A look back at U.S. Securities and Exchange Commission (SEC) Chairman Paul Atkins' first six months shows that the emphasis on garden variety fraud, insider trading, and basic regulatory requirements violations by registered entities defined the Division of Enforcement’s focus on intentional misconduct with clear investor harm. It also indicates a significant step back in enforcement overall.  

Notably, this fiscal year saw a precipitous drop in end-of-year enforcement actions, which typically account for nearly half of the SEC’s total annual actions. During September 2025, the final month of the SEC’s fiscal year, the agency filed only 50 administrative proceedings, compared to over 200 actions in the same month last year.  

Atkins has referred to the renewed focus on intentional misconduct as a "back to basics" strategy aimed at protecting retail investors even if it creates a regulatory reprieve for business. This intentional fraud-focused approach has made cases involving investment adviser misrepresentations and fraud by foreign companies participating in international business a key priority.

Investment Adviser Focus

While disclosure-based fraud and other investment adviser misconduct have seen an uptick in enforcement, these actions rely on longstanding rules applicable to registered persons and entities, not new regulatory schemes. For example, the SEC initiated two actions last month regarding misrepresentations to the public and lapses in compliance obligations. First, on September 4, the SEC settled charges against a Massachusetts-based investment adviser with violations of marketing, recordkeeping, and compliance rules under the Investment Advisers Act of 1940. According to the SEC’s order, the firm misrepresented its conflicts of interest policies in advertising materials, failed to maintain advertising materials as required, and neglected to conduct the mandatory annual review of its compliance policies and procedures. The order imposed a $75,000 civil penalty and mandated that the firm undertake corrective actions regarding the identified compliance failures.

Second, on September 10, the SEC filed a complaint against a California-based investment advisory firm and its founder. The SEC alleges that the individual and firm violated the anti-fraud provisions of the Investment Advisers Act by taking nonpublic personal client information from the investment adviser’s former employer to solicit clients for his newly launched investment firm and sharing the information with his new business partner. The investment adviser also made misrepresentations about the reasons he was disciplined and fired by his former employer. 

Cross-Border Task Force

On September 5, 2025, the SEC announced the launch of its Cross-Border Task Force to "identify and combat cross-border fraud" by foreign-based companies. Foreign-based companies from jurisdictions with tight government control, such as China, are of particular concern because of limitations placed on U.S. regulatory oversight such as restricting access to a company’s books and records. The cross-border initiative focuses on gatekeepers such as auditors and underwriters that foreign companies have to engage to gain access to the U.S. capital markets. In announcing the launch of the Cross-Border Task Force, Atkins emphasized that while the SEC welcomes foreign companies looking to access U.S. capital markets, the SEC will use its investigative capabilities to identify bad actors and to thwart foreign efforts that threaten U.S. investor protections by evading the SEC’s regulatory requirements. This may spur additional enforcement actions against foreign companies in order to root out potential transnational fraud.

Cryptocurrency Guidance, Not Enforcement

The SEC also has signaled a desire for clarity regarding cryptocurrency regulation. The newly established Crypto Task Force will concentrate on defining regulatory requirements for digital assets, formulating robust compliance policies to protect investor assets, and "appropriately distinguish[ing] securities from non-securities" to strengthen and harmonize oversight.

Meanwhile, the SEC is issuing guidance to bring crypto assets and digital tokens in line with existing federal securities laws in response to individual inquiries seeking input through requests for no-action letters. The staff’s responses are focusing on the need for clear crypto risk disclosures and accurate asset classification, while leaving open pathways for innovation that will benefit investors and capital markets. 

For example, the Division of Investment Management recently issued a no-action letter regarding the Custody Provisions of the Investment Company Act of 1940 and their application to cryptocurrency. The inquiry sought clarification regarding whether an enforcement action against a registered investment adviser or registered fund would be recommended for their use of state trust companies — bank-like entities supervised and regulated by a state bank oversight authority that are not federally-chartered banks — as a custodian for crypto assets and the related cash or cash equivalents required in order to complete crypto transactions. 

The Division of Investment Management indicated that it would not recommend an enforcement action for using a state trust company, so long as the investment adviser or registered fund take certain actions to review and assess the state trust company’s internal controls related to safeguarding those assets.  This no-action letter signals the SEC’s willingness to rely on existing regulators and regulatory regimes to address the distinct elements of cryptocurrency. The letter highlighted that state laws already require sophisticated controls to safeguard cryptocurrency outside the standard banking framework. But, because cryptocurrency does not fit existing regulatory standards for traditional legal tender, their custodial entities must obtain an annual written internal control report from an independent auditor and must demonstrate to the investment adviser or registered fund that internal controls adequately safeguard the assets in a manner similar to that required by existing federal regulations. 

Additionally, the SEC and the Commodity Futures Trading Commission (CFTC) recently issued a public announcement stating that the agencies will work together to harmonize the regulatory scheme to eliminate uncertainty around the applicable regulatory body for cryptocurrencies and encourage innovation in the space. Atkins has expressed concern that the U.S. is lagging far behind other countries in cryptocurrency regulation as crypto continues to rise as a portion of financial markets. He stressed the need to keep pace with technological changes and evolving market risks. These issues, according to Atkins, require developing clearer legislative frameworks that address digital asset markets and eliminate the gaps and inconsistencies in crypto regulation. 

Compliance Insights for Companies

With the SEC’s stated enforcement priorities and this year’s enforcement actions, companies should take care to ensure compliance with applicable regulations. While the SEC has outlined specific areas they will target, companies are encouraged to review their existing internal compliance programs, including policies and procedures regarding longstanding regulatory requirements under the federal securities laws. Even if the SEC has slowed enforcement on former focus areas such as off-channel communications, Foreign Corrupt Practices Act (FCPA) violations, and business risk disclosures, compliance procedures should continue to be thoroughly executed. Additionally, the risks of investigation by other regulators or private litigation filings by shareholders or other stakeholders remain. 

Other takeaways for companies include:

• The SEC may be quiet, but it is still actively pursuing enforcement actions in well-tread areas involving intentional fraudulent acts.
   
• Investment advisers and related persons are under the microscope for improper conduct that threatens investors through misrepresentations regarding their reputation or disregarding compliance standards meant to facilitate regulatory oversight such as maintenance and retention of records. 
   
• The SEC is looking beyond U.S. borders as it pursues investor protection.
   
• There is more to come on emerging issues like cryptocurrency and artificial intelligence, though the timeline is uncertain. Regular assessment and modification of policies and procedures can mitigate the risk of compliance lapses and avoid SEC enforcement actions, other regulatory investigations, and private litigation.

Final Takeaway

While the SEC has reduced the pace of enforcement actions overall, Atkins' remarks indicate that the agency continues to focus on key regulatory issues affecting U.S. markets and investors. Future actions may include collaboration between agencies, legislative updates related to cryptocurrency, and enforcement measures targeting fraud, in alignment with Atkins' stated priorities. 

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