Securities Enforcement Roundup – June 2025

In this issue of our monthly Securities Enforcement Roundup, we highlight top securities enforcement developments from June 2025.

In June 2025:

• The US Securities and Exchange Commission (SEC or Commission) Crypto Task Force held its last scheduled roundtable.
• The US Department of Justice (DOJ) issued guidance regarding its enforcement of the Foreign Corrupt Practices Act (FCPA).
• The US Senate Parliamentarian rejected a provision of the US Congress’s budget reconciliation bill that would have eliminated the Public Company Accounting Oversight Board (PCAOB) and transferred its responsibilities to the SEC.
• The SEC dismissed several motions to alter settlements concerning “off-channel” communications despite more recent, less onerous settlements regarding similar conduct.
• The SEC withdrew 14 rules proposed by the prior administration concerning a variety of topics, including crypto exchanges, cybersecurity, and predictive analytics.

Overall, we continue to see the SEC and other regulators focus on interactions between regulated entities and their customers with an emphasis on policing fraud.[1]

CRYPTO TASK FORCE HOLDS ROUNDTABLE ON DECENTRALIZED FINANCE

On June 9, 2025, the SEC’s Crypto Task Force (Task Force) held a roundtable discussion entitled “DeFi and the American Spirit.”[2] As we discussed in a prior Roundup, the Crypto Task Force was established in January 2025 to assist the SEC in developing a comprehensive and clear regulatory framework for crypto assets.[3] In May, SEC Chairman Paul Atkins indicated that the Task Force would be releasing its report in the coming months.[4] Since its formation, the Task Force has held a series of roundtable discussions on a range of topics, including whether crypto assets constitute “securities,” regulating crypto trading, and tokenization (discussed in depth here).[5] The latest and final scheduled roundtable on June 9 focused on decentralized finance (DeFi), which refers to blockchain-based systems that allow for peer-to-peer transactions without relying on traditional banks or centralized intermediaries.

The roundtable included remarks by Chairman Atkins; SEC Commissioners Mark Uyeda, Hester Peirce, and Caroline Crenshaw; and representatives from the crypto industry.[6] The head of the Crypto Task Force, Commissioner Peirce, indicated that the SEC has no business regulating DeFi.[7] Specifically, she stated that “the SEC has no authority to demand pre-publication approval” of software code that “could be used to exchange securities,” and that the SEC “must not infringe on First Amendment rights by regulating someone who merely publishes code on the basis that others use that code to carry out activity that the SEC has traditionally regulated.”[8] She clarified, however, that one who “operate[s], administer[s], or maintain[s] a platform through which [such] code can be accessed and that takes custody of client assets or makes execution decisions for clients” “might be subject to regulation[.]”[9]

Chairman Atkins commended the SEC’s Division of Corporation Finance for clarifying that voluntary participation in a proof-of-work or proof-of-stake blockchain network (e.g., as a “miner” or “validator”) is not within the scope of federal securities laws.[10] He noted, however, that this view is not yet a “duly promulgated rule” and urged the SEC to formally “adopt a regulation.”[11] Chairman Atkins also said he has asked SEC staff to consider an “innovation exemption” that would “expeditiously allow registrants and non-registrants to bring on-chain products and services to market,” thereby advancing the administration’s “vision to make America the ‘crypto capital of the planet[.]’”[12]

DOJ ISSUES GUIDANCE ON FCPA INVESTIGATION AND ENFORCEMENT POWER

On June 9, 2025, the DOJ issued a memorandum (the June 9 Memorandum) providing new guidance regarding the agency’s enforcement of the FCPA.[13] The June 9 Memorandum provides that the DOJ may no longer initiate FCPA investigations or enforcement actions without explicit authorization from the Assistant Attorney General for the Criminal Division or a more senior official.[14] It further requires that DOJ prosecutors consider various factors in determining whether to initiate an FCPA investigation or enforcement action, including whether (1) the matter involves misconduct by specific individuals who engaged in corrupt acts, as opposed to alleged corporate wrongdoing; (2) the investigative process would have harmful collateral consequences, including on companies, employees, and shareholders; (3) the matter involves harm to “specific and identifiable” US companies or individuals; (4) foreign jurisdictions are willing and able to prosecute the misconduct; and (5) the matter implicates cartels, transnational criminal organizations, or critical sectors like defense, minerals, and infrastructure.[15]

This guidance comes on the heels of Attorney General Pam Bondi’s February 2025 directive that the DOJ significantly scale back its approach to FCPA enforcement.[16] While some predicted that this directive might spell the end of FCPA enforcement by DOJ under the current administration—or at least a significant curtailment of such enforcement—the June 9 Memorandum indicates that the DOJ will continue to enforce the statute, albeit in a more tailored way and with a focus on direct harm to US interests and misconduct by specific individuals. Notably, while the DOJ and SEC jointly enforce the FCPA and have historically coordinated on parallel actions, the June 9 Memorandum applies only to the DOJ. Thus, while the Memorandum signals a significant shift in how the DOJ will approach FCPA investigations and enforcement, it is currently unclear how, if at all, that shift will impact the SEC’s enforcement of the statute. The SEC may choose to follow suit and focus on cases where it can articulate harm to US interests.

