SEC Enforcement Activity in the Second Quarter of 2025: The Start of the Back-to-Basics Atkins Era

By Jason Spitalnick and Joseph G. Adams

Paul Atkins was sworn in as SEC (Securities and Exchange Commission) Chairman on April 21, 2025. In a staff town hall meeting on May 6, 2025 he articulated a statement of purpose for the Enforcement program: “Investor protection is the cornerstone of our mission — to hold accountable those who lie, cheat and steal.” The second quarter of 2025 — the first under Atkins’ leadership — marked a potentially pivotal period in SEC enforcement as the Commission signaled a shift toward a back-to-basics enforcement paradigm consistent with the Chairman’s statement of purpose.

How leadership’s high-level objectives translate to specific enforcement activity remains to be seen. First, most of the settled and litigated cases announced in the second quarter were remnants of the Gary Gensler and Gurbir Grewal regime. Second, the Enforcement Division is currently being led by Sam Waldon, an acting director who as the Division’s Chief Counsel in the prior administration. (The absence of a permanent Director of Enforcement at this point is somewhat unusual; in prior presidential transitions, the Director was typically in place by the spring.) Finally, the Division (and the Commission staff more generally) has undergone significant reorganization and headcount reduction.

A Major Crypto Shift

The second quarter continued the trend of voluntary dismissals of crypto enforcement actions, including the Dragonchain and Binance suits. More generally, the SEC’s crypto program is transitioning from an Enforcement-led regime to a more legislative- and regulatory-driven one. Four Crypto Task Force roundtables took place this quarter, continuing the Task Force’s objective to develop a “comprehensive and clear regulatory framework for crypto assets.” In addition, the Division of Corporate Finance issued guidance statements on stablecoins, offerings and registrations of securities in the crypto asset markets, protocol staking activities, and crypto asset exchange-traded products. Meanwhile, the President signed the GENIUS Act into law and the CLARITY Act is pending before the Senate.

That said, the Enforcement Division shows no sign of retreating from fraud cases involving crypto assets. For instance, on April 22, 2025 the staff filed a litigated action against Ramil Palafox for raising $198 million by guaranteeing high investment returns from supposed crypto asset trading — when, instead, he was misappropriating funds and operating a Ponzi-like scheme. A month later, the SEC charged Unicoin and several of its top executives with making false and misleading statements to investors who purchased certificates purportedly conveying rights to receive crypto tokens.

Other Notable Dismissals

The Commission voluntarily dismissed (1) a case against a registered investment advisor for failing to maintain written policies and procedures reasonably designed to prevent the misuse of material nonpublic information and (2) several cases alleging violations of Section 15(a) of the Securities and Exchange Act of 1934 for unregistered dealer activity. The Commission offered minimal explanation, but did note that dismissal was warranted “in the exercise of its discretion and as a policy matter.” It is fair to assume that, going forward, there will be fewer controls-only cases that do not involve fraudulent conduct.

No Cyber Breach Disclosure Cases

Notably, the Commission filed no new cyber breach disclosure cases during the second quarter, and its July 2025 settlement in principle with SolarWinds and its chief information security officer suggests a likely retreat from the aggressive cyber breach enforcement approach of the Gensler administration.

Changes to FCPA Enforcement

The dissolution of the FCPA Unit and the absence of new FCPA cases during the first half of 2025 reflects the broader Trump administration approach to FCPA enforcement. The July 2025 voluntary dismissal of a long-running FCPA case against former executives of Cognizant Technology Solutions demonstrates the Commission’s alignment with DOJ’s revised enforcement approach in the space.

Of course, the Commission did not altogether stop bringing cases. Many of the cases seem to reflect Chairman Atkins’ “lie, cheat, or steal” mantra.

Offering Fraud, Market Manipulation, and Disclosure Cases

Many of the securities fraud cases brought pursuant to the Securities Act and Exchange Act did, indeed, focus on lying, cheating, and stealing.

AI Washing. The SEC alleges that Albert Saniger, the founder and former CEO of Nate, Inc., solicited $42 million of investment by telling investors that Nate’s application used AI technology to complete purchases without human involvement when, in reality, Nate relied in large part on contract employees to manually input orders placed by users on the app.

Ponzi Scheme. The Commission charged Kenneth W. Alexander II, Robert D. Welsh, and Caedrynn E. Conner for operating a Ponzi scheme that raised at least $91 million from more than 200 investors. The SEC alleges that the defendants represented that they ran a highly profitable international bond trading business with billions in assets, and told investors that monthly returns were generated from bond trading and related activities. In fact, the company had no material source of revenue and the purported monthly returns were actually Ponzi payments.

Pump and Dump. The SEC filed a settled civil action against Canadian lawyer Sergio Damian Lopez for promoting Regulation A offerings without disclosing the compensation he received for the promotions — giving investors the misleading impression that his recommendations were objective.

Corporate Disclosure. The SEC announced settled charges against publicly traded Emergent BioSolutions, alleging that the company made materially misleading public statements regarding its readiness to support commercial manufacturing of vaccines despite having knowledge of alleged problems with its facilities, personnel training, and quality control protocols. The company agreed to pay a $1.5 million civil penalty.

Investment Adviser and Broker Enforcement

Investment adviser enforcement during the quarter emphasized traditional fiduciary duty breaches and fraud, with no new enforcement actions solely for electronic communications recordkeeping failures. The Commission brought several cases involving adviser misappropriation of client funds, including a complaint against Andrew H. Jacobus and two of his companies for misleading clients about investment returns and misappropriating over $17.3 million of client funds. Many of the victims were elderly Venezuelan nationals, aligning with Chaiman Atkins’ public statements about affinity fraud.

There was a conspicuous absence of broker-dealer cases in the quarter. One notable filing was a settled action alleging that Velox Clearing LLC failed to reasonably design or adequately implement its anti-money laundering policies and procedures and that, due to its compliance deficiencies, Velox failed to file suspicious activity reports for numerous suspicious transactions.

Insider Trading

Some Commission observers and practitioners have predicated that the Commission will ratchet up its insider trading enforcement program. After announcing a handful of cases in the first quarter, the Commission brought no significant insider trading cases in the second quarter. It will be interesting to watch how the Commission’s insider trading enforcement develops.

Whistleblower Developments

The Commission continued to dole out whistleblower awards, including a six million award to joint whistleblowers in April. The Commission emphasized not only that the whistleblowers provided information that led to the initial investigation, but that they ultimately provided the Enforcement staff with a “roadmap” to the resulting enforcement action.

Whether the second quarter of 2025 reflects one or more watershed moments in SEC enforcement under the Atkins regime remains to be seen. There certainly are some indications that the Commission is pursuing a “back-to-basics” approach, but it will take some time to draw definitive conclusions. Either way, market participants should expect continued aggressive enforcement against fraud and should remain mindful of the Commission’s emphases on voluntary reporting, cooperation, and individual accountability.