Paul Atkins has taken the reins of the US Securities and Exchange Commission (SEC). After being confirmed by the Senate on April 9, Atkins officially began his tenure as SEC Chairman on April 21. His arrival is expected to usher in a new era of enforcement, as a leaner and more streamlined organization continues to tackle traditional cases like offering frauds and insider trading, while at the same time expanding its focus to emerging technologies like artificial intelligence. Although Chairman Atkins has just arrived in the building, the agency he inherits has already been significantly transformed from the SEC led by his predecessor, Gary Gensler—with important organizational and policy changes already in place.
Background
Since his appointment as Acting Chairman on January 20, Mark Uyeda has worked quickly to implement a series of changes to the agency's structure and priorities—many of which we expect will remain in place under Chairman Atkins. Perhaps the most important change has been in tone. Acting Chairman Uyeda and his fellow Republican Commissioner Hester Peirce have reiterated their view that the Gensler SEC consistently overreached in the enforcement area, especially in the crypto space. One of Acting Chairman Uyeda's first official acts was to create a crypto task force, headed by Commissioner Peirce, to respond to this overreach and to seek to repair ties with the crypto industry and other market players.1 The SEC has since sought to dismiss an unprecedented number of filed enforcement actions—mostly in the crypto space—and has likewise closed a number of enforcement investigations.2 The clear message from the administration has been that enforcement resources will be focused on cases of fraud targeted at retail investors, and that matters involving technical rule violations but no investor harm will generally not be pursued.
Additionally, Acting Chairman Uyeda has worked to implement the broader policy of the new administration to reduce the size of the federal workforce. Scores of SEC staff have left the agency since Inauguration Day, and more resignations and retirements are likely. Acting Chairman Uyeda also oversaw significant changes to the structure of the Enforcement Division and its enforcement procedures.
Chairman Atkins thus has arrived at an already changed agency—with much of the groundwork for SEC Enforcement 2.0 having been laid by Acting Chairman Uyeda and Commissioner Peirce. It remains to be seen to what extent Chairman Atkins will embrace these policy initiatives, but his testimony at his confirmation hearing suggests that his priorities are aligned with those of his fellow Republican Commissioners: "I will strive to protect investors from fraud, to keep politics out of how our securities laws and regulations are applied, and to advance clear rules of the road that encourage investment in our economy to the benefit of all Americans."3
Organizational and Staffing Shakeups
There have been significant organizational and staffing changes for the Enforcement Division at the SEC in the first months of President Trump's administration. The Enforcement Division's reporting structure has been streamlined with fewer “senior officer” positions now in place. The regional directors who previously headed each of the SEC's ten regional offices have been reassigned to other senior roles at the agency—including to four Deputy Director positions. While the Enforcement Division previously had a sole Deputy Director reporting to the Director of Enforcement, the new structure has Deputy Directors covering the Northeast, West, and Southeast regions, as well as a Deputy Director for the Division's specialized units.4
This reorganization comes 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, including early retirement and a $50,000 buyout.5 While the resignations have not been limited to the Enforcement Division, there has been a notable reduction in Enforcement's staffing numbers. Still, many seasoned Enforcement staff have opted to remain in their positions, and the agency has not to date instituted any across-the-board cuts (such as those affecting probationary employees). It remains to be seen whether and to what extent these staff reductions will ultimately have an impact on Enforcement's productivity.
Formal Order Review Process
Another important change at the SEC is the new requirement that formal orders of investigation—required for SEC staff to issue a subpoena for documents or testimony—be approved by a majority of the SEC Commissioners. Since 2009, the authority to approve formal orders had been delegated to the Director of Enforcement, but the Commission has now revoked that delegation.6 This means that the Commissioners will have the opportunity to weigh in on enforcement investigations at an earlier stage.
