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June 30, 2026 | Legal Update

The Nutter Securities Enforcement Update is a periodic update of noteworthy recent securities enforcement activity, settlements, decisions, and charges. We provide brief summaries that highlight recent enforcement action filings and developments to help identify enforcement trends, changes in the law, new theories, and new areas of enforcement focus. For more information on these cases or about how they may impact you, contact your Nutter attorney.

Policy

SEC Enforcement Manual Update, Press Rel. 2026-20 (Feb. 24, 2026) – The SEC announced the first update to its Enforcement Manual since 2017. The announcement emphasized changes designed to ensure a uniform Wells process, including standardized four week deadlines and access to meetings with senior Enforcement Division leaders. The revised Manual also restores the SEC’s prior practice of allowing settlements to be conditioned on acceptance of a disqualification waiver request. The revisions also include details for evaluating cooperation, changes intended to encourage more consistent internal collaboration, updates regarding the formal order process, and an updated framework for referrals to criminal authorities.

Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets, Rel. 33-11412; Rel. 34-105020 (Mar. 17, 2026) – The Commission issued an interpretive release concerning the definition of “security” as applied to crypto assets and transactions involving crypto assets. The Commission stated that “[d]igital commodities, digital collectibles and digital tools . . . are not themselves securities. However, as with any asset that is not a security, a non-security crypto asset can be offered and sold subject to an investment contract, which is a security.” While GENIUS Act stablecoins (issued by a permitted issuer) are not securities, in general stablecoins “are a broad category of crypto assets that may or may not be securities depending on their characteristics.” The Commission further explained that “protocol mining” and similar activities do not involve the offer and sale of a security, and that certain “airdrops” of digital assets do not involve an investment of money under the Howey text. Digital or “tokenized” securities – securities that are formatted as or represented by a digital asset – remain securities for federal securities law purposes.

Rescission of Policy Regarding Denials in Settlements of Enforcement Actions, Press Rel. 2026-45 (May 18, 2026) – The Commission rescinded the policy, first adopted in 1972 and codified in Rule 202.5(e) of its informal rules of procedure, that when the Commission chooses to settle an enforcement action in which a sanction is imposed, it will not settle unless the defendant or respondent also agrees not to publicly deny the allegations in the complaint or administrative order.

Major Decisions

Smith v. SEC, No. 24-3907 (6th Cir., Mar. 27, 2026) – In ongoing federal court litigation, the Sixth Circuit affirmed an SEC order upholding FINRA sanctions against an unregistered individual. The court rejected the argument that FINRA lacked jurisdiction over the unregistered individual, because he was a control person of a registered firm and Exchange Act Section 15 gives FINRA (and other national securities associations) authority to discipline persons “associated with members” including control persons. In addition, two judges stated that if the petitioner had properly preserved Seventh Amendment arguments, the individual “may well have been entitled to a jury trial in federal court” based on the Supreme Court’s Jarkesy ruling.

Sripetch v. SEC, No. 25-466 (U.S., June 4, 2026) – In a litigated matter, the Supreme Court unanimously held that, when seeking the remedy of disgorgement of profits from a defendant’s unlawful activity, the SEC does not need to show that any investor suffered a monetary loss in order to qualify as a victim of unlawful activity. The Court assumed without deciding that disgorgement under Exchange Act Section 21(d)(7) remains an equitable remedy and must comply with the rule that disgorgement must be awarded for victims and found that under traditional equitable principles a defendant who interferes with another’s legally protected rights may be ordered to disgorge his net profits from unlawful activity.

FS Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd., No. 24-345 (U.S., June 11, 2026) – In a private litigation matter, the Supreme Court held that Investment Company Act Section 47(b), which provides that contracts made in violation of the Act are generally unenforceable, does not create a private right of action but merely limits the availability of the remedy of rescission in matters already before a court. The Court reversed lower court rulings granting summary judgment to an investor in a closed-end mutual fund which had sued the fund for adopting resolutions that limit voting rights for activist shareholders allegedly in violation of the Investment Company Act requirements that every share have equal voting rights.

Trump, et al. v. Slaughter (U.S., June 29, 2026) – In a decision likely to affect SEC Commissioners, the Supreme Court declared unconstitutional the Federal Trade Act’s provision limiting the President to for-cause removal. Rejecting a challenge by an FTC commissioner whom the President removed without citing a cause, the Court held that, because the FTC exercises executive power, Congress does not have authority to limit the President’s removal power.

