SEC Returns to Traditional Frauds from Crypto

The U.S. Securities and Exchange Commission (SEC) is shifting its focus back to traditional enforcement cases under its new leadership. 

Acting Enforcement Director Sam Waldon said on Monday that the agency will prioritize cases involving individual wrongdoing and fraud targeting older investors. “Creativity is probably not where we want to be,” Waldon stated at a securities industry event when asked about recent enforcement theories, according to a report from Reuters .

In the past few years, the SEC has tried some new legal strategies, like the 2021 “shadow trading” case, which they won. But now, things are changing. Since Republicans took control of the agency in January, a lot of staff have left, and the focus has shifted.

Instead of chasing after complex legal theories, the SEC will go after financial crimes that have always been a problem—things like companies lying about their finances and people using secret information to trade stocks unfairly. Waldon also said they will still look at cases involving new technology and fraud against regular investors, but the main focus will be on these traditional crimes.

Another big priority for the SEC is holding individuals accountable. This means they won’t just go after big companies, they will also charge the people responsible. “It’s always a priority, but I do think that those are cases that are going to be received better by this commission,” Waldon said. This suggests that top executives and financial professionals could face more personal consequences if they break the law.

The SEC is also changing how it handles cryptocurrency cases. Since January, it has paused or even dropped some cases against crypto companies. On top of that, the agency has made it harder for its enforcement staff to start formal investigations without approval from the top. When asked about this, Waldon didn’t seem too worried. “It’s too early to tell,” he said. “There are a lot of ways to put together a process to get the commission to grant an authorization.”

Meanwhile, former SEC commissioner Paul Atkins, who was appointed by Donald Trump, is set to speak on Capitol Hill on Thursday. Under his leadership, the SEC is expected to take a more relaxed approach to regulating Wall Street.