How Does the SEC Enforce Securities Laws to Protect Investors in 2025?

The Securities and Exchange Commission serves as the primary federal regulator of securities markets, with investor protection at the cornerstone of its mission. Through its Division of Enforcement, the SEC investigates potential securities law violations, files hundreds of enforcement actions annually against wrongdoers, and works to return money to harmed investors. In 2025, the Commission has signaled a return to core enforcement priorities following an administration change, focusing on traditional fraud cases while evolving its approach to emerging issues including cryptocurrency and artificial intelligence. Understanding how the SEC operates and what enforcement trends are emerging helps market participants navigate their compliance obligations and recognize potential risks.

What Are the SEC's Core Enforcement Priorities?

Under Chairman Paul Atkins, who was sworn in as the 34th SEC Chairman in April 2025, the Commission has emphasized a back-to-basics approach to enforcement.

What Did the Chairman Mean by Holding Accountable Those Who Lie, Cheat, and Steal?

In his first staff town hall meeting on May 6, 2025, Chairman Atkins articulated a statement of purpose for the enforcement program centered on investor protection. He emphasized holding accountable those who engage in fraud while highlighting values of predictability, due process, rule of law, and integrity. This framing suggests a focus on clear-cut misconduct rather than aggressive expansion of regulatory theories.

Which Areas Receive Priority Attention?

The Commission has indicated that fraud-centric enforcement will dominate its activities. Priority areas include insider trading, accounting and disclosure fraud, market manipulation, and breaches of investment advisers' fiduciary duties. Offering fraud cases comprised 27 percent of all actions brought in fiscal year 2025, up from 22 percent in the prior year. Cases involving clear harm to investors receive particular emphasis.

How Have Enforcement Numbers Changed?

Fiscal year 2025 saw significantly fewer SEC enforcement actions compared to recent years. The Commission brought fewer than 50 standalone administrative proceedings and civil actions in September 2025, compared to more than 200 in September 2024. The enforcement staff has decreased approximately 15 percent from its peak, contributing to reduced activity levels. However, leadership has indicated that case counts alone do not measure program effectiveness.

What New Enforcement Initiatives Has the SEC Launched?

Despite overall reductions in activity, the SEC has launched targeted initiatives addressing specific concerns.

What Is the Cross-Border Task Force?

On September 5, 2025, the SEC announced formation of the Cross-Border Task Force to strengthen efforts identifying and combating cross-border fraud harming American investors. The task force focuses on foreign-based companies' potential securities law violations, including market manipulation and pump-and-dump schemes. Particular attention is paid to gatekeepers such as auditors and underwriters that help foreign companies access American capital markets.

The announcement specifically called out China and other jurisdictions where governmental control may pose unique investor risks. This initiative aligns with broader administration priorities regarding competition with foreign adversaries.

How Is the Crypto Task Force Different?

In January 2025, the SEC announced creation of the Crypto Task Force, led by Commissioner Hester Peirce, dedicated to developing a comprehensive regulatory framework for crypto assets. Unlike previous enforcement-first approaches to cryptocurrency regulation, this task force aims to draw clear regulatory lines, appropriately distinguish securities from non-securities, and provide realistic paths to registration.

The Commission has moved away from regulation by enforcement in the crypto space, with several ongoing lawsuits being voluntarily dismissed. However, the enforcement division continues pursuing fraud cases involving crypto assets when clear investor harm exists.

What Types of Cases Does the SEC Bring?

The SEC's enforcement activity spans multiple categories of securities violations.

How Does the SEC Address Offering Fraud?

Offering fraud cases remain central to SEC enforcement. These cases involve materially false or misleading statements made to investors in connection with securities offerings. Recent examples include Ponzi schemes promising unrealistic returns and companies making false claims about their business operations or financial condition.

The SEC secured significant results in offering fraud cases during 2025, including emergency asset freezes against fraudulent operations and settlements with companies that misled investors about their capabilities or prospects.

What Investment Adviser Enforcement Continues?

Investment adviser enforcement remains active despite overall case reductions. Priority areas include cherry-picking, where advisers fraudulently allocate profitable trades to favored accounts at clients' expense, custody rule violations where advisers fail to properly safeguard client assets, and fiduciary duty breaches where advisers place their interests ahead of clients.

The SEC brought over 90 actions against investment advisers and their representatives in fiscal year 2025, down from over 130 in the prior year but still representing a significant enforcement priority.

How Is Insider Trading Enforced?

Insider trading and market manipulation cases increased compared to the prior fiscal year despite overall enforcement declines. The SEC continues aggressively pursuing individuals who trade on material nonpublic information obtained through their employment or other relationships. Recent cases have involved trading ahead of secondary offerings, merger announcements, and other market-moving events.

