Securities Enforcement Roundup – March 2026

In this issue of our monthly Securities Enforcement Roundup, we highlight top securities enforcement developments from March 2026.

In March 2026:

• US Securities and Exchange Commission (SEC or Commission) Director of Enforcement Margaret Ryan resigned after just over six months in the position, with David Woodcock named her successor in early April.
• The SEC and Commodity Futures Trading Commission (CFTC) jointly issued two pronouncements: a joint memorandum of understanding and the agencies’ interpretation on cryptocurrency (crypto) and crypto-related transactions.
• The SEC was ordered to produce previously withheld information concerning its imposition of “off channel” device penalties.
• The SEC continues its recent run of dismissing actions brought under the prior administration, dismissing two crypto cases.
• The SEC remains focused on addressing gatekeepers and financial fraud, filing a settled order against an outside auditor and an insider trading case against a chief revenue officer.
• The Financial Industry Regulatory Authority (FINRA) highlighted important changes to its enforcement program.
• FINRA requested public comments on modernizing its arbitration rules, guidance, and processes.
• The US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), SEC, and FINRA brought historic anti-money laundering (AML)-related actions.

JUDGE RYAN RESIGNS AS SEC’S DIRECTOR OF ENFORCEMENT

On March 16, 2026, Judge Margaret Ryan resigned from her position as director of the SEC’s Division of Enforcement, with Principal Deputy Director Sam Waldon named acting director.[1] Judge Ryan’s resignation comes just over six months into her tenure, an unusually short length of time for the position.[2] While we do not anticipate Judge Ryan’s resignation will result in substantial changes to recent SEC enforcement activity trends (i.e., a “back to basics” investor protection and fraud prevention, as discussed in our annual publication, SEC Enforcement Trends for Investment Advisers 2025-2026), it nevertheless remains a notable development, with Judge Ryan’s successor, David Woodcock, having just been named on April 8.[3]

EVOLVING REGULATORY PARTNERSHIP: JOINT SEC/CFTC PRONOUNCEMENTS

As discussed in depth in our recent LawFlash Crypto Clarity: SEC and CFTC Issue Comprehensive Crypto Asset Guidance – Part 1, on March 11, 2026, the SEC and CFTC announced a Joint Memorandum of Understanding (MOU) “to guide coordination and collaboration between the two agencies to support lawful innovation, uphold market integrity, and ensure investor and consumer protection.”[4] According to the SEC, the MOU “reflects both agencies’ commitment to provide fair notice to market participants, respect individual liberty, and foster lawful innovation with the minimum effective dose of regulation to enhance U.S. competitiveness in finance.”[5] Relatedly, the agencies announced a “Joint Harmonization Initiative” to “support coordination across the policymaking, examination and enforcement functions of each agency,” including, among other things, “[c]larifying product definitions,” establishing a “fit-for-purpose regulatory framework,” “[s]treamlining regulatory reporting,” and “[c]oordinating cross-market examinations . . . and enforcement.”[6]

Thereafter, on March 17, 2026, in its first major step following the joint MOU, and as another indication of an increasingly crypto-friendly regulatory environment, the SEC (joined by the CFTC) issued its interpretation clarifying how the federal securities laws apply to certain crypto assets and related transactions, with Chairman Atkins proclaiming the interpretation “acknowledges what the former administration refused to recognize—that most crypto assets are not themselves securities.”[7] Per the SEC’s press release, this interpretation:

• Provides a coherent token taxonomy for digital commodities, digital collectibles, digital tools, stablecoins, and digital securities
• Addresses how a “non-security crypto asset”—which is a crypto asset that itself is not a security—may become subject to, and how it may cease to be subject to, an investment contract
• Clarifies the application of federal securities laws to airdrops, protocol mining, protocol staking, and the wrapping of a non-security crypto asset[8]

SEC ORDERED TO PRODUCE INFORMATION ON “OFF-CHANNEL” DEVICE PENALTIES

In an action brought by the American Securities Association (ASA) following the SEC’s “industry-wide crackdown on broker-dealers for failure to retain off-channel communications,” on March 5, 2026, Judge Steven Merryday of the US District Court for the Middle District of Florida  ordered the SEC to produce previously withheld sections of spreadsheets used in the Commission’s assessment of penalties as part of the crackdown.[9] The SEC had withheld such materials from the ASA on the basis of a Freedom of Information Act exemption.[10] While Judge Merryday declined to order the SEC to produce documents that would reveal opinion work-product, he nevertheless determined that “to the extent that each spreadsheet contains data of an entity with whom the SEC already settled and organizes that entity into a final, imposed penalty tier,” such information was “discoverable fact work-product” to which the ASA was entitled.[11]

