Russ Ryan's "Truly Trumpian SEC Hypothetical"

A Truly Trumpian SEC Hypothetical

With the recent departure of Commissioner Carolyn Crenshaw as the last remaining Democrat serving on the five-member Securities and Exchange Commission—leaving only the Republican Chairman and two fellow Republican Commissioners in place—President Trump has a golden opportunity to do something quintessentially Trumpian: appoint two more Republicans to fill the two now-empty Democrat seats.

Whatever the policy merits of an all-Republican SEC (or all-Democrat, for that matter), such a move would trigger a fascinating debate about the constitutional separation of powers and the future of “independent” administrative agencies. […]

But what if President Trump and Senate Republicans stuck together and confirmed two Republican nominees? Someone adversely affected by a subsequent SEC rule or enforcement decision presumably would have legal standing to challenge the appointments in court, setting up yet another epic battle over the separation of powers and the fate of the Administrative State.

Whatever your opinion on how that case would (or should) be decided, you have to admit it would be a fascinating one to watch.

SEC Enforcement: 2025 Year in Review

The SEC Enforcement Division had a markedly slower year compared to FY 2024. While the SEC has not publicly announced enforcement statistics for FY 2025, a private analysis concluded that the SEC brought 313 standalone enforcement actions, the lowest level of SEC enforcement activity in 10 years—down 27% from FY 2024 (431 cases) and 38% from FY 2023 (501 cases). This statistic includes 56 enforcement actions against public companies and/or subsidiaries (down 30% from FY 2024). Further, 52 of those 56 actions were brought under former Chair Gensler, the most initiated by an outgoing chair since at least FY 2013. Accordingly, only four actions against public companies and/or subsidiaries were initiated under the new SEC administration during FY 2025, the fewest in one year since FY 2013. Total monetary settlements decreased by 45% to $808 million, the lowest annual total since FY 2012 and “less than half of the FY 2016-FY 2024 average total monetary settlement of $1.9 billion.”

On the one hand, the decrease in enforcement actions is likely attributable, at least in part, to the inevitable slowdown that occurs during transition years. It remains to be seen whether and, if so, how, the new administration’s priorities will continue to drive a downward trend in enforcement. Moreover, the SEC’s reduced workforce and targeted reorganization efforts have likely contributed to the recent decline in enforcement, with possible lasting effects on the Division’s capacity to investigate and bring new actions.

Trump says he won’t rescue Sam Bankman-Fried with pardon

Imprisoned former FTX CEO Sam Bankman-Fried shouldn’t count on a clemency order from President Donald Trump, according to remarks in a wide-ranging interview the president granted to the New York Times.

While talking about his decision not to extend his presidential pardoning power to free rapper Sean “Diddy” Combs from prostitution-related charges, Trump said he also didn’t intend to help out the ex-CEO of crypto exchange FTX on his 25-year fraud sentence.

Bankman-Fried had conducted a Republican-friendly media rehabilitation tour in recent months, but he hasn’t seemingly made his case to Trump, who is a major political backer of the cryptocurrency sector and a digital assets entrepreneur in his own right. The disgraced CEO’s parents, former Stanford Law School professors Barbara Fried and Joseph Bankman, had reportedly been meeting with lawyers and other people in Trump’s orbit in an attempt to get their son a pardon.

Highlights From the 2025 AICPA Conference – Current SEC and PCAOB Developments

The three-day conference in Washington, DC, in December 2025 brought together AICPA, SEC, FASB, and PCAOB leaders alongside market practitioners to discuss priorities for US capital markets, standard-setting, audit oversight, and emerging topics such as AI, complex capital projects, and shareholder activism. Consistent themes included streamlining disclosures to revitalize public markets, elevating audit quality, and maintaining independence in light of AI and evolving firm structures. […]

SEC ENFORCEMENT POSTURE:

Improved Efficiency: Expect an emphasis on faster resolution of minor “foot faults.”

Significant Matters: Greater focus on significant departures from GAAP and company policies.

Individual Accountability (Fraud): Increased focused on individual accountability in matters involving theft and misappropriation of assets.

Errors (Complex Financial Reporting Matters and Judgments): Errors involving complex accounting or difficult judgments these days rarely involve a single individual. Expect the SEC to be interested in gathering a holistic understanding of each participant’s contributions, including intent (not overly focused on a couple of poorly worded emails by a single individual), the control environment, the individuals assigned responsibilities, and the actions (or omissions) of all parties involved before making individual accountability determinations.

SEC Staffing: SEC staff activity slowed amid significant turnover in the second half of 2025, but panelists shared that it is expected to normalize this next year.

Too big to be held accountable?

We once worried companies were “too big to fail.”

Are we now living in an era where companies are “too big to be held accountable”?

Meta advances a striking legal theory in its motion to dismiss the whistleblower case brought recently by Psst.org client, Attaullah Baig, former Head of Security at WhatsApp,

Meta argues that given its roughly $160 billion annual revenue, massive market cap, and the absence of any stock-price reaction, even widespread cybersecurity risks at WhatsApp, such as those raised by Attaullah, are “immaterial” as a matter of law.

In effect, Meta is arguing that its sheer scale acts as a shield. If an alleged failure doesn’t immediately tank the stock price, Meta implies this is evidence that a reasonable investor wouldn’t care.