SEC Ends 2024 With Flurry of Enforcement Actions

SEC’s Latest Enforcement Actions Fuel Demand for Big Law

The Securities and Exchange Commission is ramping up enforcement activity in the final weeks of 2024, announcing settlements or charges in at least seven matters in the past week alone. The activity has sent work to nearly a dozen Big Law firms that have been retained as defense counsel.

Paul, Weiss, Rifkind, Wharton & Garrison; Fenwick & West; Goodwin Proctor; Debevoise & Plimpton; Simpson Thacher & Bartlett; Morgan Lewis & Bockius; Sidley Austin; Davis Polk & Wardwell; Orrick, Herrington & Sutcliffe; Kirkland & Ellis; and Fried, Frank, Harris, Shriver & Jacobson are among the firms listed as defense counsel.

On Friday alone, the SEC announced settlements or charges in at least five separate matters.

Eight Enforcement Trends That Likely Will End Under a Trump SEC

There has been much speculation on what SEC enforcement will look like under a new administration, especially now that President-elect Donald Trump has nominated former Commissioner Paul Atkins as the next SEC chair. To be sure, there will be a resetting of enforcement priorities under a new chair that comes with any change in administration. Clearly, some portion of the more aggressive enforcement cases and policies under current Chair Gensler will no longer be supported by the new, Republican?controlled SEC — majority approval among the five Commissioners is required for any enforcement action. Indeed, the extensive voting record, speeches, public statements and dissents of the two current Republican Commissioners and former Commissioner Atkins provide some clues on the expected changes.

The two current Republican Commissioners (Peirce and Uyeda) have been unusually outspoken in objecting to certain enforcement actions, often voting in the minority against authorizing the action, or approving the matter with exceptions. Since Commissioner Uyeda was confirmed in June 2022, there were nearly 200 administrative proceedings (APs) approved where the vote authorizing the action was split 3-2 across party lines (approximately 20% of all APs according to our estimates). During that period, Commissioners Peirce and Uyeda issued 25 dissenting opinions or other statements (most of which were joined by both). The level of divisiveness on enforcement under Chair Gensler is unprecedented when compared to prior administrations.

A review of the voting record and dissents reveal eight categories of controversial cases and policies that may be jettisoned by a Republican-controlled SEC….

Compliance Wants to Go From Back-Office-Boring to Front-of-Mind Career Path

Hiring good people for compliance departments is getting harder as young professionals increasingly gravitate toward business careers with more curb appeal.

Many in the sector say it is a struggle to hire top early-career professionals, in part because of its emphasis on helping companies stay ahead of legal requirements. It is also a grind to recruit young professionals with the necessary mindset and skills for compliance work, employers say. […]

“You don’t go to school to become a compliance officer,” said John Gilmore, co-founder and managing partner of BarkerGilmore, a boutique executive search firm.

Those involved in hiring are fighting back by painting a more complex portrait of compliance, positioning the work at the intersection of evolving regulatory regimes and technological change, and as a force against financial crime and terrorism.

The U.S. Government Shouldn’t Fund Empty Crypto Schemes

The price of bitcoin went over $100,000 for a few hours on Dec. 5, peaking at $103,400. The financial press can’t resist constructing a hand-waving story of market forces, so bitcoin going past $100,000 has been attributed to a market reaction to President-elect Donald Trump’s lining up a slate of pro-cryptocurrency cabinet, advisory, and regulatory picks after the crypto industry put more money into funding Republican candidates in this last election cycle than anyone had previously put into an election in history.

But crypto trading is thin and almost entirely unregulated—perfect conditions for commodity market manipulation. The public image of cryptocurrency is still shaped by the 2023 trial of Sam Bankman-Fried of the failed FTX crypto exchange, culminating in his conviction—and not to mention the hangover from the NFT fiasco. Crypto is seen as the domain of cheap scammers. Ordinary people are not flocking into crypto. […]

But in the end, gravity still works, and a balloon can be inflated only so much. The bitcoin bubble is an artifact of market manipulation and has no more economic substance than the Hawk Tuah coin does. The U.S. government may be ripe for plunder, but other nations need to take steps to shield themselves from the impact of rug-pulling on a global scale. 

Insurers for Executives Brace for Steep Claims Under Trump’s SEC

President-elect Donald Trump’s pick to police Wall Street and corporate America is poised to focus on enforcement actions against individual executives and to roll back Biden-era regulations, sparking more private litigation against companies and their leadership—and, often, leaving insurers on the hook. “It’s potentially just open season on government regulation,” said Bradley Dlatt, a Perkins Coie attorney who represents corporate policyholders. He pointed to Trump’s promised deregulatory agenda under SEC pick Paul Atkins, as well as the US Supreme Court’s June decision in Loper Bright Enterprises v. Raimondo limiting the power of federal agencies to defend some rules in court.