PROPOSAL TO ABOLISH PCAOB AND TRANSFER ITS AUTHORITY TO THE SEC JETTISONED—FOR NOW

The PCAOB will continue to exist in its current form, for now, after a decision by the US Senate Parliamentarian on June 19, 2025 to nix a provision of Congress’s budget reconciliation bill that would have eliminated the PCAOB and transferred its responsibilities into the SEC.[17] The Parliamentarian determined that the provision violated what is known as the Senate’s “Byrd Rule,” which is designed to prevent lawmakers from using the budget reconciliation process (which requires only a simple majority vote, as opposed to the standard two-thirds majority vote) to advance policies with only incidental budgetary impacts.

Legislative proposals to eliminate the PCAOB and task the SEC with its duties have been percolating for months. The US House Financial Services Committee included a similar provision in the version of the budget reconciliation bill the House passed in May 2025. The draft Senate provision would have eliminated the PCAOB altogether, reassigned its work to the SEC, and barred the SEC from raising fees to fund its newly expanded duties.

Proponents of the provision argue that the PCAOB’s expertise overlaps with that of the SEC, and that merging the entities would eliminate waste and redundancy. By contrast, critics of the proposal argue that the SEC lacks the expertise, resources, and personnel to successfully absorb the PCAOB’s role, and that attempting to do so would reduce necessary oversight and negatively impact the quality and reliability of financial auditing.

Though the latest bid to abolish the PCAOB failed, legislators may continue to push for the elimination of the PCAOB through the standard legislative process. In the meantime, SEC Chair Atkins will continue to wield significant influence over the makeup of the board, its budget, and the rules and standards it adopts.

SEC DENIES MOTIONS TO MODIFY BIDEN-ERA OFF-CHANNEL COMMUNICATIONS SETTLEMENTS

On June 26, 2025, the SEC denied the motions of multiple firms to modify their September 2023 and February 2024 settlements with the Commission related to “off-channel” communications, as opposed to communications on firm-approved and retained channels. The firms argued that the settlements should be amended to reflect subsequent, more lenient settlements the SEC reached in January 2025 concerning similar conduct. In denying the firms’ motions, the SEC emphasized its “‘strong interest’ in maintaining the finality of settlements” and asserted that “a party’s belief that subsequent parties negotiated better settlement terms” is not the kind of “compelling” or “extraordinary” circumstance that justifies modifying a settled order.

The June 26 order shows that the SEC is not willing to modify settlements that already have been agreed to and executed, even if the conduct at issue is no longer a regulatory priority. In addition, some regulators, including the SEC, are continuing to investigate issues related to off-channel communications.

SEC WITHDRAWS 14 PROPOSED BIDEN-ERA RULES, SIGNALING REGULATORY RESET

On June 12, 2025, the SEC withdrew 14 rules proposed (but not yet finalized) by the prior administration, stating that it “no longer intend[s] to issue final rules with respect to these proposals,” and if it does “decid[e] to pursue future regulatory action in any of these areas, it will issue a new proposed rule.”[18] These withdrawals are further evidence of a shift in the agency’s regulatory approach and its rule-making agenda. Notable rule withdrawals include:

• Predictive Data Analytics: Proposed rules governing potential conflicts of interest associated with the “use of predictive data analytics” by “broker-dealers or investment advisers” in their interactions with investors.
• Cybersecurity: Proposed rules “to require registered investment advisers and investment companies to adopt and implement written cybersecurity policies and procedures reasonably designed to address cybersecurity risks, disclose information about cybersecurity risks and incidents, report information confidentially to the Commission about certain cybersecurity incidents, and maintain related records.”
• ESG Practices: Proposed rules requiring “registered investment advisers, certain advisers that are exempt from registration, registered investment companies, and business development companies, to provide additional information regarding their environmental, social, and governance investment practices.”
• Outsourcing: Proposed rules “to prohibit advisers from outsourcing certain services or functions without first meeting certain requirements,” including conducting due diligence on and periodically monitoring the outsourced service provider’s performance.
• Best Execution: Proposed rules that would have established SEC “best execution” requirements, in addition to FINRA’s existing requirements, including “by requiring detailed policies and procedures for all broker-dealers and additional policies and procedures for broker-dealers engaging in certain transactions with retail customers, as well as related review and documentation requirements.”