CLS Blue Sky Blog

SEC Announces Annual Enforcement Results for Fiscal Year 2026

  • Securities and Exchange Commission

    • The Securities and Exchange Commission today [November 10] provided its enforcement results for the past fiscal year which ended September 30. Throughout the fiscal year, the SEC’s Division of Enforcement remained focused on its fundamental responsibility: protecting investors, holding wrongdoers accountable, and safeguarding the integrity of the U.S. capital markets. The Division is also continuing to modernize its organization, processes, and technology, and launched several new initiatives in 2026 that will ensure the Division’s effectiveness in the years to come.

    Impactful Enforcement

    Enforcement actions filed in fiscal year 2026 demonstrate the Division’s continued commitment to rigorous, effective enforcement that focuses on serious and consequential violations of the federal securities laws—including fraud, market manipulation, insider trading, failures and misconduct by gatekeepers, and violations that compromise the integrity of disclosures and financial reporting. The cases emphasize the nature and severity of misconduct, magnitude of investor harm, and pursuit of meaningful remedies. Two-thirds of all standalone enforcement actions filed in fiscal year 2026 included charges against at least one individual, reflecting the Division’s continued commitment to maximizing deterrence and holding wrongdoers accountable.

    In fiscal year 2026, the Commission filed 348 enforcement actions, including 235 standalone actions and 113 “follow-on” administrative proceedings that sought to bar or suspend individuals from participating in certain securities markets activities based on criminal convictions, civil injunctions, or other qualifying orders. The Commission also instituted 13 trading suspensions in response to suspected manipulation involving the securities of Asia-based issuers.

    In addition, the Commission obtained orders for monetary relief totaling $1.095 billion, comprised of $752 million in disgorgement and prejudgment interest and $343 million in civil penalties, with $235 million of the disgorgement ordered deemed satisfied by a court in a separate non-SEC action. The SEC also returned approximately $731 million to more than 250,000 harmed investors.

    “The success of the SEC’s enforcement program is ultimately measured by how effectively it advances the SEC’s mission, protects investors, holds wrongdoers accountable, and strengthens confidence in our markets,” said SEC Chairman Paul S. Atkins. “Enforcement actions and financial remedies are important measures of activity, but they are not the only or most telling measures. Our responsibility is to apply the law fairly and consistently and ensure that our enforcement efforts advance the Commission’s mission. I commend the staff for their dedication to an effective, disciplined enforcement program that serves the investing public.”

    “Our focus is on conducting rigorous investigations, pursuing consequential misconduct, and achieving meaningful outcomes for investors,” said David Woodcock, Director of the SEC’s Division of Enforcement. “During the fiscal year, we reviewed our investigative docket, strengthened our investigative capabilities, and launched several new initiatives that will position the Division even more strongly for the future. These efforts have resulted in an enforcement program that is more focused, effective, and prepared to address both longstanding and emerging threats to our markets.”

    Positioning the Division of Enforcement for the Future

    In fiscal year 2026, the Division worked to modernize its organization and processes to increase its investigative and litigation capacity, address evolving market risks, and deliver more timely, impactful outcomes to ensure the Division’s effectiveness in the years to come. The Division also invested in its leadership ranks with a new leadership training program for supervisors. And with targeted hiring across key skill areas, the Division hired attorneys, accountants, technologists, and data specialists to deepen the Division’s bench expertise and accelerate its critical investigative work.

    Organizational Enhancements

    In fiscal year 2026, the Division made significant organizational enhancements.

    The Division formed the Retail Fraud Working Group (RFWG) to strengthen its ability to identify and address fraudulent schemes—including Ponzi schemes and offering frauds, impersonation scams, broker-dealer misconduct, false and fraudulent filings, and market manipulation schemes—and other misconduct that pose significant risks to everyday investors. Drawing on the expertise of attorneys across the Division, the RFWG employs targeted, data-driven strategies, including Super Intelligence (SI) and the analysis of information from multiple regulatory and law enforcement sources, to uncover potential violations and generate investigative leads for referral throughout the Division. In fiscal year 2026, the RFWG reviewed numerous tips and complaints, generated referrals involving suspected fraud and other violations affecting retail investors, and undertook extensive outreach involving other regulators, industry participants, and investors. Already, more than a dozen new investigations have resulted from the RFWG’s efforts.

