 Seal of the U.S. Securities and Exchange Commission | |
 Flag of the Securities and Exchange Commission | |
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 U.S. Securities and Exchange Commission headquarters inWashington, D.C. | |
| Agency overview | |
|---|---|
| Formed | June 6, 1934; 91 years ago (1934-06-06) |
| Type | Independent (component of theFederal Law Enforcement Community) |
| Jurisdiction | United States federal government |
| Headquarters | Washington, D.C., U.S. |
| Employees | 4,807 (2022) |
| Annual budget | $2.6 billion |
| Agency executives |
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| Website | sec.gov |
| Footnotes | |
| [1] | |
TheUnited States Securities and Exchange Commission (SEC) is an independent agency of theU.S. federal government that enforces federal securities laws and regulates U.S. securities markets. Its stated mission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
Congress created the SEC in 1934 afterthe Wall Street Crash of 1929 as part ofNew Deal securities reforms. Established through Section 4 ofthe Securities Exchange Act of 1934 (15 U.S.C. § 78d), the agency administers major federal securities statutes and oversees key parts of the securities markets, including public-company disclosure, market intermediaries, investment products, and trading venues. The SEC investigates and pursues misconduct such as financial fraud, insider trading, and market manipulation.[2][3][4][5][6]
The SEC carries out its work through rulemaking, examinations, and enforcement actions. The agency enforces the securities laws primarily through civil actions in federal court oradministrative proceedings and refers potential criminal violations to theFederal Bureau of Investigation orthe Department of Justice when appropriate.[7] The agency is headquartered inWashington, D.C., and is oftenmetonymously called "the commission" or "the agency."
Public scrutiny of the SEC's enforcement approach has remained high, shaped in part by its handling of major frauds such as theBernard Madoff scheme and by market turmoil indigital assets in the early 2020s. The agency has also brought high-profile crypto-related cases, including a civil action againstSamuel Bankman-Fried over his role in the collapse ofFTX Trading Ltd.[7] and a case againstTerraform Labs andDo Kwon that resulted in a jury verdict and a settlement exceeding $4.5 billion after the collapse of the TerraUSD andLuna ecosystem.[8]Paul S. Atkins was sworn in as chair in April 2025 and later outlined an initiative he called “Project Crypto,” which proposed a taxonomy for crypto assets and related guidance.[9][10] Independent research and some lawmakers reported a decline in crypto-related enforcement activity in 2025 and criticized the dismissal or closure of certain cases involving major crypto platforms, while SEC leadership disputed allegations of political favoritism and emphasized a focus on fraud-based cases.[11][12][13][14]
In the 2020s, court decisions and legislative proposals reshaped the SEC’s enforcement toolkit and its role in fast-evolving digital-asset markets. The Supreme Court's 2024 decision inSEC v. Jarkesy held that defendants are entitled to a jury trial underthe Seventh Amendment when the SEC seekscivil penalties forsecurities fraud, shifting those penalty claims fromadministrative proceedings tofederal court.[15] During the 2020s, Congress enacted a federal framework forpayment stablecoins (the GENIUS Act) and continued to consider broader digital-asset market-structure legislation, debating issues such as whether stablecoins may pay interest or other rewards, how digitial asset trading venues should be regulated, and how jurisdiction should be divided between the SEC and parts of the federal government.[16][17][18][19]
Established by Congress, the SEC's authority is rooted inSection 4 of the Securities Exchange Act of 1934 (15 U.S.C. § 78d). The agency administers and enforces statutes that govern securities offerings on U.S.capital markets, includingthe Securities Act of 1933, theTrust Indenture Act of 1939,the Investment Company Act of 1940,the Investment Advisers Act of 1940, and theSarbanes–Oxley Act of 2002, and related securities laws.
To advance its three-part mission, the SEC carries out its mandate through three primary functions that operate throughout the regulatory lifecycle: disclosure-based regulation (to prevent misinformation), oversight of market structure (to detect irregularities), and civil enforcement (to punish misconduct). Disclosure rules require standardized reporting intended to help investors compare issuers and evaluate risk. Market oversight focuses on supervised entities such as broker-dealers, investment advisers, and exchanges. Enforcement supports market integrity by investigating potential violations and bringing civil actions involving misconduct such as fraud or insider trading.
The SEC’s mandate, stemming from the agency's three-pronged mission, can involve strategic trade-offs. Disclosure, reporting, and compliance requirements can increase costs for issuers and may influence some firms’ decisions about entering or remaining in the public markets, particularly smaller companies. At the same time, disclosure and enforcement can strengthen market integrity and investor confidence, which can affect the cost and availability of capital. Analysts and policymakers often evaluate the SEC by how it balances investor protection with efficient capital formation.
Disclosure filings. Federal securities laws requirepublic companies to disclosematerial information through periodic reports so investors can evaluate financial performance and material risks. Management must also provide a narrative discussion—Management's Discussion and Analysis (MD&A)—that explains results, key risks, and known trends that may shape future performance.[20] These requirements aim to reduceinformation asymmetry and support market transparency. To make filings publicly accessible, the SEC maintainsEDGAR (Electronic Data Gathering, Analysis, and Retrieval), which, since 1994, has provided online access to most registration statements and related materials and supports analysis by institutional and retail investors.[21][22]
Market Oversight. The SEC oversees supervised intermediaries that facilitate trading and asset management, such asbroker-dealers,investment advisers,securities exchanges, and self-regulatory organizations. The Division of Examinations executes this oversight by conducting risk-based inspections to verify compliance with federal laws regarding conflict-of-interest management and asset safeguarding.[23] Examinations are one component of oversight; supervision also includes ongoing monitoring of firm conduct and market activity. For broker-dealers, the SEC overseesFINRA, a self-regulatory organization that conducts member examinations and enforces compliance with applicable rules, subject to SEC oversight.[24]
Investigations and enforcement. The SEC investigates potential violations of the federal securities laws, including fraud, insider trading, market manipulation, and misleading disclosures. The Division of Enforcement leads these matters as acivil authority, bringing actions infederal court or initiating administrative proceedings.[25] The SEC often coordinates with theDepartment of Justice (DOJ), theFederal Bureau of Investigation (FBI), and other law enforcement bodies, because the same misconduct can trigger both civil penalties and criminal charges.[26] Available remedies may include injunctions, civil penalties, disgorgement where authorized, and industry bars in appropriate cases. The SEC also operatesa whistleblower program that supports the reporting of potential violations. During investigations, the agency generally limits public comment to protect investigative integrity,due process, and the rights of the parties involved.
Whistleblower program
SEC staff provide written communications that affect disclosure practice and compliance expectations, including comment letters and no-action letters.
Comment letters. The Division of Corporation Finance may issue comment letters in response to public filings[34], requesting clarification, additional disclosure, or revisions. These letters are typically nonpublic at first and list specific questions or requested revisions. Companies typically respond in writing, and the staff may issue follow-up comments.[35] After the review concludes, the correspondence generally becomes public. For example, in October 2001 the SEC sent a comment letter toCA, Inc. that raised 15 items, most related to accounting issues, including several onrevenue recognition.[36] CA'schief executive officer later pleaded guilty to fraud in 2004.[36]
No-action letters. SEC staff may issueNo-action letters stating that, based on the facts presented, staff would not recommend enforcement action if a party proceeds with a proposed activity. These letters are typically requested when the legal status of an activity is uncertain. No-action letters are published and provide guidance on how staff interpret and apply the federal securities laws. No-action letters can guide market participants, but they do not bind the Commission or courts.
Before the enactment of the federal securities laws and the creation of the SEC, most securities regulation in the United States operated through stateblue sky laws.Kansas adopted one of the earliest modern blue sky laws in 1911, championed by banking commissionerJoseph Norman Dolley, which promoted a registration regime for securities offerings, sales activity, and the intermediaries who marketed them.[37] The phrase "blue sky" is commonly traced to a 1917Supreme Court decision in Hall v. Geiger-Jones, which described fraudulent schemes—ventures with no real substance marketed to the unwary—as having no more substance than “so many feet of ‘blue sky.’”