SEC CONTINUES TO DISMISS ACTIONS

In a departure from prior agency practice and further illustrating a more crypto-friendly approach, the SEC dismissed two key crypto-related actions this past month filed under the previous administration.[12]

In March 2023, the SEC filed an enforcement action against Rainberry, Inc., Justin Sun, Tron Foundation Limited, and BitTorrent Foundation Ltd. (the Tron Defendants), principally related to wash trading, alleging that Rainberry artificially inflated its crypto asset TRX’s value. [13] On March 5, 2026, the SEC filed a proposed final judgment with the court that, if approved, would settle the Commission’s claim against Rainberry for wash trading (which includes a $10 million penalty) and would voluntarily dismiss, with prejudice, the Commission’s remaining claims against Rainberry and all claims against the remaining Tron Defendants.[14]

Similarly, on March 12, 2026, the SEC announced that “in the exercise of its discretion,” it had dismissed all claims against decentralized social networking site BitClout’s founder Nader Al-Naji and Relief Defendants it had filed in July 2024.[15] The SEC had alleged that Al-Naji raised more than $257 million in unregistered securities and sales of the BitClout token, a cryptocurrency used to gain access to the social networking platform.[16]

The voluntary dismissal of these two crypto actions is in line with the recent SEC practice of dismissing cases against cryptocurrency firms and the current administration’s cryptocurrency executive order issued on January 23, 2025.[17]

SEC’S CONTINUED FOCUS ON GATEKEEPERS AND FINANCIAL FRAUD

As previewed in our Current Developments in SEC Enforcement for Public Companies: 2025–2026 report, the SEC continues to focus its efforts on investor protection through pursuing actions involving gatekeepers. First, in a follow-on to the largest ever mismarking case brought by the SEC, the Commission charged a business consulting and audit firm for failing to perform its 2020 audit in accordance with PCAOB standards.[18] According to the settlement, the audit firm did not adequately understand valuation-related internal controls, did not obtain sufficient appropriate audit evidence consistent with auditing standards and the audit plan, and lacked due professional care and professional skepticism in performing the work.

Second, the SEC charged Doximity Chief Revenue Officer Paul W. Jorgensen for insider trading.[19] The SEC’s complaint alleges that while CRO of the company, Jorgensen (1) sold more than 60,000 shares of Doximity stock ahead of a quarterly earnings call based on material non-public information (MNPI) concerning Doximity’s lower-than-expected sales and (2) failed to file required reports disclosing those sales.[20] Further, the SEC alleges that approximately one year after he was terminated, Jorgensen again traded shares of Doximity based on MNPI concerning the company’s sales.[21]

These actions illustrate the Commission’s continued focus on financial fraud and holding gatekeepers accountable for abusing positions of authority, and we can expect this focus to continue going forward.

FINRA HIGHLIGHTS CHANGES TO ITS ENFORCEMENT PROGRAM

As discussed in our July 2025 Securities Enforcement Roundup, in April 2025, FINRA announced its FINRA Forward initiative, a comprehensive effort to continuously review and enhance its regulatory policies, programs, and enforcement practices to better protect investors, maintain market integrity, and support member firms in complying with regulations.[22] As part of the FINRA Forward initiative, in a July 2025 blog post, FINRA CEO Robert Cook announced an effort to develop meaningful common-sense improvements to FINRA’s Enforcement program to allow the staff to better serve FINRA’s self-regulatory mission.[23] That effort is being led by FINRA Head of Enforcement Bill St. Louis and supported by two outside experts: former SEC Commissioner Troy Paredes and William and Mary Law School Professor Paul Eckert.[24]

In a March 2026 blog post, FINRA Head of Enforcement Bill St. Louis highlighted a number of “common-sense improvements” FINRA has begun instituting to its enforcement program as a result of his team’s effort.[25] Those enhancements—most of which were described in detail in our annual SEC and FINRA Enforcement Trends for Broker-Dealers publication—seek to accomplish three main goals.[26]