    In addition, the Division expanded its capacity to address complex accounting and financial reporting fraud schemes as well as other misconduct involving accountants and auditors with a new Financial Reporting and Accounting Unit (FRAU). FRAU combines the skills of attorneys and accountants with deep expertise in accounting standards, issuer disclosures, internal accounting controls, books and records requirements, and auditor responsibilities. This concentration of expertise strengthens the Division’s ability to detect patterns of financial misconduct, promotes a disciplined and consistent approach to evaluating potential violations, and ensures technically rigorous enforcement recommendations. Already, FRAU is improving the Division’s effectiveness by identifying problems earlier in the reporting cycle, building stronger and more analytically precise cases, and accelerating the timeline for delivering meaningful protections for investors. These early returns underscore FRAU’s role as a cornerstone of the Division’s efforts to modernize the enforcement program and an enhanced safeguard for the integrity of the financial reporting ecosystem.

    Complementing these enhancements, the Division launched the Office of Super Intelligence and Analytics, a dedicated office designed to bring advanced analytical capability directly into investigative workflows, “force-multiply” resources, and strengthen the Division’s overall capacity to protect investors. The office uses data‑driven techniques and SI tools to identify patterns of misconduct earlier, improve investigative efficiency, and detect emerging threats across markets. Its work includes SI‑enabled anomaly detection, accelerated document and transcript review, and improved blockchain and financial‑flow analysis. The office better positions the Division to address rapidly evolving threats, especially in fraud, cyber, and SI-enabled manipulation schemes

    The Division also reorganized its Trial Unit to enhance consistency across the Division’s litigation docket and expand the Division’s overall litigation capacity. Following the reorganization, the Chief Litigation Counsel supervises newly created Deputy Chief Litigation Counsels, who oversee the Division’s litigation attorneys across all the Commission’s offices. The Division also improved the Trial Unit’s case management processes to improve its ability to oversee cases filed across the country.

    Investing in Division Leadership

    During fiscal year 2026, the Division invested in its leadership ranks by launching a formal leadership training program for new and experienced supervisors. This program, which will continue beyond the fiscal year, is helping the Division build a deep and capable bench of leaders and preparing its next generation of leadership for success in the years to come.

    The Division also instituted a new performance-management process in which Senior Officers participate in bi‑monthly meetings with senior leadership to discuss investigation timelines, milestones, and staffing levels. This process ensures that the Division identifies risks early and completes investigative milestones in a timely and efficient manner, thus achieving meaningful investor protection.

    Strengthening Interagency Coordination

    The Commission strengthened its reach over the past year through memoranda of understanding (MOU) with key partners. The Commission entered into an MOU with the Commodity Futures Trading Commission that deepens collaboration on enforcement matters involving market integrity and complex financial products, enabling more efficient information‑sharing and joint oversight of misconduct spanning across the securities and derivatives markets. Additionally, the Commission entered into an MOU with the Food and Drug Administration that enhances coordination in monitoring disclosures and compliance issues affecting life‑sciences companies, and reinforces safeguards where securities law intersects with product‑regulatory obligations. The Division also continued its historic close coordination with the PCAOB, ensuring auditor misconduct and audit failures are identified and addressed swiftly and efficiently.

    The Division filed numerous enforcement actions in parallel with criminal authorities in fiscal year 2026, seeking complementary relief such as targeted injunctions, asset freezes, and associational bars. The Division also worked closely with overseas regulators and law enforcement in multi‑jurisdictional fraud matters, reflecting the global nature of emerging schemes.

    Updated Enforcement Manual

    The Division made significant updates to the Enforcement Manual for the first time since 2017. Notably, the updates standardize the Wells process, adding transparency, consistency, and clarity to this important part of the enforcement program; allow simultaneous Commission consideration of settlement recommendations and related waiver requests; and explain the Division’s framework for evaluating cooperation, including the impact of cooperation on civil penalties. As announced, the Division will review the Manual on an annual basis going forward to keep its processes current, fair, and effective.

    Rescission of Rule 202.5(e)

    The Commission rescinded Rule 202.5(e) of its informal rules of procedures, which provided that the Commission would not settle an enforcement action in which a sanction is imposed unless the defendant or respondent also agreed not to publicly deny the allegations in the complaint or administrative order. Among other things, rescinding Rule 202.5(e) aligned the Commission with the overwhelming majority of federal agencies that do not have a similar rule and provided the SEC more flexibility in settling enforcement actions, which conserves resources, provides certainty, and potentially expedites the return of money to injured investors.