By 1933, 47 states had enacted blue sky laws (Nevada was the exception), but the regimes across states varied widely. Some states used a merit-based approach, allowing regulators to evaluate whether an offering appeared fair; others focused more narrowly on preventing deception. This discrepancy across states created opportunities for "regulatory arbitrage," where fraudulent promoters simply moved their operations to states with the weakest standards. The system proved uneven in practice, weakened by these easy workarounds, inconsistent standards, and limited enforcement capacity at the state level.
The SEC's modern authority derives primarily from two New Deal statutes: theSecurities Act of 1933 and theSecurities Exchange Act of 1934, both enacted as part of PresidentFranklin D. Roosevelt'sNew Deal reforms. Following thePecora Commission hearings, which brought public attention to abuses and fraud in securities markets, Congress enacted the Securities Act of 1933 (15 U.S.C. § 77a). The statute regulated primary offerings in interstate commerce by requiring registration and disclosure before sale, enabling investors to review material financial information. For its first year, administration and enforcement of the 1933 Act were assigned to theFederal Trade Commission.
Congress followed with the Securities Exchange Act of 1934 (15 U.S.C. § 78a), which focused on secondary trading — exchanges between parties typically unconnected to the original issuers—and the infrastructure that supports it. The Exchange Act placed national securities exchanges (e.g., theNew York Stock Exchange) and other market institutions under federal oversight, including exchanges, self-regulatory organizations, and other entities central to trading and market integrity (e.g., theMunicipal Securities Rulemaking Board,NASDAQ, alternative trading systems). Section 4 of the Exchange Act created the SEC, transferring responsibility for administering the 1933 Act from the FTC and consolidating federal enforcement of both statutes in the new agency.[38] Later statutes and amendments expanded the SEC’s supervisory perimeter and tools, including oversight of additional market utilities and forms of trading and intermediation.
In 1934,PresidentFranklin D. Roosevelt appointedJoseph P. Kennedy Sr. as the SEC's first chair, citing in part Kennedy's familiarity withWall Street and financial markets.[39] Early commissioners also includedJames M. Landis andFerdinand Pecora, and Kennedy recruited a cadre of young attorneys who later became prominent national figures, includingWilliam O. Douglas andAbe Fortas.[40]
Roosevelt’s choice also carried a political message: Kennedy had built a fortune in the speculative markets of the 1920s and was widely seen as someone who understood—sometimes from personal experience—the very practices the New Deal wanted to police, a logic often summarized in contemporary and later accounts as “set a thief to catch a thief.”[41] Kennedy’s pre-government career, including his Prohibition-era liquor business, later fueled recurring allegations of contacts with bootleggers or organized-crime figures; documentary histories and major biographies generally treat these claims as contested and not conclusively established.[42] His social and political networks also overlapped with later national-security leadership: former CIA directorAllen W. Dulles recalled knowing Kennedy “quite well” and associated him with his period running the SEC.[43]
Another early official wasDavid Saperstein, a former associate counsel to thePecora Commission who helped draft theSecurities Exchange Act of 1934. As the SEC's first director of the Division of Trading and Exchange, he oversaw broker-dealer registration, early federal policy for over-the-counter markets, and influential staff interpretations—often associated with the 1937 "Saperstein Interpretation"—that helped shape the commission's approach to market structure and conflicts of interest.[44][45][46]
Kennedy’s early SEC emphasizedmarket credibility: it pursuedfraudulent practices, strengthenedregistration and disclosure expectations, and sought to curb abuses that underminedinvestor confidence. Contemporary accounts credit the agency’s early actions with reinforcing the legitimacy of the new federal framework and encouraging wider participation in public markets.[40]
In its first years, the Securities and Exchange Commission focused on building a workable federal disclosure regime and translating the 1933 and 1934 statutes into day-to-day market oversight. The Securities Exchange Act of 1934 created the SEC and gave it authority over key elements of secondary-market infrastructure, including national securities exchanges, broker-dealers, periodic reporting by public companies, and proxy solicitation—an institutional shift meant to rebuild investor confidence after the market abuses and failures exposed duringthe Great Depression.[47] Early administration emphasized standardized registration and reporting practices, routine supervision of market intermediaries, and enforcement against disclosure and trading misconduct to reinforce the premise that public markets depend on timely, reliable information rather than private favoritism.
Congress also broadened the SEC’s responsibilities through a sequence of New Deal–era statutes that expanded federal supervision beyond traditional stock issuance and exchange trading.The Public Utility Holding Company Act of 1935 assigned the SEC a central role in regulating public-utility holding companies and limiting abusive holding-company structures.[48]The Trust Indenture Act of 1939 required qualifying corporate debt offerings to be issued under an indenture with an independent trustee, reflecting the view that bond investors needed enforceable protections and credible oversight of issuer obligations.[49] In 1940, Congress added two cornerstones of modern investor protection:the Investment Company Act (governing entities such as mutual funds) andthe Investment Advisers Act (requiring many advisers to register and restricting fraudulent and conflicted practices).[50][51] Together, these measures helped shift federal securities regulation from a narrow focus on offering disclosure toward a broader architecture covering issuers, intermediaries,pooled investment vehicles, andfiduciaries.
In 1938, Congress created theTemporary National Economic Committee (TNEC) (52 Stat. 705) to study economic concentration and competitive conditions. Archival descriptions note that certain TNEC-related records held within SEC record groups remainunder seal and subject to access restrictions specified by the SEC, with limited exceptions, reflecting the continuing sensitivity of some materials generated in the Commission’s early institutional period.[52] The committee was defunded in 1941.[53]
In the early 21st century, the SEC continued to evolve in response to emerging market complexities and widespread calls for more rigorous oversight. After the Enron scandal and other high-profile corporate collapses, Congress enactedthe Sarbanes–Oxley Act of 2002, which significantly reshaped corporate governance and accounting standards. This reform establishedthe Public Company Accounting Oversight Board (PCAOB), strengthening the SEC's authority in regulating financial reporting and internal controls.[54]
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TheDodd–Frank Wall Street Reform Act of 2010 andConsumer Protection Act of 2010 further expanded the SEC's mandate, particularly in the wake ofthe 2008 financial crisis. Among its provisions, the Dodd-Frank Act gave the SEC the authority to regulatesecurity-based swaps and created a robust whistleblower program to incentivize the reporting of financial misconduct.[55][56] In parallel,the Jumpstart Our Business Startups (JOBS) Act of 2012 accelerated changes in capital formation by expanding pathways for smaller offerings and emerging growth companies, adding new exemptions and scaled disclosure frameworks that required substantial SEC rulemaking and implementation.[57]
Later developments reflected both investor-protection priorities in retail markets and increased sensitivity to cross-border and nonfinancial risks. In 2019, the SEC adopted Regulation Best Interest and related disclosure requirements intended to raise the standard of conduct for broker-dealers when making recommendations to retail customers, alongside a new relationship summary (Form CRS) designed to standardize key disclosures across firms.[58] In the early 2020s, the SEC implemented theHolding Foreign Companies Accountable Act framework to address audit-inspection access for foreign issuers, linking U.S. market access more directly to enforceable oversight of audit work papers.[59]
In response to the proliferation ofdigital assets, the SEC increased its focus on cryptocurrency andblockchain-based markets, including enforcement actions arising from theFTX collapse andTerraform Labs debacle. These matters contributed to ongoing debates about how federal securities laws apply to emerging technologies.
The Commission also adopted rules in 2023 requiring public companies to disclose material cybersecurity incidents and to describe cybersecurity risk management and governance, reflecting a broader shift toward treating cyber risk as a recurring disclosure and internal-controls issue rather than a purely technical operational matter.[60]
The President appoints commissioners with the advice and consent of the Senate, and the President designates one commissioner as chair.
Five presidentially appointed commissioners lead the agency. No more than three commissioners may be from the same political party. Commissioners serve staggered five-year terms, with one term expiring on June 5 each year; a commissioner may continue to serve for up to 18 months after the term expires while a successor is nominated and confirmed.
The president designates one commissioner to serve as chair, the SEC's chief executive. Commissioners may not be removed at will, a structural feature intended to support the agency's independence.
