Welcome & What to Expect:
A digest released the first week of each month synthesizing top-line news out of the Securities and Exchange Commission, specifically tailored for asset management professionals.
The Simpson Thacher Difference: This concise bulletin can be absorbed in two minutes or less, with an emphasis on practical, actionable insights. Expect less legalese, more matter-of-fact updates on exactly what you need to know: a summary, takeaway, and tips for your business going forward.
The Elephant in the Room: The SEC Retreats From Regulation by Enforcement
Summary: Chairman Atkins announced that “Policymaking will be done through notice and comment rulemaking, not through regulation-by-enforcement.” Since January, the SEC has fundamentally recalibrated its enforcement program.
- The Commission proactively closed out an extraordinary number of filed enforcement actions and ongoing investigations:
- Signaling a shift in the regulatory approach to the crypto industry, the Commission dismissed with prejudice prominent bellwether enforcement actions against several crypto players.
- The shift also touched asset managers with the voluntary dismissal of a litigated dealer registration and a litigated MNPI policies case. The era of aggressive enforcement of minor record-keeping infractions is likewise over.
Takeaway: The Commission’s willingness to walk away from enforcement actions authorized by the prior administration at such a late stage goes to show new leadership’s commitment to shifting away from governing by subpoena, as well as the complete collapse of deference to the prior Commission. Read more about that agenda as described by Atkins to the House Appropriations Subcommittee, here.
Best Practice Tip: Enforcement is recalibrating and awaiting a signal for priorities in the asset management industry—with new Enforcement Division leadership still an open question, take advantage of the quiet, address nascent regulatory issues and generally aim for a clean house.
Material Personnel Changes
Summary: With over 600 SEC staff departures in 2025 (approximately 15% of headcount), coupled with a slate of new faces in leadership, the SEC phone directories are in need of a reprint.
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Paul Atkins was confirmed by the Senate and sworn in on April 21, 2025 as the 34th Chairman of the Commission. The Commission now has three Republican members and one Democratic member.
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The Enforcement and Exams divisions specifically underwent a targeted reorganization that eliminated the regional director role in favor of just four deputy directors of enforcement, with Jason Burt in Denver being elevated to supervise the specialized units that focus on asset management enforcement.
Takeaway: The unprecedented staff departures, DOGE’s continued presence on the scene, and the ongoing federal hiring freeze will contribute to the existing slowdown in enforcement activity as the Division tries to do more with less. Will the talent drain make for less market-savvy, slower exam and enforcement programs—time will tell.
Best Practice Tip: Expect some fits and starts in any ongoing enforcement actions involving your business and keep an eye out for additional changes to the structure and operations of the Commission as the administration doubles down on its efforts to improve efficiency and oversight. As new leadership within Enforcement is installed, the time could be ripe to proactively educate new staff or leadership about your arguments in any ongoing matter.
Back to Basics & a Pivot to Prioritizing the Protection of Retail Investors
Summary: “It is a new day at the SEC,” says Atkins at SEC Speaks where he emphasized the Commission’s decision to prioritize, among other things, “allowing all investors to gain the benefits of our robust markets.” Specifically, Atkins announced his intent to reverse the Commission’s historical choice to prevent closed-end funds that invest in private funds from selling to retail investors in an effort to afford retail investors increased investment opportunities.
Takeaway: The Gensler-era weaponization of securities enforcement has come to a screeching stop. It’s unlikely that the industry will see similarly creative theories of liability, scorching penalty amounts, and an ever-increasing focus on private funds. Instead, rhetoric out of SEC leadership previews a return to the agency’s roots; that is, a focus on Congress’s “original intent” to protect investors resulting in a turn to cases involving retail investor fraud, disclosure fraud, and accountability for individual wrongdoing.
Best Practice Tip: As private fund managers expand into retail products, expect the Commission’s focus on retail to follow the flows. Many SEC staff in Exams and Enforcement have spent careers investigating private funds; we should expect them to be eager to find retail-centric ways to stay focused on those firms.