Remedies

SEC v. Gasarch, No. 22-1446 (1st Cir., Feb. 19, 2026) – In ongoing federal court litigation, the First Circuit held that where the district court finds that an individual has a particularly high proclivity for unlawful conduct of a sophisticated nature, a broad obey-the-law injunction can be appropriate. In such circumstances, an order not to engage in fraud in the offering or sale of securities and to avoid violating other foundational concepts of securities laws provided reasonable detail as required by Fed. R. Civ. Proc. 65. However, because one of the four injunction orders referenced outside materials in violation of Fed. R. Civ. Proc. 65(d)(1)(C), that order was remanded to the district court to describe the requirements and proscribed conduct in the text of the injunction itself.

Investment Advisers/Investment Companies

SEC v. Amah, No. 24-2206-cv (2d Cir., Feb. 24, 2026) – In ongoing federal court litigation, the Second Circuit remanded a summary judgment order on Advisers Act Section 206 charges for further consideration of whether the individual was an “investment adviser” under the statute. The SEC had prevailed on summary judgment against the individual on charges that he made investment performance misrepresentations to investors in violation of Exchange Act Section 10(b) and Advisers Act Section 206. The Second Circuit remanded only for the district court to reconsider whether the individual was performing investment advisory services “for compensation” as required by Advisers Act Section 202(a)(11). The district court had deferred to the SEC’s interpretation of the statutory language – that this element can be satisfied where the adviser has not yet received or is not certain to receive compensation – but the Second Circuit held that the Supreme Court’s 2024 Loper Bright decision requires the district court to conduct its own independent analysis of the statute, without deference to the agency’s position.

In the Matter of Madison Capital Funding LLC, Rel. IA-6948 (Feb. 25, 2026) – In a settled matter, a registered investment adviser was charged with engaging in principal trades with a fund it managed without reasonably determining whether the loan interests were priced at fair market value, contrary to the firm’s advisory agreements and representations to investors. The SEC alleges that during the early months of the COVID-19 pandemic, the firm continued to price loan interests at par less unamortized loan fees without accounting for the impact of market disruption on fair market value. In response to an SEC exam deficiency letter, the firm voluntarily reimbursed the funds – approximately $5 million, plus interest. Charges under Advisers Act Sections 206(2) and 206(4) and Rule 206(4)-8. Remedies included cease-and-desist, censure, and a $900k penalty. Of note, Commissioner Peirce declined to approve the Section 206(4) and Rule 206(4)-8 charges, signaling a potentially narrower view of negligence-based Advisers Act liability.

In the Matter of Ally Invest Advisors Inc., Rel. IA-6954 (Mar. 23, 2026) – In a settled matter, the SEC charged a registered investment adviser firm with failing to fully disclose conflicts of interest concerning its no advisory fee robo-adviser accounts. The RIA allegedly failed to disclose that its 30% cash allocation in those accounts benefitted the firm in the form of rebates on interest earned on the cash balances. In addition, the RIA’s representation that it used Modern Portfolio Theory in these accounts was allegedly misleading because MPT was not used to determine the cash allocation. Charges under Advisers Act Section 206(2). Remedies included censure, cease-and-desist, and a $500k penalty.

SEC v. Commonwealth Equity Services, LLC d/b/a Commonwealth Financial Network, Lit. Rel. 26508 (Mar. 27, 2026) – In settlement of a litigated matter, the SEC charged Commonwealth Equity Services for failing to disclose material conflicts of interest related to a revenue sharing agreement in which Commonwealth received payments from a clearing firm when Commonwealth invested client assets in certain classes of mutual funds. Charges under Sections 206(2) and 206(4) of the Advisers Act and Rule 206(4)-7. The firm consented to a final judgment that included a civil penalty of $5m.

SEC v. Prisno, et al., Lit. Rel. 26515 (N.D. Ill., Mar. 31, 2026) – In settlement of a litigated matter, an investment management firm and its CEO consented to final judgment on charges that they charged more than 200 advisory clients nearly $2.5 million in unauthorized and undisclosed quarterly fees and, in some cases, accessed client accounts using their clients’ login credentials to approve such fees without clients’ knowledge. Charges under Advisers Act Sections 206(1) and 206(2). Remedies included injunctive relief, disgorgement, and penalties to be determined by the court and an associational bar with duration to be determined by the court.

