SEC Sentinel

The Wells Process Needs Modernization

September 5, 2025 Topic(s): SEC Operations

The SEC’s Wells process, which allows prospective respondents to respond to potential charges, has remained largely unchanged since the 1970s despite significant evolution in enforcement practices and market complexity.

It’s time for the SEC to reform and update the process. The stakes in SEC enforcement actions have grown, with higher penalties and broader consequences for respondents. Opaque and inconsistent practices undermine the process’s core purpose: ensuring all relevant material is considered before imposing sanctions.

The SEC’s Security-Based Swap “Substituted Compliance” Regime

August 12, 2025 Topic(s): Cross-Border; Crypto / Digital Assets

Foreign security-based swap dealers (SBSDs) and major security-based swap participants (SBSPs) may satisfy specified U.S. rules by complying with comparable home-country requirements—but only if the SEC has issued an order expressly allowing it. But substituted compliance does not mean free pass.

Because many conditions are cross-referenced (e.g., capital, recordkeeping, and reporting), a single breach of a substituted foreign requirement can simultaneously violate multiple Exchange Act provisions—and instantly revoke the ability to rely on substituted compliance.

SEC Speaks 2025: A New Day at the SEC

May 21, 2025 Topic(s): Crypto / Digital Assets; Enforcement Policies; Financial Reporting and Disclosures; Insider Trading; Offering Frauds; SEC Operations

On May 19 and 20, 2025, U.S. Securities and Exchange Commission (“SEC” or “Commission”) Chairman Paul S. Atkins and other senior SEC officials convened in Washington, D.C. for the annual SEC Speaks conference. The Commission looked back at the last four years and outlined its strategic priorities going forward under President Trump’s second administration. The post below focuses on the SEC’s changing approach to enforcement.

First Circuit Limits SEC’s Reach on Investment Advisers

April 10, 2025 Topic(s): Asset Management / Investment Management; Broker Dealers

The First Circuit overturned an SEC win and disgorgement order against Commonwealth Equity Services for alleged violations of the Investment Advisers Act (“Advisers Act”). In a lengthy opinion, the court upheld traditional notions of materiality and rejected a “per se” rule for potential conflicts of interest, as well as finding related causation errors with the SEC’s disgorgement calculation.