Practically, we do not expect this change to have a significant impact on Enforcement's operations. As was the case before 2009, staff can use voluntary requests in the first instance, and the Enforcement Division can implement an efficient process for requesting formal order authority from the Commission. Where this change may prove important, however, is with respect to any cases where staff is employing "creative" legal theories that may not be embraced by the Commission. Although we do not expect the Division to pursue such cases—in the words of Acting Enforcement Director Sam Waldon, "creativity is probably not where we want to be"—the Commission will be able to make determinations about these types of issues earlier in an investigation and may use the formal order review process to narrow or even close investigations.7
Changes to Enforcement Priorities
FCPA
As we previously reported, the new administration has ordered the Justice Department to pause enforcement of the Foreign Corrupt Practices Act and to issue updated guidelines for enforcing the statute. While the executive order did not include the SEC, agency staff have indicated they will follow the Justice Department's lead.8 To date, the SEC has not provided further guidance regarding the work of its specialized FCPA unit, but the leadership of the unit recently left the agency.9
Crypto
The new administration likewise has ordered an overhaul of the federal government's regulatory approach to crypto, which already has resulted in a major shift in the SEC's crypto enforcement program.10 The SEC's specialized crypto enforcement unit—which was the largest of the specialized units, having doubled in size during Chair Gensler's tenure—has been restructured and downsized. The rebranded Cyber and Emerging Technologies Unit, which has been significantly reduced in size from its former iteration, will be largely focused on misconduct in the cyber and AI space targeted at retail investors.11 Crypto is just a small part of the new unit's mandate, and any future crypto investigations will be cases involving fraud or manipulation—as opposed to the types of high-profile registration-focused cases the SEC brought during Chair Gensler's tenure. In line with this new mandate, the Enforcement Division has shuttered a number of crypto investigations and has moved to dismiss most of its crypto litigation docket (which was largely composed of non-fraud registration cases).12
In addition, the recently created Crypto Task Force, headed by Commissioner Peirce, long-dubbed "crypto mom" by the crypto industry, has been moving at breakneck speed to develop a comprehensive regulatory framework for crypto, which will ultimately dictate the SEC's enforcement jurisdiction over the industry. The task force has held dozens of private meetings with industry players as well as a series of public roundtables to discuss the various legal and regulatory issues posed by crypto and blockchain technologies. To date, the task force has coordinated issuance of guidance about the security status of—and thus the SEC's jurisdiction over—stablecoins,13 meme coins,14 and crypto mining activities.15 All signs point to a far narrower interpretation of what falls within the SEC's regulatory and enforcement jurisdiction than that adopted by SEC staff under Chair Gensler.
With the arrival of Chairman Atkins, we expect the Crypto Task Force's work to continue in full force. At his nomination hearing, Chairman Atkins testified that "ambiguous and non-existent regulations for digital assets [have created] uncertainty in the market and inhibit[ed] innovation," adding that "[a] top priority of [his] chairmanship will be to work with [his] fellow Commissioners and Congress to provide a firm regulatory foundation for digital assets through a rational, coherent, and principled approach."16
AI
Another of the new administration's areas of focus for regulatory overhaul has been AI.17 The SEC accordingly has continued to view AI as a priority including in the enforcement area. Since last year, we have seen a steady focus by SEC staff on "AI washing," cases involving disclosure violations relating to a company's AI capabilities. While we do not expect the current administration to investigate non-fraud disclosure violations, the newly created Cyber and Emerging Technologies Unit will be focusing on AI washing and cases involving fraud committed using AI and machine learning. Because the SEC's focus will be on cases of fraud, we would expect many of these investigations to involve a parallel criminal component. We saw this pattern in a recent enforcement action against the founder of an AI startup charged with fraud for allegedly making false and misleading statements about the company's use of AI.18 The Justice Department brought a parallel criminal case.19
