Enforcement actions by the US Securities and Exchange Commission (SEC) against public companies witnessed a dramatic decline during the Trump administration, according to new research. A comprehensive study has revealed a steep 30% drop in cases during the fiscal year 2025, marking one of the most significant slowdowns in the regulatory body's recent history.
Record Low Enforcement in Fiscal 2025
Researchers from New York University and Cornerstone Research conducted an in-depth analysis, counting only 56 enforcement cases brought against public companies and their subsidiaries in fiscal 2025. This represents a substantial decline from the previous year. The most striking finding, however, concerns the second half of the fiscal year, which concluded on September 30. During this six-month period, the SEC brought a mere three enforcement actions, the lowest half-year level ever recorded in the researchers' database.
The previous record low for a half-year period was in the second half of fiscal 2017, when 19 cases were initiated. This sharp drop coincides with the leadership change at the SEC. The report highlights that an overwhelming 93% of the year's cases (52 out of 56) were initiated under former Chairman Gary Gensler, who left the commission on January 20, not even three months into the fiscal year.
A Shift in Regulatory Philosophy
The enforcement trend appears to align with the broader deregulatory stance of the Trump administration and the stated philosophy of the current SEC Chairman, Paul Atkins. Analysts note that Atkins has previously expressed the view that the SEC has been overly punitive. There was an expectation that under his leadership, the commission would pursue fewer actions against companies for technical rule violations that did not cause direct harm to investors.
Stephen Choi of NYU, one of the report's authors, stated, "What's striking this year is not the overall decline, but when the actions occurred. Nearly all of this enforcement activity took place before the SEC administration change, with very few actions under the new administration." The slowdown can also be partially attributed to the typical transition period for a new administration. Chairman Atkins did not appoint an enforcement chief until August, when he selected former military judge Margaret Ryan to lead the division.
Breakdown of Cases and Financial Impact
The research provides a detailed look at the nature of the enforcement actions that were taken. Cases involving investment advisors and broker-dealers constituted half of all actions against public companies in fiscal 2025. Specifically, cases involving RIAs or investment companies accounted for 27% of the total, while broker-dealers made up 23%. Meanwhile, allegations related to issuer reporting and disclosure were the most common, comprising 41% of the public-company enforcement actions.
The decline in case volume had a direct and significant financial impact. In fiscal 2025, the total value of monetary settlements involving public companies plummeted to $808 million. This is the lowest level recorded since 2012 and stands in stark contrast to the average of $1.6 billion seen over the previous three years that also experienced a change in SEC leadership.
As the new administration's team settles in, the market is watching closely. Choi added, "SEC enforcement activity in FY 2025 experienced a sharp decline under Chair Atkins. It remains to be seen if this lower level holds and if the types of cases pursued change following his appointment of Judge Ryan as director of enforcement." This development signals a potential long-term shift in how US financial markets will be policed.