SEC v. Backswing Ventures GP LLC, et al., Lit. Rel. 26525 (M.D. Fla., Apr. 9, 2026) – In a litigated matter, the SEC charged a Florida-based investment adviser and its principal with defrauding a private fund client. The SEC alleges they paid themselves more than $515,000 in management fees, representing over 23% of capital contributions, in excess of what the fund documents permitted, and further defrauded fund investors by failing to provide required audited and unaudited financial statements and misrepresented fund subscription information, investments, audit status, and the principal’s credentials. Charges under Advisers Act Sections 206(1), 206(2), and 206(4) and Rule 206(4)-8. The SEC seeks injunctive relief, disgorgement, and civil penalties.

Tenor Capital Partners, LLC v. GunBroker.com, LLC, No. 22-13911 (11th Cir., Apr. 10, 2026) – In a civil action between an unregistered financial consulting firm and its former corporate client, the Eleventh Circuit held that the firm’s failure to register as an investment adviser rendered the parties’ entire contract void under Advisers Act Section 215, and that the firm could not recover compensation on any phase of the contract. The District Court had found that the corporate valuation services phase of the contract was void under Section 215, but entered judgment for the firm on its unjust enrichment claim based on the firm’s later services in finding a corporate lender. The Eleventh Circuit found that the “finder” work was based on the valuation work, so the entire contract was void and the unjust enrichment award was reversed. The Eleventh Circuit also held that the client’s breach of fiduciary duty claim could proceed despite a contractual disclaimer, because the fiduciary duty exists as a matter of law under the Advisers Act.

SEC v. Schrichte, No. 16-5773 (E.D. Pa., May 20, 2026) – In federal court litigation, the court issued an order vacating a default judgment and dismissing the SEC’s complaint with prejudice. The SEC had charged an investment advisory firm and its principals with omitting information about interest-free loans from a managed fund to the principals and with misappropriating approximately $1.5 million from the fund. Charges were under Securities Act Section 17, Exchange Act Section 10(b) and Rule 10b-5, and Advisers Act Sections 206(1), 206(2) and 206(4) and Rule 206(4)-8. The court’s primary findings were that the alleged misrepresentations were not material, because the loans were taken in lieu of management fees and were later repaid and because the alleged omissions regarding business expenses were immaterial in light of existing disclosure of related party transactions.

SEC v. Daughtry, Lit. Rel. 26557 (May 21, 2026) – In a partial resolution of litigated matters, an investment adviser agreed to a consent judgment on charges that he breached his fiduciary duty in connection with the sale of his business to another advisory firm. The adviser allegedly told clients that he would continue to monitor their accounts after the sale and failed to do so, enabling the principal of the acquiring firm to misappropriate approximately $2.6 million in client assets. Charge under Advisers Act Section 206(2). Remedies included permanent injunction, association bar, and a $50k penalty.

In the Matter of Western Asset Management Company, LLC, Rel. IA-6969 (June 5, 2026) – In a settled matter, a registered investment adviser was charged with failure to detect and prevent its former Chief Investment Officer from engaging in a “cherry-picking” scheme, disproportionately allocating hundreds of millions of dollars in realized first-day gains to certain portfolios and hundreds of millions of dollars in first-day losses to other portfolios. Charges under Advisers Act Sections 206(2) and 206(4) and Rule 206(4)-7. Remedies included censure, cease-and-desist, and a $100m penalty.

In the Matter of Foundations Investment Advisors, LLC, et al., Rel. IA-6970 (June 8, 2026) – In a settled matter, the SEC charged a registered investment adviser and its former CEO with failing to disclose conflicts of interest related to investments it recommended to clients. As alleged, the conflicts included that the former CEO had an economic interest in a sub-adviser to the firm’s clients and the firm had an expense-sharing agreement related to another adviser that managed a recommended ETF. In addition, the CEO allegedly traded the ETF in his own account without obtaining preclearance as required by the firm’s policies. Charges under Advisers Act Sections 206(2), 206(4) and 204A, and Rules 206(4)-7 and 204A-1. Remedies included cease-and-desist, censure, and payment by the firm of approximately $150k plus interest in disgorgement and a $1.2m penalty.

In the Matter of Northeast Financial Group, Inc., Rel. IA-6974 (June 26, 2026) – In a settled matter, a registered investment adviser was charged with custody rule violations for failing to obtain annual audited financial statements for the four private funds it advised, or to otherwise satisfy the rule’s alternative surprise-examination and verification requirements, over a ten-year period. The firm was deemed to have custody of the funds’ assets because a related person served as managing member of each fund. Charges under Advisers Act Section 206(4) and Rule 206(4)-2 (the Custody Rule). Remedies included cease-and-desist, censure, and a $75k penalty.

