Securities Enforcement

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Sarah Abrams

We are now well into the new Trump administration. The President’s nominee to head the SEC, Paul Atkins, has now been sworn in. At the same time, the SEC is also dealing with the fallout from the U.S. Supreme Court’s decision last term in the Jarkesy case. In the following guest post, Sarah Abrams takes a look at what all this could mean for the SEC. Sarah is Head of Claims, Baleen Specialty, a division of Bowhead Specialty. I would like to thank Sarah for allowing me to publish her article on my site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Sarah’s article. Continue Reading The Post-Jarkesy, Atkins SEC

On April 21, 2025, Paul Atkins, President Trump’s nominee, was officially sworn in as the 34th Chair of the Securities and Exchange Commission. Atkins, who previously served as an SEC Commissioner from 2002 to 2008 during the George W. Bush administration, brings extensive prior SEC experience to his new post. In many ways that are already in evidence at the SEC in the early days of the Trump administration, the new leadership is likely to result in many significant changes in direction at the agency.Continue Reading Paul Atkins Chair Sworn In as SEC Chair

In parallel actions last week, the U.S. Attorney for the Southern District of New York and the SEC charged a tech exec with securities fraud in connection with fundraising for his company based on misrepresentations about the company’s AI capabilities. The exec, Albert Saniger, allegedly raised over $42 million by misrepresenting to investors that his company’s app used AI technology to complete online shopping purchases, when in fact the purchases were completed manually by contract workers located in the Philippines and elsewhere. As discussed below, there are several interesting features to these AI-related allegations.Continue Reading Tech Exec Charged with AI Washing-Related Securities Fraud

Paul Atkins, President Donald Trump’s nominee to serve as SEC Chair, has not even yet assumed his new office – his nomination apparently is scheduled to go before the relevant Senate committee on March 27 – but big changes are already underway at the agency under Mark Uyeda, the agency’s acting Chair. Indeed, based on the changes so far, a group of five leading academics including Columbia Law Professor John Coffee Jr. and calling themselves the “Shadow SEC” has already raised the alarm, warning in a March 13, 2025 post on the CLS Blue Sky Blog  that as a result of current and proposed staffing and budget cuts,  the agency is well on the way to becoming a “shell of its former self,” as it “becomes an agency with little power, capacity, or independent judgment.”Continue Reading Big Changes are Already Underway at the SEC

As I noted last week, President-Elect Donald Trump has indicated his intent to name former SEC Commissioner Paul Atkins as SEC Chair in the upcoming new administration. Atkins’s appointment, as I noted in last week’s post, could mean significant changes to the agency’s regulatory approach and enforcement priorities. Observers and commentators have continued to weigh in on the potential implications of Atkins’s appointment, and, as discussed below, academic commentators have tried to emphasize the importance of monitoring the agency closely under the new administration to ensure that it continues to be able to fulfill its traditional mission.Continue Reading More About the SEC Under the Incoming Presidential Administration

As D&O insurance professionals try to assess the potential impact on the industry from Donald Trump’s return to the White House next month, one area of focus has been on the Trump’s appointment powers. This includes, obviously, the President’s authority to appoint judges to the federal judiciary, but in addition involves his power to make appointments to the Presidential cabinet and to the federal agencies. As Trump’s appointments have unfolded over the last few weeks, none looms larger (for now at least) for the D&O arena than the announcement last Wednesday that Trump will nominate former SEC Commissioner Paul Atkins as SEC Chair. This appointment, if confirmed, could result in a significant change of direction at the SEC, which in turn could have important implications for the world of D&O.Continue Reading Trump Selects “Anti-Gensler” for SEC Chair

In recent days, SEC observers have speculated about who the new head of the agency will be in the incoming Trump Administration and what the new leadership might mean for the agency’s regulatory and enforcement agenda. While we await the upcoming changes, it is still worth asking what the agency has been up to from an enforcement standpoint in the most recently completed fiscal year (ended September 30, 2024). The agency’s recently issued enforcement activity report and a separate academic study of the agency’s enforcement activity against public companies and their subsidiaries both reveal some interesting and arguably unexpected information about what the agency has been doing. Among other things, the agency’s report shows that while the agency’s overall enforcement activity levels declined in the most recent fiscal year, the agency’s total recoveries were at record levels – but both of these observations require further discussion as well.Continue Reading SEC’s FY 2024 Enforcement Activity Declined While Total Financial Remedies Surged

In recent months, the SEC Chair and other government officials have made it clear that they are closely watching for companies that try to catch the AI wave by making exaggerated or false claims about the AI capabilities of their products or services. In the latest example of the crack down on these kinds of AI-related misrepresentations, both the U.S. Attorney  for the Southern District of New York and the SEC have filed charges against the former CEO and Chairman of the tech company Kubient. The government alleges that the executive, Paul Roberts, inflated the company’s revenues and also lied about one of its signature products, an AI-powered tool that was supposed to detect ad fraud in the digital advertising industry. There are some interesting features of the charges against Roberts, as discussed below.Continue Reading Tech Exec Charged with AI-Related Misrepresentations and Fraudulent Revenue Recognition

In an action the SEC’s two Republican Commissioners sharply criticized in a separately-issued statement, the SEC has filed settled charges against business communications services provider R.R. Donnelly & Sons (RRD) relating to the company’s disclosure and accounting controls in connection with cybersecurity incidents the company suffered in late 2021. The company, which the SEC credited for its cooperation and remedial measures, agreed to pay a $2.125 million civil penalty and voluntarily adopted corrective processes and procedures. The settled action provides strong indications of the measures and controls the agency expects reporting companies to adopt and implement with respect to cybersecurity.Continue Reading SEC Files Settled Charges Based on Alleged Cybersecurity-Related Control Deficiencies

The United States Supreme Court has held that that, in light of the Seventh Amendment’s right to a jury trial, the SEC must pursue enforcement actions seeking civil penalties in a jury trial proceeding in federal court rather than in an action before an administrative law judge. The Court’s 6-3 ruling could have significant consequences for the many SEC enforcement actions now pending in the agency’s administrative tribunals, as well as for the agency’s pursuit of future enforcement actions. The Court’s ruling could also have important implications for other federal agencies’ use of administrative tribunals as well. A copy of the Court’s June 27, 2024, opinion in SEC v. Jarkesy can be found here.Continue Reading Supreme Court Strikes Down SEC’s Use of Administrative Law Judges in Civil Penalty Actions