What to Expect in the Securities Enforcement Space in 2025
Even in areas in which enforcement is likely to substantially diminish—such as crypto or environmental, social, and governance (ESG) disclosures—the SEC will likely still have interest when there are concrete allegations of fraud or investor harm. One notable change, however, is that the SEC may be less likely to support enforcement based on technical violations of the federal securities laws that lack intentionality or specific underlying harm.
December 13, 2024 at 09:00 AM
12 minute read
Securities enforcement is not going anywhere in 2025. The enforcement agenda of the Securities and Exchange Commission (SEC) will surely be impacted by its new leadership under Paul Atkins, President-elect Donald Trump’s selection for SEC chair and a former SEC commissioner from 2002 to 2008. But the agency’s core commitments—policing fraud and market manipulation, perceived conflicts of interest, and conduct that may harm retail investors—have historically been championed by commissioners of both parties and are likely to continue unabated. Even in areas in which enforcement is likely to substantially diminish—such as crypto or environmental, social, and governance (ESG) disclosures—the SEC will likely still have interest when there are concrete allegations of fraud or investor harm. One notable change, however, is that the SEC may be less likely to support enforcement based on technical violations of the federal securities laws that lack intentionality or specific underlying harm. New leadership might also implement procedural changes that will affect how investigated parties and their counsel experience the enforcement process, and we may see a substantial reduction in penalties against public companies, given that Atkins has criticized such penalties as harming existing shareholders. Finally, there is uncertainty regarding staffing at the SEC that may impact SEC enforcement in the coming years.
Substantive Priorities—What Will Change and What Will Remain the Same?
- Diminished crypto-related enforcement actions but a continued focus on fraud
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Rebecca Maller-Stein and Kent A. Yalowitz of Arnold & Porter Kaye Scholer have entered their appearances for Hanaco Venture Capital and its executives, Lior Prosor and David Frankel, in a pending securities lawsuit. The action, filed on Dec. 24 in New York Southern District Court by Zell, Aron & Co. on behalf of Goldeneye Advisors, accuses the defendants of negligently and fraudulently managing the plaintiff's $1 million investment. The case, assigned to U.S. District Judge Vernon S. Broderick, is 1:24-cv-09918, Goldeneye Advisors, LLC v. Hanaco Venture Capital, Ltd. et al.
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Attorneys from A&O Shearman has stepped in as defense counsel for Toronto-Dominion Bank and other defendants in a pending securities class action. The suit, filed Dec. 11 in New York Southern District Court by Bleichmar Fonti & Auld, accuses the defendants of concealing the bank's 'pervasive' deficiencies in regards to its compliance with the Bank Secrecy Act and the quality of its anti-money laundering controls. The case, assigned to U.S. District Judge Arun Subramanian, is 1:24-cv-09445, Gonzalez v. The Toronto-Dominion Bank et al.
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