Broker-Dealers

In the Matter of Canaccord Genuity LLC, Rel. 34-104935 (Mar. 6, 2026) – In a settled matter, a registered broker-dealer was charged with failing to file certain suspicious activity reports (SARs) as required by the Exchange Act in connection with its equity trading business. As charged, from February 2019 through March 2022, the broker-dealer failed to maintain an anti-money laundering (AML) surveillance program reasonably designed to detect, investigate, and report suspicious activity; some internal AML exception reports went unreviewed for months or years at a time, resulting in a failure to file about 150 SARs. Charges under Exchange Act Section 17(a) and Rule 17a-8. Remedies included censure, cease-and-desist, and a $20m penalty.

Stash Capital LLC, FINRA AWC No. 2022076038801 (Mar. 20, 2026) – In a settled matter, FINRA charged a member firm with failure to establish and maintain reasonable customer identification, anti-money laundering, and identify theft prevention programs. According to the AWC, the program deficiencies allowed the firm to open several hundred new customer accounts without obtaining complete and valid SSNs, and to detect that approximately 200 accounts had been opened using a common phone number. Charges under FINRA Rules 2210 and 3310(a), (b) and (f), and Exchange Act Reg S-ID Rule 201. Remedies include censure and a $450k fine.

BTIG, LLC, FINRA AWC No. 2023079613601 (Mar. 25, 2026) – In a settled matter, FINRA charged a member firm with failing to supervise use of unapproved or “off-channel” communications platforms for business purposes by more than 50 current and former employees, including members of senior management, and with failing to retain such communications. Charges under Exchange Act Section 17(a) and Rule 17a-4, and FINRA Rules 4511, 3110(a) and 2010. Remedies included censure and a $600k fine.

Ameriprise Financial Services, LLC, FINRA AWC No. 2019063696201 (Apr. 2, 2026) – In a settled matter, a FINRA member firm was charged with failing to establish and maintain a supervisory system reasonably designed to supervise variable annuity exchange recommendations involving contracts with guaranteed lifetime withdrawal benefit (GLWB) riders. The firm allegedly failed to provide sufficient guidance to enable principals to determine whether the annual growth credit feature in newer GLWB rides would benefit customers, especially those who intended to start annuity payouts soon, sufficiently to justify the additional fees charged by the new contracts. Charges under FINRA Rules 3110, 2330(c) and (d), and 2010. Remedies included censure, a $450k fine, and restitution of approximately $1m.

Wells Fargo Clearing Services, LLC, FINRA AWC No. 2019062519601 (Apr. 13, 2026) – In a settled matter, a FINRA member firm was charged with failing to report over 800,000 fractional share trades and approximately 46,000 error correction trades executed in a principal capacity, and with failing to identify contra side executing broker-dealers in over 450,000 fractional share trade reports. Charges under FINRA Rules 6380A, 6622, 7230A(d), 7330(d), and 2010. Remedies included censure, a $125k fine, and an undertaking to pay regulatory transaction fees on the unreported trades.

Barclays Capital Inc., FINRA AWC No. 2022075734201 (Apr. 20, 2026) – In a settled matter, a FINRA member firm was charged with violating Reg SHO and related supervisory obligations. The firm allegedly effected over 25,000 short sale orders without obtaining a “locate” (identifying securities available for delivery), in instances when the firm re-used a dormant account that was improperly coded as a market maker account and therefore relied on the market maker exception to the locate requirement. Charges under Reg SHO Rule 203(b)(1) and FINRA Rules 2010 and 3110(a). Remedies included censure and a $140k fine.

In the Matter of Merrill Lynch, Pierce, Fenner & Smith Inc., Rel. 34-105790, IA-6975 (June 29, 2026) – In a settled matter, a registered broker-dealer was charged with failing to file suspicious activity reports (“SARs”). The SEC alleges that the firm relied on an affiliate’s automated monitoring system that investigated only alert groups scoring above a set risk threshold, even though the firm’s sampling showed that many lower-scoring groups would have yielded SARs. As a result, the broker-dealer failed to file numerous SARs covering hundreds of millions of dollars in transactions. Charges under Exchange Act Section 17(a) and Rule 17a-8. Remedies included cease-and-desist, censure, and a $7.5m penalty.

