SEC Announces Changes to Wells Process, Cooperation, Settlements and More in Revised Enforcement Manual

SEC’s Division of Enforcement Announces Updates to Enforcement Manual

The Securities and Exchange Commission’s Division of Enforcement today announced significant updates to its Enforcement Manual. These updates underscore the Commission’s ongoing commitment to fairness, transparency, and efficiency in the investigations conducted by the Division. They include changes to investigative procedures that are intended to enhance consistency and uniformity in the Division’s practices and to create greater efficiencies in support of the Commission’s mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. The Enforcement Manual, which was last revised in 2017, will undergo yearly reviews going forward.

The Next American Unwinding

There are clear corollaries between then and now. Despite the increasing popularity of cryptocurrencies and prediction markets, both are still largely unregulated. The CFTC, which until recently had the lion’s share of the regulatory authority over these assets, has become muted over the past 13 months.

In 2024, the CFTC’s Enforcement Division brought 58 enforcement actions. That number dwindled to 13 in 2025. Many ongoing crypto investigations have been closed without any claims being filed, and CFTC management appears to be discouraging new crypto investigations. From what I gather from discussions with my former colleagues at the CFTC, staff members who managed to survive the multiple rounds of layoffs that occurred in 2025 got the message: Even modest efforts to regulate burgeoning digital asset or prediction markets could cost you your job.

Sam Bankman-Fried is waging a campaign for a pardon—but Trump will not grant one, says White House

Convicted crypto fraudster Sam Bankman-Fried used to be a prolific donor to the Democratic Party, but these days his public statements have taken on a decidedly MAGA tone. “Clinton-appointed Judge Lewis Kaplan made his political bias very clear when sentencing me,” reads a recent screed on X. “I admire @realDonaldTrump for standing up to this ‘partisan and out of control activist’!”
This is just one of dozens of tweets railing about the deep state and other MAGA villains that Bankman-Fried, one of the century’s most notorious financial criminals, has published in recent weeks despite being locked up for 25 years in federal prison.

Though Bankman-Fried has not stated so explicitly, the goal of his social media spree is clear: persuade President Donald Trump to spring him from prison. The strategy makes sense given that Trump has been dispensing pardons to several high-profile figures convicted of financial crimes, including Binance founder and onetime Bankman-Fried archrival, Changpeng Zhao.

Alas for Bankman-Fried, his petitions to Trump for mercy appear to be in vain. In response to a request for comment about the recent social media campaign, a White House spokesperson reiterated to Fortune that Trump has no intention of pardoning Bankman-Fried.

Prosecuting Insider Trading in the AI Era

A key defense to insider trading is that the defendant did not trade “on the basis of” MNPI. The defendant might claim that the trading decision was based on a factor independent of MNPI, and AI tools could provide that independent factor. For example, the defendant could establish that the trades were part of a routine investment strategy or diversification effort and were motivated by publicly available information aggregated by AI.

Relatedly, the use of AI could be part of a mosaic defense to insider trading. The “mosaic theory”[16] is the view that a trader who gathers information from multiple public and nonpublic sources, analyzes the data, and makes an independent decision cannot be liable for insider trading if no one piece of information qualifies as MNPI. The defendant could argue that even if he had tidbits of nonpublic information, he used AI to supplement his knowledge and create a “mosaic” of information, and the entire picture provided the reason for his trades.

An investor who gets inside information about a stock could query AI about the stock before trading and then point to AI’s analysis as the reason for its trades. Of course, ten years ago a defendant could accomplish the same goal by running Google searches for a stock before trading. But the sophistication of AI’s capabilities and the rise in AI-assisted trading make it so much easier to have a cogent investment thesis.

The Tax Nerd Who Bet His Life Savings Against DOGE

Alan Cole put his life savings, all $342,195.63, into a prediction-market wager. He insists he’s not really a betting man.

Cole is a 37-year-old tax economist with Ivy League degrees, a mortgage and a young child. Until Elon Musk’s Department of Government Efficiency came roaring into the nation’s capital last year, he was largely a plain-vanilla investor or, as he puts it, a “normal, conventional Wall Street Journal-reading adult.”

But Musk’s boasts and his eager fans brought an unusual opportunity into the burgeoning U.S. prediction markets: People willing to bet that the world’s richest man would transform and shrink the federal government.

Cole took the opposite position, one he didn’t see as a gamble at all. If federal spending in each quarter of 2025 exceeded federal spending in the fourth quarter of 2024, he would win big.