What Due Process Changes Has the SEC Made?

The new administration has emphasized procedural fairness in enforcement proceedings.

How Has the Wells Process Changed?

In October 2025, Chairman Atkins announced enhancements to the Wells process, the mechanism by which the SEC notifies individuals or entities under investigation that enforcement staff plans to recommend charges. The Chairman described this process as an extension of due process and fundamental constitutional rights.

Changes include greater willingness to provide defense counsel with investigation materials, more meaningful Wells meetings where subjects can present their positions, and increased consideration of cooperation and remediation in charging decisions.

What About Settlement Waivers?

Chairman Atkins issued a statement on simultaneous Commission consideration of settlement offers and related waiver requests. This addresses situations where settling parties need relief from collateral consequences that would otherwise flow from enforcement settlements. The approach suggests greater willingness to tailor resolutions to individual circumstances rather than applying blanket requirements.

How Is Technology Affecting SEC Enforcement?

Emerging technologies create both new enforcement challenges and new areas of focus.

What AI-Related Enforcement Exists?

The SEC has pursued what has been termed AI washing, cases where companies make false or misleading claims about their use of artificial intelligence. Enforcement actions have targeted companies that claimed to use sophisticated AI technology when they actually relied on human workers or simpler systems. Accurate disclosure of AI capabilities has become an enforcement priority.

The Division of Examinations has also indicated that AI use by regulated entities, particularly when deployed in connection with advising or making recommendations to retail investors, will be an examination focus.

How Are Cybersecurity Failures Addressed?

Cybersecurity disclosure and controls have become significant enforcement areas. The SEC charged SolarWinds and its chief information security officer for allegedly misleading investors about cybersecurity practices, though that case was ultimately dismissed without admission of wrongdoing. Other enforcement actions have targeted failures to protect customer data and inadequate cybersecurity disclosures.

What Should Market Participants Know?

Understanding SEC enforcement helps market participants manage compliance risks and respond appropriately to investigations.

How Should Companies Respond to Investigations?

Companies facing SEC investigations should engage experienced securities counsel early and preserve potentially relevant documents. Cooperation with investigations can result in more favorable outcomes, including reduced penalties and resolution without admitting wrongdoing. Self-disclosure of discovered problems may qualify for additional leniency under the SEC's cooperation programs.

What Disclosure Practices Matter?

Accurate disclosure remains the foundation of securities compliance. Companies should ensure their public statements about business operations, financial condition, technology capabilities, and other material matters are truthful and not misleading. Internal controls over financial reporting and disclosure controls and procedures help ensure disclosure accuracy.

How Do Examination Priorities Provide Guidance?

The SEC's Division of Examinations annually publishes examination priorities that indicate areas of focus for registered entities. The 2026 examination priorities emphasize investment advisers' fiduciary standards, best execution obligations, and risks associated with complex products. Companies subject to SEC examination should align their compliance programs with these stated priorities.

What Are the Consequences of Enforcement Actions?

SEC enforcement actions can result in significant penalties and collateral consequences.

What Monetary Penalties Apply?

The SEC can seek disgorgement of ill-gotten gains, civil monetary penalties, and prejudgment interest. Penalty amounts depend on various factors including the egregiousness of the conduct, harm to investors, and the violator's financial resources. While headline penalty amounts can reach hundreds of millions of dollars for large companies, smaller penalties are more typical for individual violators and smaller entities.

What Non-Monetary Remedies Exist?

Beyond financial penalties, the SEC can seek injunctions prohibiting future violations, bars preventing individuals from serving as officers or directors of public companies, suspensions or revocations of professional registrations, and undertakings requiring specific compliance improvements. These non-monetary remedies can be career-ending for individuals and business-altering for companies.

How Do Parallel Criminal Proceedings Work?

The SEC coordinates with the Department of Justice on matters that may warrant criminal prosecution. While the SEC brings civil enforcement actions, the DOJ has authority to bring criminal charges for willful securities violations. Individuals facing parallel civil and criminal proceedings confront significant strategic decisions about how to respond.

Navigating the Current Enforcement Environment

The SEC's enforcement program in 2025 reflects a shift toward core investor protection priorities while reducing activity levels compared to recent years. Market participants should understand that the Commission continues aggressively pursuing traditional fraud, insider trading, and investment adviser misconduct even as it moves away from expansive regulatory theories in areas like cryptocurrency. Compliance programs should focus on accurate disclosure, fiduciary duties, and emerging technology risks. Companies and individuals facing investigations should engage counsel promptly and consider cooperation strategies that may lead to more favorable outcomes. The enforcement landscape continues evolving, requiring ongoing attention to SEC priorities and practices.