In the Matter of Wedbush Securities Inc., Rel. 34-105791, IA-6976 (June 29, 2026) – In a settled matter, a registered broker-dealer was charged with submitting incomplete and inaccurate Electronic Blue Sheets (“EBS”), which are the trading data that broker-dealers must provide in response to SEC requests. The SEC alleges that at least 19,571 submissions, affecting approximately 51.8 million transactions, contained errors that stemmed largely from coding and programming issues in the firm’s and its vendors’ systems. The release noted that the firm admitted the facts set forth in the Commission’s findings and acknowledged the cited violations. Charges under Exchange Act Section 17(a)(1) and Rules 17a-4(j) and 17a-25. Remedies included cease-and-desist, censure, and a $1.9m penalty.

In the Matter of Netrios LP Ltd. and Red Acre, Ltd., Rel. 33-11425, 34-105803 (June 29, 2026) – In a settled matter, an offshore operator and an affiliated entity were charged in connection with the offer and sale of security-based swaps, namely, single-stock “contracts for differences,” to U.S. retail investors through ready-to-operate white-label online brokerage platforms (“white-label brokers”) without an effective registration statement and not on a registered national exchange. The SEC alleges that customers funded their accounts with cryptocurrency and that U.S. residents were permitted to trade without any verification of their status as eligible contract participants. Charges against the operator under Securities Act Section 5(e) and Exchange Act Section 6(l), and against the affiliate as a cause of those violations based on the know-your-customer (“KYC”) verification services it provided. Remedies included cease-and-desist orders and penalties of $1.75m for the operator and $750k for the affiliate.

Securities Offerings

SEC v. CBA Pharma, Inc., et al., Lit. Rel. 26479 (Feb. 6, 2026) – In a litigated matter, the SEC charged a biopharmaceutical company, its president, and its vice president of capital markets with conducting a fraudulent securities offering. The SEC alleges that the parties misrepresented to investors that the company’s lone drug was effective in treating cancer and was in the final stages of obtaining FDA approval, when in reality the drug was never close to FDA approval. Charges under Securities Act Section 17(a), Exchange Act Section 10(b), and Rule 10b-5. Remedies sought include permanent injunctive relief, disgorgement, prejudgment interest, civil penalties, and, as to the executives, bars from participating in any issuance, purchase, offer, or sale of any security except in certain personal account transactions.

Issuer Reporting/Audit and Accounting

SEC v. Passos, Lit. Rel. 26493 (Feb. 26, 2026) – In a settlement of a litigated matter, a former finance and investor relations executive at a Brazilian reinsurance company consented to judgment on charges that he planted a false story claiming that Berkshire Hathaway had made a substantial investment in the company. The SEC alleges that the company’s stock rose 6% on the false news and dropped over 40% when Berkshire publicly denied the claim. Charges under Exchange Act Section 10(b) and Rule 10b-5. Remedies include injunctive relief, an officer-and-director bar, and a $500k penalty.

In the Matter of EisnerAmper LLP, Rel. 34-104936, Rel. AAE-4587 (Mar. 6, 2026) – In a settled matter, a PCAOB-registered accounting firm was charged with failing to perform the 2020 audit of a mutual fund in accordance with PCAOB standards. As charged, the firm did not (1) obtain an understanding of the internal controls around the valuation process with respect to hard-to-value Level 3 assets that was sufficient to assess and respond to the risk of material misstatements; (2) obtain sufficient appropriate evidence when it performed valuation testing that was not in accordance with applicable auditing standards and the firm’s audit plan; and (3) exercise sufficient due professional care or professional skepticism in performing the work. Charges under Exchange Act Section 4C, Rule 2-02(b)(1) of Regulation S-X and Rule 102(e) of the Commission’s Rules of Practice. Remedies included cease-and-desist, censure, and compliance undertakings. No penalty was assessed based on the firm’s prompt remediation.

In the Matter of Francis Decker, CPA, Rel. 34-105184, Rel. AAE-4589 (Apr. 8, 2026) – In a settled matter, the SEC charged the lead engagement partner at Prager Metis CPAs, LLC with improper professional conduct in its audits of FTX. The SEC alleges that the engagement partner lacked a sufficient understanding of FTX and the crypto asset markets in which it operated, and that the audit team he assembled lacked the competence, experience, and knowledge necessary to conduct the audits in accordance with GAAS. The SEC alleges this led to deficiencies in audit design and execution, resulting in audit opinions that FTX’s financial statements fairly presented its financial position despite the absence of sufficient appropriate audit evidence to support those opinions. Charges under Exchange Act Section 4C(a)(2) and Rule 102(e)(1)(ii) of the Commission’s Rules of Practice. Remedies included a two-year bar from appearing or practicing before the Commission as an accountant.