The commission's membership as of January 7, 2026[update]:[61]
| Name | Party | Took office | Term expires |
|---|---|---|---|
| Chair:Paul S. Atkins | Republican | April 21, 2025 | June 5, 2026 |
| Hester Peirce | Republican | January 11, 2018 | June 5, 2025 |
| Mark Uyeda | Republican | June 30, 2022 | June 5, 2028 |
| Vacant | N/a | — | — |
| Vacant | N/a | — | — |
The president appoints the commissioners with Senate confirmation and designates one commissioner to serve as chair.[62] The chair acts as the agency’s chief executive—setting priorities, directing the SEC’s staff and divisions, and representing the Commission toCongress, other regulators, and the public—while most Commission actions require a majority vote.[62]
The current chair is Paul S. Atkins, sworn in as the 34th chair of the Securities and Exchange Commission on April 21, 2025, after being nominated byPresident Donald J. Trump on January 20, 2025 and confirmed bythe U.S. Senate on April 9, 2025.[63] A former SEC commissioner (2002–2008), Atkins has been described as a business-friendly regulator and has drawn attention for past and current views on how securities regulation should apply todigital-asset markets.[64] In public remarks as chair, he has also emphasized the importance of cooperation with foreign counterparts on cross-border market oversight.[65]
For additional information, see:
The SEC's core work is carried out through six principal divisions headquartered inWashington, D.C.:[4]
| Division | Core remit | Key functions and notes |
|---|---|---|
| Corporation Finance | Public-company disclosure; registration of securities offerings; certain corporate transactions (including mergers). | Reviews registration statements and periodic reports for compliance with disclosure standards and issues comment letters seeking revisions or additional information. OperatesEDGAR, the SEC’s electronic filing system used to make issuer disclosures broadly accessible. |
| Trading and Markets | Market structure; broker-dealers; self-regulatory organizations (SROs). | Oversees SROs such as theFinancial Industry Regulatory Authority (FINRA) andMunicipal Securities Rulemaking Board (MSRB), reviews proposed SRO rule changes, and monitors industry practices. Many day-to-day broker-dealer oversight functions are carried out by FINRA under SEC supervision; firms not regulated by other SROs must register with FINRA, and individuals trading securities typically qualify through FINRA-administered examinations (e.g., theGeneral Securities Representative Exam).[66] |
| Investment Management | Investment companies and investment advisers. | Regulates registered investment companies (includingmutual funds) and registeredinvestment advisors under the Investment Company Act of 1940 and the Investment Advisers Act of 1940.[67] Reviews filings; responds to no-action and exemptive requests; supports Commission rulemaking; assists enforcement matters involving advisers and funds.[68] |
| Enforcement | Civil enforcement of federal securities laws. | Investigates potential violations and brings cases in federal court or through administrative proceedings. The SEC can file acivil action in aU.S. district court or initiate an administrative proceeding before an independentadministrative law judge (ALJ). The division does not initiate criminal cases by itself, but can refer matters to prosecutors and works withDOJ/FBI on parallel civil/criminal proceedings. The agency has increased the division's resources and emphasis in the 21st century in line with the agency's post-2008 financial crisis priorities and scrutiny following the failure to detect the Madoff fraud.[69] |
| Economic and Risk Analysis | Economics and data analytics across SEC functions. | Created in 2009 to integrate financial economics and data analytics into rulemaking, examinations, and enforcement. Produces economic and statistical analyses, develops analytic tools to identify risks and potential misconduct, and provides subject-matter expertise across the agency; houses the agency’s chief economist.[70] |
| Examinations | Supervisory examinations of regulated entities. | Conducts the National Exam Program using risk-based strategies to assess compliance by regulated firms, identify and monitor emerging risks, inform policy and rulemaking through examination findings, and pursue misconduct. |
The agency maintains 10 regional offices in the United States, each led by a regional director.[71] The table lists the federal judicial district for each office’s location for reference.
| Office (City, State) | Regional director(s) | Federal judicial district (office location) |
|---|---|---|
| Atlanta,Georgia | Nekia Hackworth Jones | N.D. Ga. |
| Boston,Massachusetts | Silvestre A. Fontes | D. Mass. |
| Chicago,Illinois | Daniel Gregus | N.D. Ill. |
| Denver,Colorado | Jason Burt | D. Colo. |
| Fort Worth,Texas | Eric R. Werner | N.D. Tex. |
| Los Angeles,California | Katharine Zoladz; J. Cindy Eson | C.D. Cal. |
| Miami,Florida | Eric I. Bustillo | S.D. Fla. |
| New York City,New York | Antonia M. Apps | S.D.N.Y. |
| Philadelphia,Pennsylvania | Nicholas P. Grippo | E.D. Pa. |
| San Francisco,California | Monique Winkler | N.D. Cal. |
In addition to its divisions, the SEC includes specialized offices that provide legal, accounting, operational, and policy support.
| Office/unit | Role |
|---|---|
| Office of General Counsel | Represents the agency in appellate litigation and provides legal advice across the commission and staff. |
| Office of the Chief Accountant | Supports commission accounting and auditing policy and coordinates with standard setters and audit regulators, including theFinancial Accounting Standards Board (GAAP), thePublic Company Accounting Oversight Board (audit requirements), and theInternational Accounting Standards Board (IFRS). |
| Office of International Affairs | Represents the SEC in cross-border regulatory and enforcement coordination and supports engagement with international counterparts, including theInternational Organization of Securities Commissions and theFinancial Stability Forum. |
| Cyber and Emerging Technologies Unit (CETU) | Enforcement-focused unit covering cyber-related misconduct and emerging technologies, including digital assets and related market abuse (formerly the Crypto Assets and Cyber Unit (CACU)). |
| Office of Information Technology | Supports agency systems, cybersecurity, infrastructure, and user services. |
| Office of Inspector General | Independent oversight office within the SEC. In January 2013, the SEC announced the appointment ofCarl Hoecker as Inspector General; public reporting at the time described an OIG staff of 22.[72][73][74] |
| Office of the Whistleblower | Created by Section 922 of the Dodd–Frank Wall Street Reform and Consumer Protection Act, which added Section 21F to the Exchange Act.[75][76] The program provides a channel for tips and authorizes monetary awards to eligible whistleblowers whose original information leads to successful enforcement actions with monetary sanctions exceeding $1,000,000.[77] |
Revenue and fee mechanics. The SEC's budget authority is provided byCongress through the annual appropriations process, and the agency's operating costs are generally designed to be offset by regulatory fees (often described as "offsetting collections").[78] In its Fiscal Year 2026 Congressional Budget Justification, the SEC requested $2.149 billion to support 4,101 full-time equivalents (FTE), describing the request as flat compared with the Fiscal Year 2025.[79]
The SEC collects several types of fees, including trading-related transaction fees under Section 31 of the Securities Exchange Act of 1934 and certain registration and filing fees. The agency deposits those fee collections inthe U.S. Treasury.[80] Fee collections can exceed the SEC's budget authority in periods of high market volume. For Fiscal Year 2025, the SEC reported Section 31 transaction fee revenue of about $3.3 billion and noted that Section 31 offsetting collections surpassed the SEC's $2.2 billion budget authority as of February 2025; the SEC therefore set the Section 31 transaction fee rate at zero for most covered transactions, effective May 14, 2025, for the remainder of the fiscal year.[81][82]
Scale of markets covered and staffing comparison. SEC staffing figures suggest that, per staff member, the SEC covers a larger dollar value of financial activity in the capital markets than the comparable per-staff dollar value implied for the U.S. banking sector. Using common measures of U.S. capital-market size,SIFMA reported U.S. equity market capitalization of about $68.2 trillion at year-end 2025 and U.S. fixed-income securities outstanding (excludingMBS andABS) of about $48.9 trillion as of 3Q 2025, or roughly $117.1 trillion combined.[83][84] On that basis, using the SEC’s FY 2026 requested staffing level, these numbers correspond to about 35 FTE per $1 trillion of market size (about $28.6 billion per FTE).
