SEC FY25 Enforcement Results Reflect Shift in Priorities
Commentary by Steven Lofchie
In newly released enforcement results for FY 2025, the SEC highlighted its efforts to refocus the agency's priorities on issues of core "fraud, market manipulation, and abuses of trust" that directly harm investors.
In the release and accompanying addendum, the current SEC underscored a strategic transition from the prior administration from what was described as "regulation by enforcement" and the pursuit of "media headlines and inflated numbers." The SEC stated that a primary focus for FY 2025 was holding individual wrongdoers accountable to promote deterrence. Approximately two-thirds of all standalone actions involved charges against individuals, marking an almost 30% year-over-year increase. Nearly 90% of standalone actions included individual charges, and the SEC successfully barred 119 individuals from serving as officers and directors of public companies.
The SEC said it prioritized protecting vulnerable retail investors, including seniors, veterans, and religious communities, from fraud. The agency also targeted abusive trading practices, such as insider trading and manipulative "spoofing" schemes. To combat transnational fraud harming U.S. investors, the SEC stated that it formed a Cross-Border Task Force in September 2025.
While shifting its approach to crypto-asset enforcement like dismissing actions against Coinbase, Binance, and Consensys, the SEC said it maintained its commitment to policing new technologies, citing the launch of the Cyber and Emerging Technologies Unit to address misconduct related to artificial intelligence, blockchain technology, cybersecurity, and account takeovers.
The agency also criticized the prior administration's focus on off-channel communication recordkeeping violations. They noted that since FY 2022, $2.3 billion in penalties were imposed for these violations (including $71 million in early FY 2025), which the current SEC views as a misallocation of resources that produced no direct investor benefit.
Commentary
For many years, the SEC seems to have marketed itself as an agency whose primary purpose was the collection of fines (or sometimes the imposition of fines that could not be collected). A change in focus from fine imposition to going after investor injury is all to the good.
FINRA should also take note of the change in approach. Over the past year, the fines, and penalties FINRA imposed on registered representatives for injuring their clients have been disproportionately low compared to situations where the representatives have injured their employers, and often much less seriously.