In the Matter of Key Tronic Corp., et al., Rel. 34-105275, Rel. AAE-4591 (Apr. 20, 2026) – In a settled matter, a computer and medical device manufacturer, its then-CFO (now CEO), and its Senior VP of U.S. Operations were charged with, among other things, releasing earnings before its auditor could evaluate the firm’s adjustments for a confirmed manipulation of its inventory system. The company publicly acknowledged the inventory system misconduct. Charges under Exchange Act Sections 13(b)(2)(A) and (B) (all respondents) and 13(b)(5) (SVP of U.S. Operations). Remedies included cease-and-desist and penalties of $20k (CFO) and $15k (SVP of U.S. Operations).

In the Matter of MCB Acquisitions Manager LLC, Rel. 34-105364 (May 4, 2026) – In a settled matter, the SEC charged a Maryland-based activist investor with failing to timely file a Schedule 13D. The SEC alleges that the investor had formed a plan to take control of a registered REIT, but did not file its 13D for 17 business days after it crossed the five percent threshold, during which time it continued to purchase nearly 1.5 million additional shares. Charges under Exchange Act Section 13(d)(1) and Rule 13d-1(a). Remedies included cease-and-desist and a $75k civil penalty.

In the Matter of ACM-CPC LLC, Rel. 34-105360 (May 4, 2026) – In a settled matter, the SEC charged a Boston-based activist investor with filing an inaccurate Schedule 13D, failing to disclose that it had made a written proposal to replace four out of five of the target company’s board members. Charges under Exchange Act Sections 13(d)(1) and 13(d)(2) and Rules 13d-1 and 13d-2. Remedies included cease-and-desist and a $100k civil penalty.

In the Matter of Foot Locker, Inc., Rel. 34-105542 (May 22, 2026) – In a settled matter, the SEC charged a public company with violations of the whistleblower protection rule by including in severance agreements for approximately 148 employees a provision purporting to waive the employees’ rights to receive whistleblower awards from the Commission. Foot Locker began phasing out this provision prior to being contacted by Commission staff. Charges under Exchange Act Section 21F and Rule 21F-17. Remedies included cease-and-desist and a $148k penalty.

SEC v. Jones, No. 5:24-cv-01560-JPC (N.D. Ohio, June 27, 2026) – In ongoing federal court litigation, the district court granted a motion to dismiss the SEC’s complaint against the former chief executive officer of FirstEnergy Corp. in a matter arising from the Ohio House Bill 6 corruption scandal. The SEC principally alleged that, after the Ohio House Speaker’s arrest on federal charges, the executive misled investors by stating that the company had acted “ethically” and “transparently” in its dealings with the former Speaker. In addition, the SEC alleged that the executive falsely certified the company’s 2019 Form 10-K, misled its auditor, and aided and abetted the company’s reporting and internal controls failures tied to approximately $60 million routed through “dark money” 501(c)(4) organizations. The court held that the complaint failed to state a claim, concluding that the statements about ethical conduct were nonactionable opinion or puffery, that the statement about acting transparently was not false or misleading when read in context, and that, in any event, the alleged fraud was not made “in connection with” the purchase or sale of a security. The court added that the securities laws cannot be used to compel disclosure of political spending that 501(c)(4) organizations are not otherwise required to reveal. The dismissed claims arose under Exchange Act Section 10(b) and Rule 10b-5, Securities Act Section 17(a), Rules 13a-14 and 13b2-2, and aiding-and-abetting theories under Exchange Act Sections 13(a) and 13(b)(2)(B).

SROs/Exchanges 

In the Matter of New York Stock Exchange LLC, Rel. 34-104934 (Mar. 6, 2026) – In a settled matter, the NYSE was charged with failing to establish written policies and procedures to monitor Systems Compliance and Integrity (Reg SCI) systems that support its opening auctions to determine if opening auctions had occurred. As charged, on January 24, 2023, the NYSE failed to run opening auctions for 2,824 listed securities, because NYSE staff failed to turn off a backup trading system that had been activated during the prior evening’s system maintenance, so that the primary system acted as though the next day’s opening auctions had already occurred. Charges under Exchange Act Section 19(g)(1) and Rule 1001(a)(2)(vii) of Reg SCI. Remedies included cease-and-desist and a $9m penalty.