A parallel illustration for the banking market uses staffing figures for the federal banking regulators and total assets at FDIC-insured institutions. For example, published staffing figures for the federal banking regulators—theFDIC,the Federal Reserve Board, andthe OCC— indicate a higher staff-per-dollar ratio in banking than the SEC’s staff-per-dollar metric for the capital markets. The FDIC proposed staffing authorizations of 5,386 positions for 2026, the OCC projected 2,571 FTE for FY 2026, and the Federal Reserve Board reported 3,057 authorized positions for 2025 (11,014 positions combined).[85][86][87] For an illustrative size measure, the banking system reported $25.1 trillion in total assets in the third quarter of 2025, implying about 439 staff positions per $1 trillion of bank assets based on the combined staffing figures above.[88] Comparing this measure (i.e., staff per dollar ratio) for the U.S. capital markets and the U.S. banking sector indicates a considerably higher staff-per-dollar ratio in banking than the staff-per-dollar ratio implied for the SEC using the capital-market measures above.
Early scandals tested confidence in U.S. securities markets. One of the most damaging episodes came when Richard Whitney—then president ofthe New York Stock Exchange—was convicted for embezzlement-related misconduct in the late 1930s, a reputational blow that undercut the idea that Wall Street could reliably “self-police.”[89][90] The episode previewed a recurring theme in later enforcement history: market credibility can collapse quickly when elite institutions and gatekeepers fail.
A second benchmark was theMcKesson & Robbins accounting fraud (1938–1940), in which fabricated inventory and receivables exposed how easily paper profits could be manufactured without basic verification.[91] The scandal became a practical forcing function for stronger audit procedures and professional skepticism—ideas that later reappeared in modern debates about internal controls, third-party verification, and “trust-but-verify” expectations for new products and fast-growing firms.
These early legitimacy shocks also set the stage for courts to define what counts as a “security” and who must register—doctrinal building blocks that became especially important when financial innovation made new schemes look unlike traditional stock sales.
InSEC v. W. J. Howey Co. (1946), the Supreme Court articulated the“investment contract” framework that later became a central tool for evaluating novel fundraising structures under the federal securities laws.[92] The case involved sales of citrus-grove plots coupled with a service contract under which the promoter cultivated, harvested, and marketed the fruit; many purchasers lacked the ability or intent to manage the groves themselves and instead relied on the promoter’s efforts for returns.[92] The Court framed “investment contract” as a functional concept and directed courts to look to the transaction’s economic reality rather than its label or packaging.[92]
InSEC v. W.J. Howey Co. (1946),the Supreme Court held that the federal securities laws can reach arrangements that function as investments even when promoters describe them as real-estate or commercial transactions.[92] Courts later summarized theHowey framework as asking whether a scheme involves (1) an investment of money, (2) in a common enterprise, (3) with a reasonable expectation of profits, (4) to be derived from the efforts of others.[92] Later Supreme Court decisions clarified important edges of that analysis, including that “profits” refers to investment returns rather than consumption value (United Housing Foundation, Inc. v. Forman (1975))[93] and that a promised fixed return can still satisfy the “profits” element (SEC v. Edwards (2004)).[94]
Since the original case, regulators and courts have used theHowey approach across successive market cycles to evaluate new fundraising structures under existing securities statutes, particularly when issuers combine a sale of an asset with ongoing managerial promises that purchasers rely on for returns.[92] SEC guidance describing the application ofHowey in the context of digital assets similarly emphasizes an objective inquiry into the transaction’s economic reality and whether purchasers reasonably expect returns from the efforts of a promoter or other active participants.[95]
InSEC v. Ralston Purina Co. (1953), the Court narrowed what qualifies as a truly “private” offering by tying exemptions to whether offerees can realistically fend for themselves (including access to information), rather than to a company’s informal framing of the sale.[96] Together,Howey andRalston Purina influenced later enforcement waves by giving the SEC a theory for (1) novel instruments and (2) “private” distributions that function like public capital raising. Those concepts became especially visible again decades later in enforcement theories applied to token distributions and platform intermediation.
Insider trading doctrine developed through a mix of landmark cases and changing market tactics.SEC v. Texas Gulf Sulphur (1963–1968) became an early touchstone for modern “materiality” and the principle that corporate insiders should not trade on significant nonpublic information while keeping the market in the dark.[97] The case became an early touchstone for modern “materiality” and the principle that corporate insiders should not trade on significant nonpublic information while leaving the market uninformed.
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Later Supreme Court decisions refined when trading on information becomes unlawful. InChiarella v. United States (1980), the Court limited liability absent a duty to disclose arising from a relationship of trust, tightening the legal hook for “information-only” trading strategies.[98] InDirks v. SEC (1983), the Court set the “personal benefit” standard for tipper–tippee liability, shaping how prosecutors and regulators built insider trading cases for decades—especially when the factual story involved networks rather than a single executive trading in a lonely corner.[99]
In the early 2000s, the SEC brought several insider-trading cases that illustrated how the agency applied material nonpublic information and tipping theories in real-world settings, including through brokers and other intermediaries. One widely reported example involved the SEC’s civil action againstMartha Stewart and her broker,Peter Bacanovic, arising from trading inImClone Systems stock. In June 2003, the SEC filed a civil insider-trading complaint inthe Southern District of New York alleging that Martha Stewart sold ImClone Systems stock after receiving material nonpublic information from her broker, Peter Bacanovic, about sales byImClone CEO Samuel Waksal and his daughter.[100] In August 2006, Stewart and Bacanovic settled the SEC’s civil case without admitting or denying the allegations; Stewart agreed to disgorgement and interest totaling $58,062 and a civil penalty of $137,019 and accepted five-year public-company director/limited-officer restrictions, while Bacanovic agreed to disgorgement and interest totaling $645 and a $75,000 civil penalty.[101][102]
By the late 2000s and early 2010s, enforcement attention increasingly centered on institutionalized pipelines (consultants, analysts, and trading desks).The SAC Capital matters (2009–2014) became emblematic of that era: authorities pursued actions tied to repeated misuse of corporate information across multiple traders and teams, sharpening compliance expectations around controls, supervision, and “willful blindness” risks inside large funds.[103] The broader lesson was that “market integrity” cases often turn less on one rogue actor and more on systems that repeatedly convert confidential information into profit.
