SECURITIES ENFORCEMENT

A lighter touch from the SEC

The regulatory environment for publicly traded corporations and financial institutions is complex, but an underlying framework of regulations designed to promote transparency for investors, prevent fraud, and keep the U.S. financial system secure remains robust.

Under the second Trump administration, the SEC's tone is generally friendlier toward regulated entities than in the past. Senior executives nevertheless remain aware that the fastest way to trigger an inquiry or a securities lawsuit is a compliance misstep. Some of the largest settlements and verdicts historically for financial institutions have arisen from regulatory inquiries.

A softer approach to financial regulation may stem from personnel changes at the SEC, Treasury Department, and other federal agencies. For example, the current administration includes more officials with business experience, as opposed to the academics and public servants who have often dominated past administrations.

The current administration’s regulatory approach places more focus on enforcement driven by fraud and consumer harm rather than the procedural foot faults that prior administrations may have pursued. Current Chair Paul Atkins has made it clear that he intends to refocus the agency on enforcement in traditional areas like insider trading, accounting fraud, and disclosure violations. “Naming and shaming” is another tactic the current administration has used to express its viewpoint where no specific regulations exist.

That said, the SEC initiated just 56 actions against public companies and their subsidiaries during the 2025 fiscal year, which ended Sept. 30, 2025, according to Cornerstone Research. (See Figure 2.) That represents a 30% drop from FY2024.

Notably, 93% of the actions during FY2025 were initiated under the Biden administration and previous chair Gary Gensler, the most by an outgoing administration during a year of leadership change. (See Figure 3.)

0/56

Just four of 56 total actions were initiated under the second Trump administration, including two after Atkins was confirmed as chair. Reduced staffing of federal agencies, particularly in the SEC’s Enforcement Division, is another likely contributing cause of the fall in enforcement activity.

September delivered two examples of policy shifts, both done outside of the SEC's official rulemaking process:

The SEC reversed a decades-long policy of prohibiting companies seeking to go public from relying on arbitration clauses to avoid class-action lawsuits.

The president suggested the SEC relax rules on quarterly filings and instead limit financial reporting to every six months. The SEC is considering codifying this approach, which would align with a growing trend of companies declining to issue quarterly investor guidance.