    Noteworthy Enforcement Actions

    Vigorous Pursuit of Cross-Border Fraud

    The Division took decisive action to disrupt foreign bad actors targeting U.S. markets and investors. This work built off the momentum of the Commission launching, in September 2025, the Cross‑Border Task Force, a dedicated enforcement group that protects U.S. investors from transnational bad actors.

    In a host of enforcement actions brought in November 2025 and August 2026, the Commission charged a total of 42 entities in the District of Colorado, two entities in the Southern District of New York, and an entity in the Northern District of New York, for allegedly filing false Forms ADV to feign legitimacy as U.S. advisers and lure retail investors. Several of these entities appeared to be located overseas, as alleged.

    The SEC brought charges against three purported crypto asset trading platforms and four investment clubs for allegedly defrauding retail investors of at least $14 million and funneling those funds overseas in an investment confidence scam that involved soliciting investors through social media using investment tips supposedly generated by SI. The SEC also charged multiple entities, likely operated by individuals overseas, for allegedly defrauding hundreds of retail investors through investment confidence scams on online platforms. The Commission instituted cease-and-desist proceedings against a foreign-based issuer that, according to the order, engaged in sham transactions concerning certain online advertising and marketing that materially overstated its net revenues.

    The SEC also instituted 13 trading suspensions to protect U.S. investors from harm arising out of suspected manipulation in the securities of Asia-based issuers. The trading suspensions involved potential manipulation designed to artificially inflate the price and trading volume of the securities, mostly using social media.

    Combating Harm to Retail Investors

    Throughout the fiscal year, the Division concentrated resources on matters that cause real harm to retail investors, including offering frauds, Ponzi schemes, and emerging technology scams.

    For example, in fiscal year 2026, the Commission charged:

    Over the past year, the Division intensified its investor-protection efforts in the pre‑IPO secondary market. As investors obtain greater access to private markets, the risk of harm posed by fraudsters and other bad actors in those markets grows as well. In line with this focus, the Commission charged: private fund adviser, Adit Ventures Management, its CEO, and affiliated general partners for allegedly defrauding investors and client funds in connection with investments in pre-IPO shares, including by misappropriating advisory client assets and charging millions in undisclosed fees; private fund adviser, Meyer Global Management, and its CEO for allegedly defrauding investors and client funds in connection with investments in SpaceX and other pre-IPO securities; and boiler room operator, Andrew Spaventa, and three of his entities in an alleged fraud scheme that purportedly offered retail investors an opportunity to invest in shares of pre-IPO private companies while charging hidden fees. In a settled order, the Commission found that a California resident allegedly defrauded investors in a private fund that invested in pre-IPO shares of Palantir Technologies, Inc.

    Reinforcing Critical Investor Protection Guardrails

    The Commission also brought enforcement actions to reinforce critical investor-protection guardrails, which strengthen compliance by holding market participants accountable for failing to meet their obligations, increase the likelihood that fraud and other misconduct is detected early, and provide meaningful deterrence to would-be bad actors from violating the law. These actions involved the Custody Rule, Regulation Best Interest, privacy and identity‑protection breaches, Suspicious Activity Report (SAR) and Bank Secrecy Act obligations, and blue sheet compliance. These guardrails strengthen deterrence, enable early detection of misconduct, and support effective market oversight.

    Among other enforcement actions, the Commission instituted settled orders against:

    Strengthening Market Integrity

    The Division continued to pursue market manipulation and insider trading, conduct that undermines the fairness and efficiency of markets. Enforcement actions in fiscal year 2026 addressed spoofing, deceptive trading, and misuse of material nonpublic information by employees, gatekeepers, and professionals across industries. Consistent with its return to basics, the Division prioritized these matters so that investors can expect accountability for abusive practices.

    In fiscal year 2026, the Commission charged:

    The Commission also instituted settled orders against:

    Promoting Accurate Disclosure, Accounting, and Financial Reporting

    In fiscal year 2026, the Commission filed settled charges against Archer-Daniels-Midland Company and two former executives, and a litigated action charging a third former executive, for materially inflating the performance of a key business segment that the company touted to investors as an important growth driver. The Commission also instituted a settled order against two former public company executives finding that they failed to disclose to the company’s auditor at least $290,000 in personal and/or unauthorized expenses paid by the company.

    The Commission also charged:

    The Division also reinforced accounting and auditing standards. For example, the Commission instituted a settled action against an audit engagement partner, finding that the partner’s negligent conduct during audits of the now-defunct crypto asset trading platform FTX resulted in a violation of Generally Accepted Accounting Principles; audit firm EisnerAmper LLP, finding that it failed to perform an audit of a mutual fund’s financial statements in accordance with PCAOB auditing standards; and a New Jersey-based CPA, finding that he failed to comply with the Commission’s and PCAOB’s auditor independence rules as well as several other PCAOB audit standards.