As with crypto, the SEC is taking a more comprehensive regulatory approach to AI, including holding roundtables with industry participants to evaluate regulatory issues around the use of AI. Topics discussed include potential conflicts of interest created by the use of AI by investment advisers and broker-dealers, new ways that AI could be used to facilitate fraud and market manipulation, and steps companies can take to implement governance and risk-management procedures around AI.20
Private Funds
One area where we likely will see a marked pullback of enforcement resources is with respect to private funds. Under Chair Gensler, there was increasing focus on private funds' disclosures and potential conflicts of interest. But during his confirmation hearing, Chairman Atkins emphasized the sophistication of private funds investors who have "the means" to conduct their own investigations of financial products—signaling a coming shift in enforcement efforts in the private funds area.21
"Bread and Butter" Enforcement
As many practitioners expected, the lead-up to the Atkins administration has seen a return to more traditional enforcement areas. As Acting Enforcement Director Sam Waldon recently noted, the agency will pursue perennial areas of enforcement—including insider trading and accounting and disclosure fraud—in lieu of "creative" enforcement theories like "shadow trading."22
Along these lines, the SEC recently dismissed a litigated case the agency brought in the waning days of Chair Gensler's tenure against an investment adviser for allegedly failing to draft rules expressly prohibiting an attorney from sharing material non-public information.23 Although the SEC did not state its reasons for dismissing the case, one can surmise that the type of novel legal theory pursued in the case (which did not allege any actual insider trading) is not in line with the current administration's agenda.
According to Acting Director Waldon, Enforcement staff also will prioritize cases aimed at individual accountability, as "those are cases that are going to be received better by this commission."24 In one such case, the SEC recently charged a real estate investment firm and its owner with defrauding at least 700 investors of more than $52 million by using investor funds to prop up other failing commercial real estate projects.25
Another of the more controversial enforcement areas for the SEC—off-channel communications—is likely at an end. As perhaps a final act in this area, the SEC recently denied a motion by a number of firms that sought modifications to their settlement agreements with the SEC to bring those settlements in line with settlements the SEC reached in January 2025 that were more favorable to the firms. In denying the motion, the SEC found that those firms' "settlor's remorse" did not justify upsetting a final, agreed-upon settlement; Commissioner Peirce issued a dissent.26
Going Forward
The outlines of the new SEC's enforcement program have already taken shape, and we expect Chairman Atkins' priorities to be further clarified in the coming months. The Enforcement Division, like its counterparts across the agency, will be trying to do more with less. While the loss of many long-tenured staff will doubtless be felt, we expect that the agency will remain able to pursue its core enforcement mission. The enforcement priorities are certainly different than they were during Chair Gensler's years, and it is unlikely that we will see many novel or controversial enforcement theories being put forward by the new SEC. In the same vein, we expect to see lower civil penalties and a more conservative approach to disgorgement calculations, and we may even see more flexibility from the SEC in granting relief from associational and other bars.27 In addition, there may be additional organizational and procedural changes implemented by Chairman Atkins that could significantly impact the Enforcement Division. But, through all of these changes, the agency's core enforcement program will continue—even as its contours come into full view as Chairman Atkins and his new team, including his new Enforcement Director, take the reins.
1 Press Release, U.S. Sec. & Exch. Comm'n, SEC Crypto 2.0: Acting Chairman Uyeda Announces Formation of New Crypto Task Force (Jan. 21, 2025) available here.
2 See e.g. Press Release, U.S. Sec. & Exch. Comm'n, SEC Announces Dismissal of Civil Enforcement Action Against Coinbase (Feb. 27, 2025) available here.
3 Opening Statement of Paul Atkins Nomination Hearing Before the Senate Banking Committee (Mar. 27, 2025) available here.
4 Chris Prentice, Exclusive-US Securities and Exchange Commission shakes up enforcement, exams units, Reuters (Apr. 2, 2025) available here.
5 Declan Harty, SEC set to see hundreds leave through buyout, retirement offers, Politico (Mar. 21, 2025) available here.
6 17 CFR 200.30-4(a)(13).
7 Reuters, SEC to focus on traditional cases under new leadership, acting director says (Mar. 24, 2025) available here.
8 Chris Prentice and Dawn Kopecki, Top officials to leave US SEC's anti-bribery unit, sources say, Reuters (Apr. 2, 2025) available here.