Major corporate fraud cases repeatedly forced upgrades to disclosure and gatekeeping norms.The Equity Funding scandal (1969–1973) drew attention as an early “technology-assisted” fraud episode—fabricated policies and numbers designed to inflate reported performance—illustrating how innovation can amplify deception as well as efficiency.[104] In the early 2000s,the Enron collapse and related actions (2001–2006) became a defining corporate-failure wave;the SEC charged Enron with massive accounting fraud, while the broader aftermath helped drive reforms and reshaped expectations for audit independence and internal controls.[105]
Conflicts of interest and intermediary incentives also became central targets.The Global Research Analyst Settlement (2002–2003) addressed allegations that major firms issued biased research to win investment-banking business, and it helped reset supervisory and disclosure expectations around analyst independence and conflicts management.[106] Outside the SEC’s jurisdiction but frequently cited as a cautionary example, theBre-X collapse (1993–1997) illustrated how narrative-driven markets can outrun verification when gatekeepers fail and “too good to check” becomes the default setting.[107]
High-growth private fundraising also tested disclosure and gatekeeping norms outside the public markets. For example, in March 2018, the SEC charged privately held blood-testingstartupTheranos, itsfounder and CEO Elizabeth Holmes, andformer president Ramesh "Sunny" Balwani with fraud, alleging they raised more than $700 million from investors through false and misleading statements about the company's technology, business, and financial performance.[108] As part of the SEC investigation, Holmes gave sworn deposition testimony[109] in July 2017; ABC News later reported it obtained video from her July 11, 2017 SEC deposition.[110] The SEC alleged Theranos claimed it had developed analyzers that could run a “comprehensive range” of laboratory tests from small amounts of blood and portrayed its technology and commercial progress in ways that materially overstated its capabilities.[111] The SEC emphasized that federal securities anti-fraud rules apply toprivate offerings as well as public-company disclosures.[108] Theranos and Holmes settled without admitting or denying the allegations, including penalties and governance restrictions, while the SEC's civil litigation against Balwani continued.[108]Federal prosecutors later pursued a parallel criminal case, and theU.S. Attorney's Office for the Northern District of California credited an investigation that included the FBI and other federal partners.[112]
Later episodes highlighted how communications, retail participation, and cross-border listings can stress market “plumbing.”The Tesla “funding secured” matter (2018–2024) focused on whether public statements by a CEO misled investors, becoming a high-visibility example of enforcement interacting with social-media-era disclosures and governance controls.[113][114] The 2021 meme-stock trading halts and the payment-for-order-flow debate (GME and others) drew attention to brokerage risk controls, liquidity demands, and market-structure incentives, prompting an SEC staff report and continued policy debate.[115]
Separately, the HFCAA/PCAOB China audit-access dispute (2020–2024) showed how a technical audit-oversight fight can decide whether foreign companies keep access to U.S. investors and U.S. exchanges. In everyday terms, the issue was whether U.S. regulators could check the work behind the audits of some China- and Hong Kong–based issuers trading in the United States—and if they could not, whether those issuers should lose U.S. trading access. ThePublic Company Accounting Oversight Board (PCAOB)—a nonprofit audit regulator created by the Sarbanes–Oxley Act that inspects and investigates audit firms and operates under SEC oversight (the SEC appoints PCAOB board members and approves the PCAOB’s rules, standards, and budget)—determined in 2021 that it could not inspect or investigate completely in mainland China and Hong Kong because of restrictions imposed by local authorities.[116][117][118] Before the 2022 access agreement, U.S. policymakers and analysts argued that China’s restrictions on audit work papers and PCAOB inspections created a regulatory blind spot that could be exploited by fraudulent issuers and state-linked actors seeking access to U.S. capital markets without full audit transparency.[119]Geopolitics entered the picture because Chinese authorities had long limited foreign regulators’ access to audit documents, at points citing national security concerns, creating a direct clash between U.S. market-oversight demands and China’s sovereignty and state-secrecy posture.[119] U.S. policymakers argued that prolonged non-access could weaken investor protections by limiting the ability of U.S. regulators to verify audits and detect issuer misconduct or undisclosed government influence in U.S.-listed companies.[119][120] The SEC’s rules implementing theHolding Foreign Companies Accountable Act (HFCAA) required affected issuers to submit documentation and make additional annual-report disclosures—such as whether the issuer is owned or controlled by a foreign governmental entity and details about audit arrangements and governmental influence—and the HFCAA framework can culminate in U.S. trading prohibitions when PCAOB non-access persists for the statutory period.[121][120] The dispute eased in late 2022 when the PCAOB reported it had secured complete access to inspect and investigate China- and Hong Kong–headquartered audit firms and voted to vacate its prior non-access determinations, effectively resetting the HFCAA delisting clock for then-affected issuers while leaving the framework in place for future reassessment.[122]
The combined arc across these episodes is blunt: fraud and conflicts damage confidence directly, while market-structure stress tests often reveal second-order failures—controls, liquidity, and information flow—that can turn volatility into disorder.
The leveraged buyout and junk-bond era created a different kind of enforcement flashpoint: not classic issuer fraud, but the policing of intermediaries whose influence could reshape markets. The SEC’s actions involvingDrexel Burnham Lambert andMichael Milken (1986–1991) became a defining example of enforcement targeting misconduct in the machinery of high finance rather than in a single issuer’s books.[123]
Contemporary accounts and later SEC histories described the crackdown as a chain reaction rather than a single case: the SEC’s 1986 insider-trading case involving arbitrageurIvan Boesky ended in a headline settlement and a cooperation agreement that broadened scrutiny across Wall Street’s deal ecosystem (often dubbed “Boesky Day” in retrospective accounts).[124][123]
As the inquiry widened, Drexel—then a central player in junk-bond financing—agreed to plead guilty and to pay what federal prosecutors described as a $650 million package combining criminal and civil penalties and an escrow fund tied to the SEC’s parallel civil action.[125][126] In related proceedings, Milken pleaded guilty in a criminal case, and SEC materials described civil judgments and administrative sanctions that included disgorgement and interest and imposed industry bars.[127][128][129][130] The alleged wrongdoing varied across proceedings, but the broader storyline centered on whether markets remain fair when financing, deal-making, and trading incentives concentrate too tightly around a small set of powerful intermediaries.[123]
The lesson that stuck was structural: enforcement can change behavior most effectively when it forces institutions to re-engineer supervision, compensation incentives, and information barriers—especially in periods when “everybody wins” narratives encourage corners to be cut.
The Bernard Madoff collapse (revealed in 2008 and litigated afterward) became the emblematic “trust disaster” of the modern era—not only because of the scale of investor harm, but because it raised uncomfortable questions about how warnings were handled and why red flags did not trigger decisive action sooner.[131] Post-mortems emphasized failures in follow-through, skepticism, and cross-unit coordination—problems that are mundane on paper but catastrophic in outcome when a fraudster’s reputation acts as camouflage.
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At its core, the scheme operated as a Ponzi fraud: instead of executing the securities strategy he represented to clients, Madoff allegedly fabricated trading records and customer account statements and used incoming investor money to fund redemptions and withdrawals, creating the appearance of steady, market-independent returns.[132][133] The misconduct harmed thousands of investors, charities, and institutions by wiping out principal and confidence at once, and it fit the core legal theory behind securities fraud: material misrepresentations and deceptive practices in connection with securities transactions and advisory services, including violations the SEC alleged under Securities Act Section 17(a), Exchange Act Section 10(b) and Rule 10b-5, and Advisers Act Sections 206(1)–(2).[133]
The fraud came to light in December 2008 after Madoff disclosed to senior employees that the advisory business was “a fraud,” and the SEC filed an emergency civil action on December 11, 2008; the court later ordered relief including an asset freeze and other measures as the case proceeded.[133][134] In parallel, federal prosecutors brought criminal charges; Madoff pleaded guilty in March 2009 and was sentenced in June 2009 to 150 years’ imprisonment, underscoring that the case involved not only regulatory violations but criminal fraud and related offenses.[135] The SEC’s Office of Inspector General later documented that the SEC had received significant warnings and conducted multiple examinations and inquiries before 2008 but failed to uncover the scheme, and the episode became a catalyst for changes in how the agency evaluates tips, coordinates across offices, and prioritizes high-risk matters.[136]
The Madoff case highlighted the need to treat credible anomaly evidence as urgent and to pursue it through standard investigative steps. The episode also contributed to later changes in tips intake, examination procedures, and risk-based prioritization, intended to reduce the risk that reputation or perceived sophistication overrides routine investigative discipline.
During the financial crisis, regulators faced parallel pressures to address immediate failures and maintain public confidence in oversight.
The 2008 financial crisis produced enforcement and regulatory actions aimed at stabilizing markets under extreme conditions. In September 2008, theSEC issued emergency orders addressing abusive short selling practices, including efforts to curb “naked” short selling—selling shares short without borrowing the shares or confirming they can be borrowed for timely delivery—and adopted a temporary prohibition on short selling in certain financial stocks as markets convulsed.[137][138] The practice involves a trader who bets that a stock will fall but does not borrow the shares, or confirm they can be borrowed, for timely delivery. The episode remains a durable reference point in debates over how regulators should use emergency powers during market stress and how those interventions affect confidence, liquidity, and price discovery.
During the same period, the SEC expanded a sweeping investigation into market manipulation and false rumors about financial institutions and required certain market participants to provide information aboutcredit default swap positionsunder oath—an example of crisis-time information gathering and deterrence operating at speed.[139] The SEC also negotiated large auction rate securities settlements that required firms to offer liquidity to affected investors, efforts it described as producing tens of billions of dollars of investor relief during the crisis period.[140]
Crisis-linked cases also emphasized disclosure and conflicts in complex products. In theSEC’s ABACUS matter (2007–2010),Goldman Sachs agreed to pay $550 million to settle allegations tied to disclosures and conflicts in a mortgage-related product, a case frequently cited in post-crisis scrutiny of structured products sold to sophisticated counterparties.[141]
The list covers selected major SEC actions from the crisis and immediate post-crisis period (2009–2012).
