Sanjay Wadhwa, Acting SEC Director of Enforcement, Will Depart Agency on January 31

SEC Announces Departure of Acting Enforcement Director Sanjay Wadhwa

The Securities and Exchange Commission today announced that Sanjay Wadhwa, the Acting Director of the Division of Enforcement, will depart the agency, effective January 31, 2025, after more than 21 years of service with the Commission.

“I thank Sanjay for leading the Division of Enforcement and his dedication to the SEC, which began as a staff attorney more than 20 years ago,” said SEC Chair Gary Gensler. “He has led a division that has acted without fear or favor, and he has earned the deep respect of his colleagues during his more than two decades of service. I wish Sanjay all the best in his next pursuits.”[…]

Mr. Wadhwa has served as Acting Director of Enforcement since October 2024 and, before that, served as the Division’s Deputy Director since August 2021. During that time, Mr. Wadhwa oversaw the filing of more than 2,600 enforcement actions, resulting in orders for more than $20 billion in disgorgement, prejudgment interest, and civil penalties, and the return of billions of dollars to harmed investors. In his roles as Acting Director and Deputy Director, Mr. Wadhwa emphasized fostering a culture of compliance by market participants through vigorous enforcement of the securities laws while also crediting parties that cooperated with the Division’s investigations. Those efforts bore fruit, as the Commission obtained orders for record amounts of financial remedies while at the same time an increasing number of market participants self-reported, remediated, and took other proactive steps to cooperate with the Division’s investigations.

SEC Charges GrubMarket with Overstating Revenue to Investors by More Than $500 Million

The Securities and Exchange Commission today announced settled charges against GrubMarket Inc., a private, California-based e-commerce food distributor, for providing investors with financial information that the company should have known was unreliable and that overstated its historical revenues by approximately $550 million.

According to the SEC’s Order, between November 2019 and February 2021, GrubMarket raised approximately $80 million from investors in a private Series D offering. When soliciting prospective investors in the Series D round, GrubMarket emailed them financial information, including an investor presentation and financial statements, which prospective investors incorporated into their investment analyses and decisions. At the same time, GrubMarket was using a different set of financial information, including in its tax filings, that reflected significantly lower historical revenues for other corporate purposes. In doing so, GrubMarket should have known that the financial information it was using to solicit prospective Series D investors, which overstated the company’s historical revenues by $550 million over a five-year period, was unreliable. Even so, GrubMarket did not inform any Series D investors about the significant discrepancy in historical revenues until after the fundraising round closed.

SEC Announces Record Enforcement Actions Brought in First Quarter of Fiscal Year 2025

The Securities and Exchange Commission today announced that, based on its preliminary results, it filed 200 total enforcement actions in the first quarter of fiscal year 2025, which ran from October through December 2024, including 118 standalone enforcement actions. The Division filed a total of 75 enforcement actions in October 2024 alone. The foregoing numbers represent the most actions filed in their respective periods since at least 2000.

The actions filed in the first quarter addressed a wide range of violations, including financial misstatements, misleading disclosures to brokerage customers, failures by advisory firms to disclose conflicts of interest, alleged bribery schemes, frauds targeting retail investors, misleading statements about artificial intelligence, and more.

Should SEC Revisit Executive Security Perquisite Disclosure?

The recent homicide of UnitedHealthcare CEO Brian Thompson has put a spotlight on executive security and has prompted many companies to reassess how they are protecting their top executives. We also believe that in the wake of this tragic event it is time for the Securities and Exchange Commission (SEC) to revisit the treatment of personal security as a perquisite requiring disclosure in a company’s SEC reports. The current SEC guidance forces companies into a catch-22, where a decision to provide personal security protection will require disclosure and draw additional scrutiny, and potentially the ire of proxy advisory firms, while a decision to limit or not provide such protection to avoid disclosure or reduce the amount disclosed will potentially put executives’ safety at risk.

Crypto bros won’t throw off yoke of SEC regulations despite backing Trump

Far from being the bit player the crypto types have been advocating for, the SEC and its new chairman, Trump nominee Paul Atkins, are still very much in charge of the $3.5 trillion digital coin market.

And according to McHenry, the industry’s preferred regulator — the Commodity Futures Trading Commission — with its lighter hand will not take over all of crypto regulation.

The reason, he said, is a law that dates back to the Depression. Under the securities legislation, Bitcoin doesn’t qualify for SEC oversight — which includes investor disclosure — because it wasn’t used as part of an offering to build out the blockchain technology used to make transactions that underpins the digital coin.

Not so for other sales of crypto that financed new blockchain platforms; they will have to go through the SEC regulatory and disclosure gauntlet. What do you think? Post a comment.

“If you’re going to raise capital in America, raising capital is done through our securities laws,” McHenry said. “So what is native to the SEC …that will not change.”