    Addressing Misconduct by Investment Advisers and Safeguarding Investors in Private Funds

    The Division remained focused on monitoring for and addressing misconduct by investment advisers, including misappropriated client assets, inadequate safeguarding of assets, misleading or inadequate disclosures, undisclosed fees and expenses, fraudulent valuations and mismarking, and undisclosed conflicts of interest.

    Notable enforcement actions in fiscal year 2026 include settled actions instituted against:

    The Commission also charged:

    Holding Individual Bad Actors Accountable

    Holding individuals accountable remains one of the Commission’s most effective deterrents. Two-thirds of the standalone enforcement actions brought by the Commission this year included claims against at least one individual, including founders and CEOs in major Ponzi and offering fraud cases, senior executives in financialreporting cases, and gatekeepers such as accountants, auditors, and investment adviser personnel whose failures or misconduct contributed to investor harm. Most of the enforcement actions previously discussed in this release involved charges against individuals.

    Additional examples include:

    Encouraging Prompt Remediation and Cooperation

    The Commission continued to emphasize that prompt remediation and meaningful cooperation can accelerate investigations and influence charging and penalty decisions. Recent enforcement matters emphasized the factors that the Commission considers when evaluating cooperation, such as prompt self-reporting, swift and thorough remediation, and early, proactive engagement with staff. Several enforcement actions in fiscal year 2026 reflect calibrated penalties and charging decisions that took remediation and cooperation into account.

    For example, in a settled order, the Commission found that CBIZ Inc. had made unregistered offers and sales of securities but imposed no civil penalty in acknowledging the cooperation afforded to the Commission staff and remedial acts promptly undertaken by CBIZ. Likewise, the Commission described extensive remedial steps taken and imposed no civil penalties in an order against Ammo, Inc. n/k/a Outdoor Holding Company for misleadingly failing to disclose certain information on Forms 10-K and presenting materially misstated financial statements on Forms 10-K and Forms 8-K; and in an order against Key Tronic Corporation and two of its senior executives, for books and records and internal controls violations related to false entries in the company’s inventory system that improperly increased income. In a settled order against Nipun Kumar Jami, the Commission found that Jami traded in advance of an acquisition based on material nonpublic information obtained from his spouse and imposed a civil penalty equal to half of Jami’s illicit profits, acknowledging his voluntary self-report to the staff approximately one month after the acquisition was announced and cooperation in the Commission’s investigation.

    The Commission also held firms that failed to promptly remediate known deficiencies accountable. For example, the Commission imposed a $20 million civil penalty in a settled order against dually registered UBS Financial Services Inc., finding that UBSFS failed to adequately monitor its customers’ FX wire transactions for possible suspicious transactions, as required by its own anti-money laundering policies and procedures, and—even after engaging a consulting firm to remediate deficiencies in its data for customer FX wire transactions and conduct a “lookback” to determine if it was required to file additional SARs—UBSFS failed to timely file “lookback” SARS concerning thousands of suspicious transactions.

    Likewise, the Commission also imposed a $100 million civil penalty against Western Asset Management Company, LLC, finding that it failed to take reasonable steps to detect and prevent a cherry-picking scheme despite being aware that the trading and allocation practices of its former co-Chief Investment Officer diverged from those of other portfolio managers at the firm.

    Office of the Whistleblower

    Since its enactment in 2011, the SEC’s whistleblower program has become an integral part of the Division’s crucial work to detect and prosecute wrongdoing and protect investors.  Whistleblowers often provide significant information that either alerts the Commission to possible securities law violations or substantially contributes to an existing investigation.  Indeed, high-quality whistleblower tips have resulted in impactful SEC enforcement actions covering a broad range of misconduct and led to more than $11 billion in financial remedies ordered by the Commission since inception of the program.  Participation in the whistleblower program remains strong: In fiscal year 2026, the Commission received approximately 26,000 whistleblower tips and awarded more than $158 million to 65 individual whistleblowers, the highest number of individual whistleblowers since fiscal year 2023.

    Litigation Highlights

    The Division prevailed in several cases at trial, on summary judgment, and in the remedies phase in fiscal year 2026, including:

    Trials 

    SEC v. Robert Brian Watson (D. Colo.)