Several major cases underscored how cross-border structures can complicate detection and accountability. In November 1972, the SEC filed an injunctive enforcement action,SEC v. Robert L. Vesco, et al., naming Vesco and 41 other corporate and individual defendants, including International Controls Corp. The case centered on SEC allegations that Vesco and associates diverted about $224 million from IOS-managed funds using offshore banks, foreign entities, and layered transactions.[142] Vesco later left U.S. jurisdiction and spent years moving among countries while U.S. authorities pursued civil and criminal proceedings and sought extradition or deportation.[143][144] Contemporary reporting also described the matter taking onWatergate-era campaign-finance overtones, including allegations that Vesco made a $200,000 cash contribution toPresident Nixon’s reelection committee while seeking help in connection with the SEC investigation.[143] Related proceedings included indictments alleging efforts to impede the SEC investigation, followed by acquittals at trial in 1974 for former U.S. Attorney General John N. Mitchell and former Commerce Secretary Maurice H. Stans.[145][146]
DeclassifiedCIA records indicate that other parts of the federal government examined aspects of the Vesco matter as it unfolded. A May 1973CIA memorandum reported that, after a query from the Director—apparently at the request of then–Treasury SecretaryGeorge Shultz—CIA analysts in October 1972 reviewed Securities and Exchange Commission files on Vesco via the agency’s Domestic Contact Service.[147] A Washington Post / UPI report preserved in declassified CIA files summarized an NBC News broadcast alleging that Vesco lived inHavana underCuban government surveillance and that reporting had linked him to smuggling activity andcocaine trafficking.[148] The Vesco matter illustrated how offshore structures and jurisdictional limits can complicate tracing funds and enforcing judgments.
In contrast to the Vesco episode—where offshore layering and a flight from U.S. jurisdiction complicated enforcement—theBCCI /First American case (1978–1991) is often used to illustrate a more institution-centered oversight problem: complex, multi-jurisdiction structures can impede detection and accountability even when multiple regulators and law-enforcement bodies are engaged.
From the SEC’s perspective, early scrutiny in the First American lineage focused onfederal securities-law disclosure obligations associated with coordinated accumulations of stock inFinancial General Bankshares (FGB), a predecessor of First American. Official accounts describe a February 7, 1978 FGB shareholder meeting at which Bert Lance stated that a BCCI-linked group controlled about 20 percent of FGB stock and sought eventual control, despite not having made disclosures described as required by federal securities laws. The Middendorf group then complained to the SEC and the Federal Reserve, and the SEC filed its own suit to block the takeover attempt; the report describes eleven defendants in the SEC action, including Lance,Agha Hasan Abedi,BCCI, and four BCCI clients. The same account characterizes the case’s resolution as a consent decree and permanent injunction framed as ensuring future compliance (rather than punishment) while permitting the transaction to proceed.[149]
Commentators and official reviews have treated the broader BCCI / First American episode less as a single, discrete “SEC investigation case” and more as an illustration of how global banking opacity and political complexity can complicate oversight. Official reviews documented howBCCI’s structure and practices enabled evasion across jurisdictions, creating a complex enforcement environment involving multiple regulators and law-enforcement bodies.[150]
In a parallel proceeding tied to the case, U.S. prosecutors filedmoney-laundering, narcotics, and conspiracy charges in 1988 against 15 individuals (including BCCI officers) and four corporations after a two-yearundercover operation.[151] Almost three years later, U.S. District Judge William Terrell Hodges presided over a six-month jury trial that raised novel issues about the then-new federal money-laundering offense and whether extensive pretrial publicity required a change of venue.[151] The court’s historical account states that FBI DirectorRobert Mueller III described the resulting arrests and convictions as “one of the largest money-laundering prosecutions in United States history.”[151] The same account describes the undercover operation as spanning multiple U.S. cities and foreign jurisdictions and culminating in 1988 with a staged wedding event atPalm Harbor’sInnisbrook Resort that served as a coordinated arrest operation.[151]
The BCCI episode is often cited in discussions of supervisory coordination, beneficial-ownership opacity, and the limits of single-agency action in globally distributed misconduct.
Afterthe September 11 attacks, market regulators faced intense pressure to determine whether anyone attempted to profit from advance knowledge through securities or derivatives trading. The SEC reported on its review of unusual trading activity tied to the attacks and stated that its investigation did not find evidence supporting allegations of insider trading based on foreknowledge of 9/11.[152] The episode shows how market-integrity inquiries can intersect with national security urgency even where enforcement outcomes are limited.
The 9/11 Commission’s reporting also underscored the difficulty of separating rumor-driven market patterns from provable violations under intense public scrutiny and time pressure—making the episode a case study in how regulators communicate findings and coordinate across agencies when markets become a potential intelligence signal.[153]
SEC v. Jarkesy (2013–2024) became a major structural event for SEC enforcement, focusing on constitutional limits around the agency’s use of in-house administrative proceedings and the right to a jury trial in certain contexts.[154] The decision’s practical significance was procedural rather than narrative: it affected where and how the SEC can pursue certain contested penalties, with downstream effects for case strategy, settlement leverage, and litigation timelines.
OtherSupreme Court decisions also reshaped the enforcement toolkit by limiting forums, timing, and remedies. InLucia v. SEC (2018), the Court addressed who can lawfully appoint SEC administrative law judges (ALJs), the in-house judges who run many SEC administrative proceedings. The Court held that SEC ALJs exercise enough authority to count as “officers” under the Constitution, so they must be appointed by the Commission itself (or another constitutionally authorized appointing authority), not through a lower-level staff process; the remedy was a new hearing before a different, properly appointed adjudicator (or before the Commission).[155]
A key timing constraint came fromKokesh v. SEC (2017), where the Court treated SEC “disgorgement” (an order to give back ill-gotten gains) as a penalty for statute-of-limitations purposes. That holding subjected disgorgement claims to the federal five-year limitations period in 28 U.S.C. § 2462, limiting how far back the SEC can seek disgorgement in many enforcement actions and potentially reducing recoveries in long-running schemes unless the SEC files earlier (or another limitations rule applies).[156]
A related remedial limit came fromLiu v. SEC (2020), which upheld disgorgement in principle but limited how the SEC may use it in federal court. The Court held that disgorgement can qualify as “equitable relief” only when it stays tied to a wrongdoer’s net profits (generally, revenue minus legitimate expenses) and is awarded for the benefit of investors rather than operating as a punitive sanction; the Court vacated and remanded for the lower courts to ensure the award followed those limits.[157]
Together, these decisions reinforced the notion that majorSupreme Court cases can influence. In other words, it highlighted that high-impact SEC enforcement matters are not limited to fraud allegations; courts also shape the rules of the enforcement game itself. When procedural and remedial constraints tighten, agencies often shift more activity into federal court and adapt how they select, negotiate, and litigate cases.