Insider Trading

SEC v. Garelick, et al., Lit. Rel. 26477 (Feb. 5, 2026) – In a partially settled matter, the SEC charged two brothers (and others) with allegedly trading in the stock of a company that was in merger negotiations with Trump Media & Technology Group Corporation on the basis of material nonpublic information. The SEC alleges that shortly after the merger was announced, the target company’s stock price increased and the brothers sold their securities for over $20 million in profits. Charges under Exchange Act Section 10(b) and Rule 10b-5. Remedies included injunctive relief, disgorgement of over $20m — deemed satisfied by payments made in parallel criminal proceedings — and an officer-and-director bar against one of the brothers.

SEC v. Taylor, et al., Lit. Rel. 26509 (Mar. 27, 2026) – In a settled matter, two former investment bankers consented to judgment on charges in an alleged multi-year insider trading scheme. The SEC alleged that while working in London the two investment bankers misappropriated material nonpublic information about forthcoming U.S. corporate transactions that was acquired from their employer, a London-based investment banking firm. They provided that information to a third party, who then told other individuals who used it to trade securities, and shared its subsequent proceeds. Charges under the Exchange Act Sections 10(b) and 14(e) and Rule 10b-5 and Rule 14e-3, disgorgement of $500k, ordering one former investment banker to pay disgorgement of $50k and a civil penalty of $50k.

SEC v. Smith, Lit. Rel. 26513, No. 26-cv-02582 (S.D.N.Y., Mar. 30, 2026) – In a litigated matter, the SEC charged a former registered representative for a New York-based broker-dealer with trading in the securities of two public companies based on material non-public information regarding mergers and acquisitions involving an investment bank’s clients. The SEC alleges that the registered representative’s close friend and colleague obtained the information from a third person, who misappropriated the information from the laptop of his romantic partner, an executive assistant at the investment bank. The SEC further alleges that the former representative traded for himself and used the information to recommend trades to customers. Charges under the Exchange Action Section 10(b) and Rule 10b-5. The SEC seeks injunctive relief, disgorgement with prejudgment interest, and civil monetary penalties.

SEC v. Nourafchan, et al., Lit. Rel. 26551 (D. Mass., May 6, 2026) – In a litigated matter, the SEC charged 21 individuals in a wide-ranging insider trading scheme in which two orchestrators, an M&A attorney and his associate, misappropriated material nonpublic information about at least a dozen impending corporate transactions from multiple global law firms, tipped that information to a network of traders who agreed to kick back a portion of their profits, and recruited a second corporate attorney to misappropriate and tip additional deal information. Parallel criminal charges were brought by the U.S. Attorney's Office for the District of Massachusetts. Charges under the Exchange Action Section 10(b) and Rule 10b-5. The SEC seeks injunctive relief, disgorgement, and civil penalties.

SEC v. Li, Lit. Rel. 26561 (June 5, 2026) – In a litigated matter, the SEC charged a former investment analyst at an investment advisory firm with trading on the basis of confidential information about securities offerings and clinical data of at least twelve of his firm’s healthcare company clients. Charges under the Exchange Action Section 10(b) and Rule 10b-5. The SEC seeks injunctive relief, an association bar, disgorgement, and civil penalties.

SEC v. Jennings and Vortex Strategies LLC, Lit. Rel. 26570 (June 23, 2026) – In a litigated matter, the SEC charged an individual and an LLC he owned and controlled with making illicit profits of approximately $2.7 million from trading on the basis of nonpublic information he obtained without consent from his then-romantic partner’s work-issued laptop. The individual’s partner was an account executive at a strategic communications and investor relations firm who had access to information about upcoming announcements by public company clients, including announcements about corporate earnings and mergers and acquisitions. Charges under the Exchange Action Section 10(b) and Rule 10b-5. The SEC seeks injunctive relief, an association bar, disgorgement, and civil penalties.

Market Manipulation

SEC v. Rosen, et al., Lit. Rel. 26475 (Feb. 4, 2026) – In a litigated matter, the SEC charged two co-owners of a company and the former CEO of a microcap issuer with securities fraud. The SEC alleges that the co-owners used social media to promote the microcap issuer’s stock while simultaneously making large, undisclosed sales of their own shares at significant profits. The SEC further alleges that the former CEO directed the issuance of a press release falsely claiming the issuer had secured a $10 million line of credit with a large national bank. Charges under Securities Act Section 17(a), Exchange Act Section 10(b), and Rule 10b-5. Remedies sought include injunctive relief, disgorgement, and civil penalties.