    In January 2026, after a five-day trial, a jury found defendants R. Brian Watson and Northstar Commercial Partners, a real estate company Watson owned, liable for intentional securities fraud. The Commission charged Watson and Northstar in August 2022 for allegedly misrepresenting their own investments in securities offerings to fund various real estate projects across the country.

    As demonstrated at trial, Watson and Northstar defrauded investors in 11 different offerings over the course of about 36 months. Defendants told investors that Watson “co-invested” in every real estate offering by investing his personal funds in Northstar-sponsored real estate projects alongside investors who were also investing in common equity. The statements were false and misleading because Watson did not co-invest his personal funds and have “skin in the game” as promised to investors.

    SEC v. Ismael Zarco Sanchez (S.D. Tex.)

    In February 2026, after a four-day trial, a jury found defendant Ismael Sanchez liable for securities fraud and registration violations. The Commission charged Sanchez and 16 other individuals in March 2024 for their alleged roles in a $300 million Ponzi scheme that involved Houston, Texas-based CryptoFX LLC and targeted more than 40,000 predominately Latino investors.

    As demonstrated at trial, Sanchez was a lead salesperson for the CryptoFX Ponzi scheme that involved promises to trade investor funds in the crypto asset and foreign exchange markets, but in reality used investor money to make Ponzi payments, pay commissions to salespeople, and fund personal expenses. The office in Chicago that Sanchez led raised tens of millions of dollars from investors.

    Summary Judgment

    SEC v. Brian Hutchison (D.D.C)

    In August 2026, the District Court for the District of Columbia granted the Commission’s motion for summary judgment and found that Brian K. Hutchison violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, among other charges. The Commission charged Hutchison, then-CEO of RTI Surgical Holdings, Inc., in August 2022 for allegedly masking RTI’s disappointing sales numbers by shipping future orders ahead of schedule to accelerate, or “pull forward,” revenue and then failing to disclose this practice to investors. In June 2020, RTI restated its public financial statements from 2014 through 2019 to correct errors caused by this practice.

    Remedies 

    SEC v. Robert Newell (C.D. Cal.)

    In May 2026, following the entry of a bifurcated consent judgment enjoining Robert Newell from violating Section 17(a) of the Securities Act; Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and Sections 206(1), 206(2), and 206(4) of the Advisers Act and Rule 206(4)-8 thereunder, the District Court for the Central District of California granted the Commission’s motion for the entry of a final judgment ordering Newell liable for disgorgement in the amount of $668,300, plus prejudgment interest thereon of $254,067, and a civil penalty of $668,300, and enjoining him for five years from directly or indirectly participating in the issuance, purchase, offer, or sale of any security, except for purchases or sales for his own personal accounts. The Commission charged Newell, a fund manager, and his prior firm, Black Hawk Funding, Inc., in July 2023 with engaging in undisclosed misuses of investor funds, making Ponzi-like payments, and distributing misleading disclosure documents to investors in connection with three cannabis-related private fund offerings. Newell allegedly misappropriated at least approximately $668,300 of investor money.

    SEC v. Trevon Brown, et al. (S.D.N.Y.)

    In July 2026, following the entry of a bifurcated consent judgment enjoining Michael Noble from violating Section 5 of the Securities Act and Section 15(a) of the Exchange Act, the District Court for the Southern District of New York granted the Commission’s motion for monetary relief in its entirety, ordering Noble to pay disgorgement in the amount of $731,281, prejudgment interest in the amount of $293,703.36, and a civil penalty in the amount of $50,000. The Commission charged Noble and other co-defendants in May 2021 for their involvement in the promoting and acting as unregistered brokers for the BitConnect digital asset platform “lending program.”

    SEC v. Aron Govil (S.D.N.Y.)

    In January 2026, following the entry of a bifurcated consent judgment against Aron Govil imposing certain injunctive and other relief in 2021, the entry of a final judgment in 2022, and the Second Circuit’s 2023 decision vacating the judgment and remanding the case for a determination of pecuniary harm, the District Court for the Southern District of New York granted the Commission’s renewed motion for imposing remedies in its entirety, including $6,670,977 in disgorgement and $3,037,615.59 in prejudgment interest. The Commission charged Govil, the founder and former CEO of Cemtrex, Inc., in July 2021 with misappropriating over $7 million in investor funds and misrepresenting how offering proceeds would be used. The court found that the SEC’s evidence established pecuniary harm, as was required under the Second Circuit’s standard at that time.

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