• In an effort to drive more transparency, FINRA now offers (1) introductory meetings at the beginning of the enforcement process, (2) requires Enforcement staff to provide status updates at least every 90 days, and (3) holds investigative findings meetings before any final determinations are made regarding violations.
• FINRA is also seeking to improve its efficiency by (1) creating 11 areas of specialization in an effort to build expertise and drive consistency in outcomes, as well as by (2) launching a 4530(b) pilot program pursuant to which (in certain instances) FINRA will refrain from sending formal requests while a firm continues its own internal investigation.
• Finally, FINRA is giving member firms more opportunities to be heard by (1) reaching out to firms prior to issuing a Cautionary Action Letter and (2) prior to issuing Rule 8210 requests, both of which will allow firms to provide information they think is helpful and to ask questions.

The blog post notes that FINRA expects to implement additional enhancements to its enforcement program, including by (1) issuing additional guidance regarding how FINRA grants credit for cooperation and remediation, (2) exploring changes to how FINRA gathers information through 8210 requests, (3) considering alternatives to on-the-record testimony, and (4) eventually publishing an enforcement manual.[27] These enhancements (and others) will be driven in part by the assessment of Paredes and Eckert, which FINRA expects to share with the public in Q2 2026.[28]

FINRA SEEKS INPUT ON MODERNIZING FINRA ARBITRATION RULES, GUIDANCE, AND PROCESSES

On March 2, 2026, FINRA published Regulatory Notice 26-06 (the Notice), which seeks input from all interested parties as to how FINRA can revise its arbitration rules, guidance, and processes to help ensure that customers, members, and their associated persons are treated fairly and that the arbitration forum remains efficient and transparent.[29]

The Notice highlights 13 key areas for comment and potential revision, including the following:

1. Forum selection considerations for both customer and industry disputes (e.g., whether FINRA should allow parties to contractually agree to opt out of FINRA arbitration for certain types of claims and whether FINRA should no longer require specific types of industry disputes to be arbitrated under the Industry Code)[30]
2. Eligibility motions and motions to dismiss (e.g., whether to eliminate the eligibility rule and rely solely on applicable statutes of limitations, whether FINRA should amend the eligibility rule to expressly provide that the rule is a statute of repose, barring claims based on transactions or events that occurred more than six years before the claim is filed and whether changes should be made to the timing and/or guidance regarding prehearing motions to dismiss)[31]
3. Explained decisions in awards (e.g., whether to require explained decisions in all (or some) FINRA arbitration awards, and whether to require additional detail for certain explained decisions)[32]

The Notice represents a significant opportunity for members to advocate for common-sense changes to arbitration proceedings. The comment period expires May 1, 2026.

FINCEN, SEC, AND FINRA BRING HISTORIC AML-RELATED ACTION

On March 6, 2026, FinCEN announced a coordinated action with the SEC and FINRA, in which the three regulators fined a broker-dealer $80 million in connection with securities fraud-related violations of the Bank Secrecy Act (BSA), a law that imposes AML requirements in an effort to combat the financing of terrorism.[33] The $80 million fine is the largest penalty ever imposed against a broker-dealer for violating the BSA.[34]

As part of its resolution with FinCEN, the broker-dealer admitted that it willfully violated the BSA, including by failing to “(1) develop, implement, and maintain an effective AML program; (2) conduct required due diligence on correspondent accounts for foreign financial institutions; and (3) file [suspicious activity reports (SARs)].”[35] FinCEN found that these failures resulted in the broker-dealer (1) failing to timely detect and report numerous securities fraud schemes that resulted in significant harm to investors, (2) onboarding high-risk customers with reported ties to illicit actors, and (3) failing to file at least 160 SARs, which “deprived law enforcement of timely and critical financial information pertaining to suspicious activity.”[36] The SEC’s order and FINRA’s letter of acceptance, waiver, and consent (AWC) include similar findings, and each imposed a $20 million fine on the broker-dealer.[37]

The coordinated action serves as a reminder that firms should carefully evaluate their AML and BSA programs and that regulators continue to focus on such conduct, particularly where the misconduct relates to fraud and/or results in investor harm.[38]