SEC v. Fullenkamp, et al., Lit. Rel. 26517 (Mar. 31, 2026) – In a litigated matter and partial settlement, the SEC charged two individuals with perpetrating a fraudulent scheme to misappropriate millions of dollars from two publicly traded penny stock issuers over which they exercised extensive control. The SEC alleged that the two individuals caused the issuers to enter into sham agreements with an entity secretly controlled by one of them (Fullenkamp) and to issue hundreds of thousands of preferred shares to that entity. The individuals then sold some preferred shares to third parties, realizing a $2.6 million profit. Charges under Securities Act Sections 17(a)(1) and (a)(3) and Exchange Act Section 10(b) and Rules 10b-5(a) and (c). Fullenkamp consented to the entry of a judgment that included injunctive relief; permanent officer-and-director and penny stock bars; surrender for cancellation all fraudulently acquired shares; and disgorgement, prejudgment interest, and a civil monetary penalty in amounts to be determined by the court.

SEC v. Lee, et al., Lit. Rel. 26524 (Apr. 9, 2026) – In a partial settlement, an individual defendant consented to judgment on charges that he participated in a sophisticated penny stock pump-and-dump scheme. The defendants allegedly used a network of offshore front companies to conceal their ownership and control of penny stock issuers, hired promoters to tout the stocks, and then sold their positions into the market at inflated prices. Charges under Securities Act Sections 5 and 17(a), and Exchange Act Section 10(b) and Rule 10b-5. Remedies included injunctive relief, a penny stock bar, and disgorgement of approximately $3.2m plus prejudgment interest.

SEC v. Patel, Lit. Rel. 26532 (Apr. 20, 2026) – In a litigated matter, an individual was charged with carrying out a manipulative trading scheme involving thinly-trading securities on thousands of occasions and generating over $5 million in illicit profits. As alleged, the individual placed many small lot market orders to purchase a security to increase its price, then placed non-bona fide limit orders to buy that same security to falsely indicate additional buying interest, then sold the same security in large lot orders at the now-inflated price and cancelled the buy limit orders. The SEC also alleges that as broker-dealers discovered this scheme and closed his accounts, the individual opened new brokerage accounts in the name of another individual to continue his scheme. Charges under Securities Act Section 17(a) and Exchange Act Sections 9(a)(2) and 10(b) and Rule 10b-5.

SEC v. Wang, Lit. Rel. 26574 (June 24, 2026) – In a settled matter, the SEC charged an individual trader with manipulating the prices of over 150 thinly traded American Depository Receipts (ADRs) by spoofing: placing market-moving buy or sell orders he did not intend to execute, executing orders to take advantage of the manipulated prices, and then cancelling the initial orders. Charges under Securities Act Section 17(a) and Exchange Act Sections 9(a)(2) and 10(b) and Rule 10b-5. The individual consented to a judgment that includes injunctive relief together with disgorgement and penalties to be determined by the court at a later date.

Crypto

In the Matter of American CryptoFed DAO LLC, Rel. 33-11407, Rel. 34-104765 (Feb. 2, 2026) – The SEC reconsidered and granted a crypto asset issuer’s 2022 request to withdraw its registration statements in response to the SEC’s commencement of proceedings to deny or suspend the effective date. The SEC further held that the withdrawal was effective from the time of the issuer’s request.

SEC v. Sun, et al., Lit. Rel. 26496 (Mar. 5, 2026) – In settlement of a litigated matter, a proposed consent judgment was filed on charges that one corporate defendant facilitated wash trades to artificially inflate the trading volume of the crypto asset TRX. The consent judgment further provides that all remaining charges against corporate and individual parties, including charges of failing to register the crypto assets and antifraud charges, would be dismissed with prejudice; for one individual, the SEC filed a voluntary dismissal with prejudice. The surviving charge was under Securities Act Section 17(a)(3). Subject to court approval, remedies as to the trading firm included injunctive relief and a $10m penalty.

SEC v. Al-Naji, Lit. Rel. 26499 (Mar. 12, 2026) – In settlement of a litigated action, the SEC filed a joint stipulation dismissing its enforcement action with prejudice against a crypto founder and relief defendants. In 2024 the SEC charged a crypto founder with violating the Securities Act registration and anti-fraud provisions and the Exchange Act anti-fraud provisions. The SEC alleged the founder raised more than $257 million from unregistered offers and sales of the cryptocurrency and falsely told investors the proceeds would not compensate him or his employees, although more than $7 million was spent on his personal expenses. The founder also obtained a letter from a law firm opining the token was not likely to be a security under federal law based on his characterizations to the firm and allegedly told investors he was attempting to evade compliance with the law.

(NSEU 26-02)

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