In the 2025 fiscal year (ended September 30, 2025), the SEC’s enforcement activity, as measured by the number of stand-alone enforcement actions, was at its lowest level in ten years. While the decline was reflected across many categories of SEC enforcement, there were certain specific areas – such as cases involving insider trading and market manipulation – where SEC activity actually increased. And notwithstanding the overall decline in SEC enforcement activity, there are signs to suggest that foreign companies listed on U.S. exchanges should be prepared heightened SEC scrutiny and enforcement activity, as discussed below.

According to a November 12, 2025, memo from the Covington law firm (here), the SEC brought 313 stand-alone enforcement actions in FY 2025, compared to 431 in FY 2024, representing a decline 118 actions (27.3%). The SEC’s enforcement activity in FY25 was, according to the law firm memo, at its “lowest level in ten years.”

Among the reasons for the apparent decline, the law firm memo suggests, is the loss of approximately one-fifth of the SEC’s work force. Since the start of 2025, about 1,300 employees have left the agency (many due to early retirements or buyouts), for a headcount reduction from 5,400 to 4,100 (representing a decline of 24%).

The year-to-year decline in the number of enforcement actions also reflects a shift in priorities due to the change in administration following President Trump’s January 2025 inauguration. Among other things, the agency has taken a different approach to cryptocurrency under its current Chair, Paul Atkins. The FY 2025 enforcement actions also reflect a decrease in the number of actions in nearly every area, with the exception that it now appears that the SEC under Atkins is, as the law firm memo puts it, “what it sees as flagrant fraud and individual wrongdoing.” In that regard, the number of enforcement actions relating to insider trading and market manipulation actually increased in FY25 compared to FY24.

While the agency’s shifting priorities and reduced enforcement activity might be welcomed by many companies, there are signs that at least one category of companies in particular should remain vigilant. According to a November 14, 2025, Law360 article from the Cooley law firm (here), there are signs based on recent SEC activity that foreign companies participating in the U.S. capital markets “should anticipate heightened SEC oversight and enforcement in coming years.”

In support of its thesis that foreign companies may experience increased scrutiny, the Cooley law firm memo cites four recent developments.

First, in a series of orders beginning in September, the SEC suspended the trading in the securities of ten foreign-based issuers listed on the Nasdaq suspected of market manipulation. The ten companies are all Asia-based, with four headquartered in Hong Kong, three in Singapore, one in Malaysia, and one in Japan. The memo quotes the SEC suspension orders reference to “unknown persons” using social media to “artificially inflate the price and trading volume” of the affected securities. The law firm memo notes that the SEC orders’ reference to “unknown persons” makes it unclear whether the activity allegedly was conducted by anyone connected to the company. The memo notes that the uptick in suspensions is particularly noteworthy given the “relative scarcity” of suspensions in recent years (for example, there were only two suspensions in all of FY24).

Second, in June the SEC published a concept release soliciting public comment on potential changes to the definition of a foreign private issuer. The law firm memo notes that the SEC’s concept release, as well as comments made by SEC officials, signal that the commission is considering narrowing the eligibility criteria for FPIs, potentially making it harder for FPIs to benefit from such accommodations. The concept release notes that as a result of a population shift in foreign companies current FPIs are “not subject to meaningful disclosure requirements and oversight outside the United States,” resulting in less information for U.S. investors. Were the proposed changes to be implemented, foreign companies “likely would face more frequent and expansive disclosure obligations, potentially leading to higher noncompliance and enforcement risks.”

Third, according to the memo, a recent enforcement action “further underscores the SEC’s scrutiny of non-U.S. market participants.” The action, in which the SEC announced settled charges on August 6, 2025, involves MUFG Securities EMEA, a U.K.-based security swap dealer. The firm had elected, as permitted under SEC rules, to opt, as permitted, for compliance with its home country recordkeeping and financial reporting requirements. However, the SEC alleged, the firm failed to comply with those requirements, obliging the company to comply with SEC requirements, which the firm failed to do. To settle the charges, the firm agreed to pay $9.8 million and to undertake a comprehensive review of its compliance program. The law firm memo notes that the enforcement action underscores the need for foreign companies opting to elect to follow its home country compliance requirements must be diligent in ensuring compliance or follow the equivalent SEC requirements.

Fourth, and perhaps most significantly, in September, the SEC announced the formation of a cross-border task force to investigate potential U.S. federal securities law violations related to foreign-based companies. Among other things, the SEC noted in announcing the task force formation that it was focusing in particular on companies in foreign jurisdictions “where governmental control and other factors pose unique investor risks,” including China; and on “gatekeepers, particularly auditors and underwriters, which help these companies access the U.S. capital markets.” My prior post about the cross-border task force formation can be found here.

The Cooley law firm memo notes that the task force is “the SEC’s first major enforcement initiative announced under Atkins.” The memo notes that in coming months, “we can expect to task force to increase scrutiny of foreign-based – and in particular, China-based – companies, as well as their companies as well as their U.S.-based auditors and underwriters.”

The Cooley law firm memo concludes by emphasizing that “in recent months, the SEC has made it clear that it is focused on violations by foreign-based companies that participate in the U.S. capital markets.” The memo notes that these foreign companies should “ensure compliance with the U.S. securities laws” and should “consider enhancing their compliance programs and strengthening their internal reporting systems to mitigate the risks of an SEC investigation.”