How Hard Might "DOGE" Hit the SEC?

How Low Can You Go?: DOGE and the SEC

The proposed Department of Government Efficiency (“DOGE”) in incoming President Donald J. Trump’s administration promises an ambitious agenda of “regulatory rescission, administrative reductions and cost savings” with the goal of “mass head-count reductions across the federal bureaucracy” by July 4, 2026. Many questions remain about the logistical and legal paths to accomplish these objectives. But assuming it is possible to achieve reductions of this scale at an independent agency such as the U.S. Securities and Exchange Commission (“SEC”), what might the SEC look like post-DOGE?

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Central to DOGE’s analysis is its vision for the future. Shrinking the SEC down to 3,235 positions – an over 40 percent reduction – would return the agency to its approximate size in the year 2000. With the proliferation of new technology, the capital markets have become far more complicated to supervise then they were 25 years ago. But if the SEC has underinvested in technology in that time, as Chair Gensler has suggested recently to Congress, future investments in applications such as those involving data analytics and artificial intelligence (each of which the enforcement division has already begun to use) could obviate the need for larger numbers of human staff in the coming years.

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Running on a skeleton crew relative to today’s numbers, the agency may be required to return to its 1930s-era roots as a lean market regulator, with most of the remaining staff focused on oversight of securities exchanges, broker-dealers, clearing agencies, and other securities market intermediaries, as well as money market funds and other potentially systemically important financial institutions. A scaled down enforcement division would perhaps pursue only mammoth cases where there is widespread investor harm. Future rule-writing would slow to a trickle in the three programmatic divisions. Few staffers would remain to answer questions from the public and issue related interpretive guidance. And so on. 

Does Bitcoin at $100,000 Signal a Last Laugh for HODLers?

What is there to say with Bitcoin at $100,000 for those of us who thought $10,000 looked nuts. After 15 years of cryptocurrency boom-and-bust cycles, rags-to-riches (and back to rags) stories, scams and bankruptcies, a carnival mood is back and hushing us naysayers.

Politicians are joining the party: Donald Trump is appointing pro-crypto officials, eyeing a Bitcoin reserve and even hawking his own coin. So are punters, who are trying their hand and losing their shirts in the risky meme coin market. Like the 18th-century carnival of Rome attended by the poet Goethe — where all mad and foolish behavior save knifing and brawling was allowed — it’s the mystified tourists who are in the minority.

Right now, it’s Anthony Scaramucci of all people whose analysis makes the most sense: Bitcoin’s new milestone shows it’s gained wider acceptance as a tradable asset and portfolio investment, offering both big gains and gut-wrenching drawdowns (the last peak-to-trough fall after Covid-19 was around 76%)….

Atkins Likely to Bring Pro-Business, Light Regulatory Touch to SEC, Say Agency Observers

Paul Atkins’ pro-business regulatory philosophy is clear and consistent. President-elect Donald Trump’s nominee to be the next chairman of the U.S. Securities and Exchange Commission has long held that financial markets should have minimal government intervention and that regulators should not govern market behavior.

Atkins served as SEC commissioner for two terms from 2002 to 2008, where he was a strong free-market proponent. He opposed large penalties levied against companies accused of fraud, arguing large penalties unfairly harm innocent investors.

Atkins dissented in SEC’s decision in 2005 to penalize Qwest Communications $250 million for securities fraud.

“Even after the penalty statement, too often our penalties seem to be justified on little more than that they ‘feel right,'” Atkins said in a 2008 speech.

SEC’s Top Accountant Keeps Close Eye on Firms’ Private-Equity Deals

A wave of midsize accounting firms is welcoming private equity into their bloodstream. For the top accountant at the Securities and Exchange Commission, those deals present a number of risks.

Several midsize audit and consulting firms in the U.S. are selling stakes, both large and small, to outside investors, often to boost funds for technology and talent. Grant Thornton’s U.K. unit, PKF O’Connor Davies and Carr, Riggs & Ingram were among the firms that last month unveiled private-equity investments. Grant Thornton’s U.S. unit in May became the largest firm to do such a deal so far. Accountants and regulators have questioned whether the independence of auditors can be preserved or not under new buyers.

These deals must not result in a significant culture shift away from its focus on audit quality, SEC Chief Accountant Paul Munter said in an interview with The Wall Street Journal at a conference in Washington, D.C.

ESG Backlash Securities Suit Against Target Survives Dismissal Motion

There is no doubt that Target’s decision to launch the 2023 Pride Month sales and marketing campaign turned out badly, for the company and its shareholders. It is easy to see how someone might argue with the benefit of hindsight that the campaign was a huge mistake. It is not hard to see how someone armed with the observation that the campaign was a mistake might launch a mismanagement lawsuit against the company’s executives. However, this lawsuit is not a mismanagement lawsuit; it is a misrepresentation lawsuit. While the court’s reactions to the defendants’ arguments in their motion to dismiss in many ways feel as if the court’s analysis tracked with what might apply in a mismanagement case, the court nevertheless concluded that the plaintiff’s allegations were sufficient to sustain a misrepresentation case.

In denying the defendants’ motion to dismiss, the court found that the broad risk disclosures in prior documents were insufficient to warn of potential risks associated with a much later initiative. That is, the court held that disclosures in the 2021 and 2022 annual reports were misleading with respect to events that were not even going to take place until May 2023 (if in fact anyone at the time the 2021 and 2022 annual reports were published was aware that there would even be a May 2023 campaign). How specific should or even could risk disclosures be in prior documents about subsequent events? Especially when the company went to such lengths to warn investors that based on prior events at the company, there could be problems with future company initiatives?