In practical terms, theseSupreme Court decisions changed SEC enforcement along four measurable margins: venue, timing, remedies, and (indirectly) case mix. AfterLucia, the SEC had to redo a large set of in-house cases—Chair Jay Clayton said the agency reassigned about 200 administrative proceedings to newly appointed judges—consuming resources and delaying outcomes in matters already in progress.[158]Jarkesy then narrowed the SEC’s ability to seek civil monetary penalties for contested securities-fraud claims in its in-house forum, pushing more of those penalty fights into federal court with juries and typically longer litigation timelines; the SEC has described the added uncertainty and federal-court resource demands as a program-level challenge.[159][160] On remedies,Kokesh imposed a five-year time limit on disgorgement by treating it as a penalty for statute-of-limitations purposes, and the SEC’s Enforcement Division estimated the ruling could force it to forgo up to roughly $900 million in disgorgement in already-filed matters;Liu further limited disgorgement to a wrongdoer’s net profits and tied the remedy more closely to returning funds to investors, which can reduce recoveries in older or expense-heavy schemes and increase the practical burden of tracing and distributions.[161] Even with those constraints, aggregate totals can still swing on a small number of large matters: in FY 2024, the SEC filed 583 total enforcement actions (431 standalone) and obtained $8.194 billion in penalties and disgorgement, illustrating how procedural limits can shift venue and increase time-to-remedy without mechanically capping headline-dollar outcomes each year.[162]
Crypto enforcement in the 2020s grouped into two overlapping themes: (1) token-offering cases centered on whether fundraising and distribution resembled unregistered securities offerings; and (2) platform cases focused on whether intermediaries operated as unregistered exchanges, brokers, or clearing agencies. In theTelegram matter (2019–2020), the SEC alleged an unregistered offering tied to the distribution of digital tokens; Telegram agreed to return funds and pay a civil penalty, making the case an early high-visibility application of registration concepts to token distribution plans.[163]
The Ripple litigation (2020–2025) similarly sharpened debates about howHowey applies in token markets and how facts about distribution and marketing shape outcomes. In December 2020, the SEC filed a civil enforcement actionSEC v. Ripple Labs (XRP) against Ripple Labs and executives Bradley Garlinghouse and Christian A. Larsen, alleging that Ripple raised funds through sales of the digital asset XRP in an unregistered securities offering in violation of Section 5 of the Securities Act of 1933.[164][165] In a July 2023 summary-judgment decision, the district court held that Ripple’s institutional sales of XRP constituted unregistered offers and sales of investment contracts, while certain other distributions and programmatic sales on trading platforms did not.[166] In August 2024, the court entered final judgment imposing a $125,035,150 civil penalty and an injunction restraining Ripple from further violations of the Securities Act’s registration provisions.[167] The SEC and Ripple later filed a joint stipulation to dismiss their Second Circuit appeals, leaving the district court’s final judgment in effect.[168] In 2025 the SEC and Ripple filed a stipulation of dismissal as part of a broader resolution of the case.[169][170]
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Enforcement also targeted major collapses and alleged disclosure failures in crypto ecosystems. After theFTX failure (2022), the SEC filed charges againstSamuel Bankman-Fried, alleging securities law violations tied to investor communications and the handling of customer assets; the episode became a defining “controls and custody” reference point for crypto intermediaries and affiliated trading entities.[171] In December 2022, the SEC charged former FTX CEO Sam Bankman-Fried with defrauding equity investors in FTX; the SEC’s civil case was stayed pending the parallel criminal proceeding, in which he was later sentenced to 25 years’ imprisonment.[172][173][174] The SEC’sTerraform Labs (“Terra–Luna”) matter (filed in 2023) reflected related concerns, alleging misleading statements and fraud tied to marketed stability mechanisms and ecosystem representations—illustrating how disclosure theories and market integrity concerns can converge in digital-asset products.[175]
Large platform actions emphasized compliance architecture and the “platform vs. token” divide. In June 2023, the SEC suedBinance and its founderChangpeng Zhao, alleging violations including failures to comply with registration requirements and issues involving customer assets; the case was framed as a major test of how securities laws apply to global crypto trading venues serving U.S. customers.[176] On June 6, 2023, the SEC filed a separate action againstCoinbase, alleging the company operated as an unregistered exchange, broker, and clearing agency; in 2025, the SEC announced dismissal of its civil enforcement action against Coinbase.[177][178] Across these matters, the recurring enforcement throughline has been familiar investor-protection plumbing—registration, disclosure, conflicts, and custody/controls—applied to new market forms even as courts and policymakers debate boundaries and appropriate regulatory frameworks.
A recurring point of dispute concerns when a digital asset constitutes a "security." The SEC has applied theHowey framework and has argued that certain crypto offerings meet the definition of an investment contract when purchasers expect profits based on the efforts of others.[179] The SEC has classified many crypto assets as securities under this approach, often emphasizing the role of developers or other central parties in driving value. Industry participants and some commentators argue that applying Howey to crypto markets creates uncertainty, especially for networks that claim decentralization.
Academic research reports recurring fraud and manipulation in cryptocurrency markets, includingwash trading,coordinated pump-and-dump schemes, andtrading patterns consistent with price manipulation, which can inflate reported volume, distort prices, and harm late-arriving traders.[180][181][182][183][184][185] Studies that comparetrading venues find less evidence of wash trading and related distortions on more regulatedexchanges than on less regulated venues, consistent with oversight improving transparency and market quality.[186][187] Research ontoken offerings also finds that moreinformative disclosure and credible intermediaries are associated with stronger fundraising outcomes and better post-issuance performance—results often cited in debates over applying securities-style disclosure and antifraud standards to crypto-asset markets.[188][189]
Empirical studies that estimate the effects of SEC interventions in crypto markets find mixed short-run reactions: some announcements are followed by price drops and shifts in volatility or trading, while others produce smaller or more mixed effects, depending on the asset and the setting. One event-study analysis associates SEC interventions with negative abnormal returns and changes in volatility and trading activity for the named assets, interpreting the effects as a repricing of regulatory and legal risk.[190] Other interpretations emphasize that announcement effects may reflect compliance and legal-risk repricing rather than changes in underlying fundamentals.[191] The same research reports heterogeneous effects by asset characteristics such as liquidity, volatility, size, and age.[192] Evidence of elevated pre-announcement trading volume has also been interpreted as consistent with information asymmetries that disclosure and enforcement aim to reduce.[193] Other empirical work similarly emphasizes persistent manipulation risks and information problems in crypto markets and argues that clearer disclosure expectations and credible enforcement can improve market integrity over time even when short-run reactions appear volatile.[194][195][196]
In December 2025, the Securities and Exchange Commission providedthe Depository Trust & Clearing Corporation (DTCC) with a no-action letter allowing the organization to hold and record tokenized equities and other real-world assets on blockchain networks. The authorization enables DTCC to deliver tokenization-related services on approved blockchains for a period of three years.[197] On January 28, 2026, the Divisions of Corporation Finance, Investment Management, and Trading and Markets issued a statement on tokenized securities, clarifying that the format does not alter the application of federal securities laws and categorizing them into issuer-sponsored and third party-sponsored types.
Cybersecurity. On July 26, 2023, the SEC adopted the Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure rule to encourage public companies to more transparently and effectively manage and disclose cybersecurity risk. However, according to a CIO analysis of a proposed AI disclosure rule and its connection to the earlier cybersecurity disclosure regime, some experts argue that the cybersecurity rule's broad, materiality-based thresholds and reliance on company-defined terms create challenges for consistent reporting. Critics also note that many disclosures rely on boilerplate language and provide limited investor insight.[198]
Climate-related disclosures. In 2024, the SEC decided on a climate disclosure rule, The Enhancement and Standardization of Climate-Related Disclosures for Investors. It requires companies to disclose information on their risk to be impacted byclimate change and a company's risks to profit by a growing number of climate change regulations, concerning direct and indirectgreenhouse gas emissions produced.[199]
Many SEC investigations involve conduct that can also implicate federal criminal statutes. As a result, major matters may proceed in parallel tracks, with the SEC pursuing civil remedies while the Department of Justice (often working with the FBI and U.S. Attorneys’ Offices) evaluates criminal prosecution. The SEC’s Division of Enforcement describes its mission as enforcing the federal securities laws and seeking remedies such as injunctions, penalties, disgorgement, and bars, including through federal court litigation and administrative proceedings.[200]
In public announcements, the SEC often references coordination with criminal authorities and other investigative partners in matters that involve parallel actions. For example, in a 2024 enforcement action related to alleged digital-asset fraud, the SEC’s release explicitly referenced parallel criminal proceedings and thanked federal prosecutors and the FBI for assistance, illustrating the practical reality of cross-agency coordination in complex investigations.[201]
The SEC participates in interagency coordination mechanisms intended to support market integrity and financial stability, including the President’s Working Group on Financial Markets, established by Executive Order 12631 and chaired by the Secretary of the Treasury, with the SEC Chair among its statutory members.[202] These structures provide a forum for senior-level coordination on market functioning and stress events, especially where supervision, enforcement, and crisis communications can interact.
