Warn Former General Counsels: SEC Enforcement Won't Vanish Under Chairman Paul Atkins

• SEC Chairman Paul Atkins was sworn in last week and will preside over a newly constituted SEC after a flood of departures due to DOGE. The rule-making agenda is likely to see significant shifts, experts said, but Atkins is no shrinking violet when it comes to enforcement actions.

Three out of the last four general counsels of the Securities & Exchange Commission are predicting that enforcement priorities will shift, but not disappear with newly sworn-in Chairman Paul Atkins leading the agency.

Last week, Atkins assumed his position as the head of the main federal agency overseeing U.S. securities markets; however, this role isn't uncharted territory for him. Earlier, from 2002 to 2008, Atkins was a commissioner at the SEC, and he has been recognized as an authority figure in this domain. crypto enthusiast , and has previously frozen up to $6 million worth of cryptoassets. Despite market observers anticipating more lenient regulation due to President Trump’s emphasis on pro-business approaches, it should be clear that enforcement actions will not cease under Atkins, as forecasted by Melissa Hodgman, who was once among the longest-serving senior officials at the SEC Division of Enforcement.

Hodgman notes that Atkins' comments on enforcement usually focus on several main points. She mentioned, speaking last week, that issues like fraud—such as accounting and disclosure fraud—as well as insider trading might receive considerable attention. Berkeley Spring Symposium on Mergers & Acquisitions and Corporate Governance .

Hodgman currently works as a partner at the law firm Freshfields after spending approximately 16 years with the SEC’s enforcement division. She cautioned the attendees that attorneys must remain vigilant regarding how corporate leaders and board members utilize material non-public information when engaging in security transactions. This is due to the fact that regulatory bodies have grown "exceptionally adept" at uncovering connections in insider trading cases using social media platforms and artificial intelligence technologies.

They incorporate data and analytics in a manner that wasn't part of my tenure there," stated Hodgman. "This enforcement division will be highly concentrated on that aspect.

In other instances of enforcement actions, the agency might observe a change in the types of regulatory breaches presented to the commission, said three former SEC general counsels who were participants alongside Hodgman as the moderator during a panel discussion.

During President Donald Trump's initial term, Robert Stebbins served as the general counsel for the Securities and Exchange Commission from 2017 to 2021 under Chairman Jay Clayton. He forecasted that enforcement actions would revert to the focus areas established during Clayton’s leadership.

This indicates a concentration on "Main Street" or retail-level individual investors, as he mentioned. Additionally, Stebbins pointed out that there won’t be any enforcement of the Foreign Corrupt Practices Act this time. The Trump administration halted FCPA enforcement back in February. executive order that it hindered America's economic competitiveness.

Dan Berkovitz, general counsel under former Chairman Gary Gensler from 2021 to to 2023, said with enforcement, there will be more focus on cases in which there has been investor harm rather than procedural violations.

Similarly, Megan Barbaro, general counsel from 2023 to 2025 aslo under Gensler, said it’s likely enforcement actions will seek lower corporate penalties because of a deeper concern at the commission that fines extracted from companies indirect harm shareholders.

“I expect to see smaller dollar amounts in those cases,” said Barbaro, who agreed with Berkovitz’s take on lower penalties. “There will be a focus on fraud, and fewer policies and procedures violations.”

In 2024, the SEC initiated 583 enforcement actions and collected over $8 billion in penalties. Although this represents a decrease of 26% in case volume, the total fines amounted to an all-time high of $8.2 billion. SEC history . Ex-chair Gensler faced criticism from businesses due to his extensive regulatory plans and also drew opposition from fellow Commissioner Hester Peirce who called In some instances, Gensler’s strategy towards cryptocurrency involves "enforcement-based regulation."

In that vein, all three former chief lawyers said they expect the SEC under Atkins to address crypto regulation, even though it’s a “delicate” issue, said Stebbins.

On his fourth day as chairman, Atkins spoke at the third roundtable of the SEC’s newly formed Crypto Task Force. Atkins gave a hat tip in his remarks to Peirce, who is nicknamed “CryptoMom.”

Regarding regulatory measures, the agency could potentially take formal action on environmental disclosures as well, according to Stebbins.

In March 2024, the Securities and Exchange Commission adopted final rules mandating fresh reporting requirements for publicly traded firms regarding their direct and indirect greenhouse gas emissions. These regulations encountered quick and intense legal challenges right away, and after President Trump was elected in 2024, Acting SEC Chair Mark Uyeda declared the commission had decided not to continue defending the climate-risk disclosure rule in court anymore.

Berkovitch mentioned that besides cryptocurrency, the regulatory environment might also concentrate on increasing accessibility to private markets and boosting regulations in this area. accredited investor threshold .

The SEC previously tackled the threshold in 2020. expanding the definition Of investors and companies capable of investing in private equity, hedge funds, venture capital, and pre-IPO shares.

This tale was initially showcased on The News Pulse