9 Id.
10 Stewart et al., Crypto 2.0: The New Administration Recasts the Landscape for Crypto, The National Law Journal (Feb. 21, 2025) available here.
11 Press Release, U.S. Sec. & Exch. Comm'n, SEC Announces Cyber and Emerging Technologies Unit to Protect Retail Investors (Feb. 20, 2025) available here.
12 See e.g. Press Release, U.S. Sec. & Exch. Comm'n, SEC Announces Dismissal of Civil Enforcement Action Against Coinbase (Feb. 27, 2025) available here; Press Release, U.S. Sec. & Exch. Comm'n, Payward, Inc. and Payward Ventures, Inc. (d/b/a "Kraken") (Mar. 27, 2025) available here; Press Release, U.S. Sec. & Exch. Comm'n, Consensys Software Inc. (Mar 27, 2025) available here.
13 Statement, Division of Corporation Finance, Statement on Stablecoins (Apr. 4, 2025) available here.
14 Statement, Division of Corporation Finance, Staff Statement on Meme Coins (Feb. 27, 2025) available here.
15 Statement, Division of Corporation Finance, Statement on Certain Proof-of-Work Mining Activities (Mar. 20, 2025) available here.
16 Opening Statement of Paul Atkins Nomination Hearing Before the Senate Banking Committee (Mar. 27, 2025) available here.
17 Exec. Order, Strengthening American Leadership in Digital Financial Technology (Jan. 23, 2025) available here.
18 Press Release, U.S. Sec. & Exch. Comm'n, SEC Charges Founder and Former CEO of Artificial Intelligence Startup with Misleading Investors (Apr. 11, 2025) available here.
19 Press Release, U.S. Dep't of Just., Tech CEO Charged In Artificial Intelligence Investment Fraud Scheme (Apr. 9 2025) available here.
20 Commissioner Uyeda, Remarks at the SEC Roundtable on Artificial Intelligence in the Financial Industry (Mar. 27, 2025) available here; Commissioner Peirce, Artificial Fears and Human Intelligence: Remarks at the SEC Roundtable on Artificial Intelligence in the Financial Industry (Mar. 27, 2025) available here; Commissioner Crenshaw, Statement Regarding Climate-Related Disclosures Rule Litigation: The Commission has Left the Building (Mar. 27, 2025) available here.
21 C-SPAN, SEC, Treasury and Transportation Department Nominees Testify at Confirmation Hearing (Mar. 27, 2025) available here.
22 Reuters, supra note 7.
23 Press Release, U.S. Sec. & Exch. Comm'n, SEC Charges Silver Point Capital with Policy Failures Regarding Receipt of Material Nonpublic Information About Bonds Issued by Puerto Rico (Dec. 20, 2024) available here; Press Release, U.S. Sec. & Exch. Comm'n, Silver Point Capital, L.P. (Apr. 4, 2025) available here; see also Press Release, U.S. Sec. & Exch. Comm'n, Advisory Firm Marathon Asset Management Charged with Policies Failures Regarding Potential Receipt of Confidential Information from Ad Hoc Creditors' Committees (Sept. 30, 2024) available here.
24 Reuters, supra note 7.
25 Press Release, Elchonon Schwartz and Nightingale Properties, LLC (Feb. 21, 2025) available here; Securities and Exchange Commission v. Elchonon Schwartz and Nightingale Properties, LLC, No. 1:25-cv-00716-ELR (N.D. Ga., Feb. 12, 2025) available here.
26 In Re Certain Off-Channel Commc'n Settled Orders, Exchange Act Release No. 102860 (Apr. 14, 2025) available here.
27 See e.g. In Re Singh, Securities Act Release No. 11372 (Apr. 10, 2025) available here; In Re Denha, Investment Advisers Act Release No. 6872 (Apr. 11, 2025) available here.