In cyber- and technology-enabled misconduct, coordination often extends beyond financial regulators to operational law-enforcement and intelligence-support channels. The SEC has built specialized enforcement capacity for cyber and digital-asset matters—expanding its Crypto Assets and Cyber Unit in 2022 and, in 2025, reorganizing those efforts into a Cyber and Emerging Technologies Unit—reflecting the agency’s stated focus on technology-driven retail harms and market integrity threats.[203][204] The SEC also describes working with federal and local partners on cybersecurity-related issues affecting markets and public companies.[205] At the federal law-enforcement level, the FBI’sNational Cyber Investigative Joint Task Force (NCIJTF) serves as a multi-agency cyber coordination hub and supports intelligence analysis for decision-makers, illustrating the broader interagency architecture that can intersect with securities-market cyber incidents.[206]
A related public–private example is the FBI-led Illicit Virtual Asset Notification (IVAN) initiative, highlighted by the White House in 2023 as part of U.S. actions to counter ransomware and illicit virtual-asset flows, withMITRE describing IVAN as an information-sharing capability intended to help identify and disruptillicit use ofvirtual assets.[207][208]
The SEC oversees a market structure in whichself-regulatory organizations (SROs) and market utilities perform day-to-day rulemaking, surveillance, and operational functions under SEC supervision. In U.S. broker-dealer markets, firms commonly interact with SRO rules (including examinations and disciplinary processes) as part of the broader regulatory framework, with the SEC retaining authority over the federal securities laws and exercising oversight of SRO rule filings and governance arrangements.[209]
Key institutions in this ecosystem includethe Financial Industry Regulatory Authority (FINRA) andthe Municipal Securities Rulemaking Board (MSRB), which develop and administer rules for segments of the securities markets subject to SEC oversight and approval processes.[210][211] Market utilities and protection mechanisms—such as clearing and settlement infrastructure and investor-protection entities created by statute—also operate within a framework in which the SEC’s supervisory role is designed to support orderly markets and investor confidence.
Because U.S. securities markets operate globally, the SEC maintains mechanisms for cross-border regulatory and enforcement cooperation. The SEC’s Office of International Affairs (OIA) has described its role as encouraging international regulatory and enforcement cooperation and negotiating information-sharing arrangements for regulatory and enforcement matters.[212] In practice, this work is carried out through a mix of multilateral engagement, technical assistance, and bilateral cooperation instruments.
Bilateral memoranda of understanding (MOUs) are one common tool for structuring information sharing and assistance in cross-border matters. The SEC publicly posts examples of such arrangements, including MOUs with foreign securities regulators, which are intended to facilitate cooperation in investigations and supervisory matters that span jurisdictions.[213]
The SEC also uses advisory committees to obtain structured input from external experts and market participants, complementing enforcement and supervision with formal channels for policy feedback. These committees are intended to surface practical implications of proposed rules and guidance, including how market structure, disclosure regimes, and technology trends affect investors and intermediaries.[214]
For example, the Asset Management Advisory Committee (AMAC) was established in 2019 to provide perspectives on asset management and related issues affecting investors and market participants, including trends, globalization effects, and the role of technology and service providers.[215]
The SEC provides public access to many filings and datasets through its website and responds to records requests under the Freedom of Information Act (FOIA). The agency also collects non-public sensitive data on market transactions used for market oversight, examinations, and enforcement.
The SEC publishes datasets extracted from filings and other sources to support research and analysis on capital market issues.
The SEC collects and obtains non-public data used for market surveillance and enforcement.
A 2015 analysis byCenter for Effective Government of 15 federal agencies receiving the most FOIA requests (using 2012–2013 data) ranked the SEC among the five lowest performers, assigning it a D− based on a score of 61 out of 100.[235]In contrast, a 2025 Department of Justice assessment—based on the 2025 Chief FOIA Officer Reports for agencies receiving more than 1,000 requests—reported higher ratings for the SEC across assessed categories.[236]
Commentators have criticized the SEC as overly cautious in confrontingWall Street misconduct and as insufficiently effective at holding senior executives accountable.[237][238][239]
Former SEC chairChristopher Cox acknowledged multiple failures connected to theBernard Madoff fraud.[240] The SEC's involvement with Madoff-related matters dated back at least to a 1992 investigation intoa feeder fund that invested only with Madoff and that, according to the SEC, promised "curiously steady" returns.[241] Critics have alleged that the agency missed red flags and did not act on tips and warnings about Madoff's alleged fraud.[242]
Cox later said the agency would investigate "all staff contact and relationships with the Madoff family and firm, and their impact, if any, on decisions by staff regarding the firm."[243] One episode that drew attention involved SEC assistant directorEric Swanson, who metShana Madoff while participating in an SEC examination of the firm (specifically pertaining to an allegation thatBernard Madoff was running a Ponzi scheme); she served as the firm's compliance attorney. The SEC closed the inquiry, and Swanson later left the agency and married Shana Madoff.[244]
Surveys reported that approximately 45 percent of institutional investors believed stronger SEC oversight could have prevented the Madoff fraud.[245] In 2000,Harry Markopolos contacted the SEC's Boston office and urged staff to investigate Madoff, arguing that the returns Madoff claimed could not be generated legally using the strategy described.[246]
In June 2010, the SEC settled awrongful termination lawsuit with formerSEC enforcement lawyer Gary J. Aguirre, who was terminated in September 2005 after attempting to subpoena Wall Street figure John J. Mack in an insider trading case involving hedge fundPequot Capital Management.[247]Mary Jo White, who later served as chair of the SEC, representedMorgan Stanley in connection with the matter.[248] Although the SEC dropped the case at the time, the agency filed charges against Pequot about a month before settling with Aguirre.[247]The U.S. Senate report issued in August 2007 discussed the episode and urged reforms.[249]
On September 26, 2016,Democratic senator Mark Warner sent a letter to the agency to evaluate whether the disclosure regime remained adequate, citing the low number of company disclosures at that point.[250][251][252]
In 2009,the Project on Government Oversight (POGO), a government watchdog group, sent a letter to Congress criticizing the SEC for failing to implement more than half of the recommendations issued by itsinspector general.[253] POGO claimed that the SEC took no action on 27 of 52 recommended reforms from inspector general reports over the prior two years and still listed 197 of 312 audit recommendations as "pending." POGO's cited recommendations included disciplining employees who accepted improper gifts and investigating the causes of failures to detect the Madoff Ponzi scheme.[254]In a 2011Rolling Stone article byMatt Taibbi quoted former SEC employees criticizing theSEC's Office of the Inspector General (OIG) and described reporting concerns to the office as potentially harmful to careers.[255]
After former SEC investigatorDavid P. Weber raised concerns about conduct bySEC inspector general H. David Kotz,David C. Williams (Inspector General ofthe U.S. Postal Service) conducted an external review in 2012.[256] Williams concluded in a 66-page report that Kotz violated ethics rules by overseeing probes involving people with whom he hadconflicts due to "personal relationships."[256][257] The report questioned Kotz's work on the Madoff investigation and other matters because it described Kotz as a "very good friend" of Markopolos.[257][258][259][260] The report also stated that Kotz "appeared to have a conflict of interest" in a separate Stanford-related investigation due to a personal relationship with an attorney representing fraud victims.[258]
According to former SEC employee andwhistleblower Darcy Flynn—also reported by Taibbi—the agency routinely destroyed thousands of documents related to preliminary inquiries into alleged wrongdoing byDeutsche Bank,Goldman Sachs,Lehman Brothers,SAC Capital, and other financial firms involved inthe Great Recession that the SEC was supposed to be regulating. The destroyed materials allegedly included records tied to"Matters Under Inquiry" (MUI), the SEC's term for the earliest stage of the investigation process. Flynn stated that the practice began as early as the 1990s and led to conflict withthe National Archives and Records Administration after it was disclosed to them in 2010. Flynn also described a meeting at the SEC in which senior staff discussed refusing to acknowledge the destruction, because doing so might have been illegal.[255]
Whistleblowers have alleged that the agency routinely destroyed thousands of documents related to "Matters Under Inquiry" (MUI), the earliest stage of investigations into major financial firms. This practice highlights a "Transparency-Efficiency Paradox": while the SEC argued that purging files was necessary for administrative efficiency, critics and the National Archives argued it obscured the history of why certain high-profile cases were never pursued. The SEC has since defended its practices, while legal experts have debated what qualifies as a formal "investigative record" under federal rules.[261] Federal officials argued that no judge had ruled that papers tied to early-stage SEC inquiries are investigative records. The SEC's inspector general stated that he was conducting a thorough investigation and would issue a report by the end of September.
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|---|---|
| National | |
| Academics | |
| Other | |
