins SEC is protecting the American people.”
What Happened?
Under Atkins, the SEC renounced some Biden-era enforcement actions, including a series of lawsuits against cryptocurrency platforms, and dropped most of its crypto lawsuits last year, according to the WSJ. Former Chair Gary Gensler maintained most crypto assets were securities, while Atkins has said the SEC tried to use enforcement to regulate the industry rather than tailoring its rules to crypto’s market structure. The agency also dismissed cases against former executives such as Nikola founder Trevor Milton and Ozy Media co-founder Carlos Watson, who were pardoned or had sentences commuted by President Trump. It has continued traditional cases, including a May suit against 21 people in an alleged insider-trading ring.
Why It Matters?
Lower penalties reduce a cost that Wall Street resented: big banks including JPMorgan and Goldman Sachs paid hundreds of millions of dollars to settle SEC probes over traders’ use of messaging apps during the Gensler era. For crypto firms and capital-markets businesses, the lighter-touch regime has been a tailwind. But with Democrats set to control Congress, the political risk is shifting toward hearings and oversight that could pressure the SEC’s priorities even without new legislation.
What’s Next?
Watch for Warren’s banking committee agenda once the new Congress convenes and whether hearings target the dropped crypto cases and pardoned executives. The SEC’s fiscal-year statistics will also be a reference point for whether enforcement rebounds in areas such as insider trading and fundraising fraud. For crypto platforms, any shift in oversight posture would matter for how new crypto rules are applied.
Affected Tickers and Coins: COIN, HOOD, JPM, GS
Source: The Wall Street Journal
