(Article from Registered Funds Regulatory Update, January 2026)
For more information, please visit the Registered Funds Resource Center.
In a speech at Fordham School of Law on October 7, 2025, SEC Chair Paul Atkins announced procedural reforms to enhance fairness and transparency in the SEC’s enforcement program, stating that the Division of Enforcement will (i) no longer seek maximum penalties in enforcement cases; (ii) undergo an investigation process liberalization; and (iii) change its performance-based incentives for the Staff. Atkins stated that penalties should be “appropriately tailored to the misconduct at issue, within statutory limitations and without adding further to shareholder injury.”
Atkins also criticized recent agency enforcement actions targeting books and records violations, which consumed excessive resources “not commensurate with any measure of investor harm.” Atkins stated that the Enforcement Division will modify its investigation process to allow potential respondents and defendants at least four weeks to make written submissions in response to a Wells notice, which is an initial informational request by the agency given in certain enforcement circumstances. He highlighted the benefits of early engagement with the Staff through pre-Wells discussions to address perceived factual misunderstandings prior to the issuance of a Wells notice. Atkins noted that, in some cases, the Staff will allow unsolicited submissions by investigated firms (i.e., white papers), prior to receipt of a Wells notice; this may assist the Staff in identifying issues and analyses that would have otherwise been missed. Additionally, Atkins explained that the SEC will now consider an enforcement settlement at the same time as other Division waivers in an effort to increase efficiency and holistic analysis.
Atkins also stated that the SEC will change its performance-based incentives for the Staff, expressing his concern that incentivizing the Staff only for bringing enforcement actions may discourage it from following the evidence and law and closing investigations. He suggested that the SEC look beyond the numbers and instead reward the Staff for high quality work and good judgment for bringing cases.
Paul S. Atkins, SEC Chair, Speech, Keynote Address at the 25th Annual A.A. Sommer, Jr. Lecture on Corporate, Securities, and Financial Law (Oct. 7, 2025), available at:
https://www.sec.gov/newsroom/speeches-statements/atkins-100925-keynote-address-25th-annual-aa-sommer-jr-lecture-corporate-securities-financial-law.