Securities Enforcement Roundup – September 2025

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

In September 2025:

• US Securities and Exchange Commission (SEC or Commission) Chairman Paul S. Atkins issued a statement on simultaneous Commission consideration of settlement offers and related waiver requests.
• The SEC announced the formation of the Cross-Border Task Force to combat fraud.
• Chairman Atkins and Acting Chairman of the US Commodity Futures Trading Commission (CFTC) Caroline D. Pham issued a joint statement on regulatory harmonization between the two agencies.
• The SEC brought enforcement actions against a biopharmaceutical public company and an executive for allegedly materially misleading statements concerning the results of drug safety testing.
• The SEC brought various actions against investment advisers or their employees alleging insider trading, breaches of fiduciary duty and misrepresentations to private funds and investors, improper disclosures of client information, and violations of the “Marketing Rule.”
• The SEC continued to pursue and bring charges arising from Ponzi schemes and affinity frauds.
• The SEC dismissed an administrative proceeding against a former hedge fund manager, concluding that “further proceedings, including a hearing, would not be in the public interest,” and the Financial Industry Regulatory Authority (FINRA) National Adjudicatory Council dismissed violations and reversed sanctions from a hearing that occurred years earlier after identifying “shortcomings” during the proceeding.
• FINRA settled a matter with a brokerage firm related to its failure to establish and enforce a system reasonably designed to supervise the firm’s solicitation of private placement offerings.

REDUCED SEC FISCAL-YEAR END ENFORCEMENT ACTIVITY

As the old saying goes, there are few certainties in life beyond death and taxes. For securities enforcement lawyers, that list of certainties also includes a flurry of SEC enforcement action in September, the last month of the agency’s fiscal year. Last year, for example, the SEC initiated more than 200 standalone administrative proceedings and civil actions in September 2024, or just under half of its yearly total of such cases.[1]

This year, however, that certainty came to an end, as the SEC brought fewer than 50 total standalone administrative proceedings and civil actions in September 2025. Chairman Atkins has long indicated that he does not view the number of cases filed in any particular fiscal year as evidence of an effective enforcement program, and the more-than-four-fold decrease in enforcement activity can be seen as another step taken to align with his “back to basics” approach to refocus efforts on cases that present concerns for retail investor harm. It is also likely a further indication that the Division of Enforcement continues to evaluate its current inventory of investigations and closes those that do not align with the current administration’s priorities.

SEC RESTORES SIMULTANEOUS CONSIDERATION OF SETTLEMENT OFFERS AND WAIVER REQUESTS

On September 26, 2025, Chairman Atkins issued a statement to “restore the Commission’s prior practice of permitting a settling entity to request that the Commission simultaneously consider an offer of settlement that addresses both an underlying Commission enforcement action and any related waiver request.”[2] The impetus for this statement and change in policy is that settlements with the SEC—particularly for registered entities such as broker-dealers and investment advisers—often involve collateral consequences. These consequences can be significant for the settling person or entity; for example, for public companies, loss of well-known seasoned issuer status or, in the case of investment advisers, the inability to act or serve in certain capacities pursuant to Section 9(a) of the Investment Company Act of 1940 (ICA).

Under the previous administration, the Commission could, but was not required to, consider settlement offers simultaneously with requests for waivers of the potential collateral consequences of the settlement. Thus, settling respondents did not know if the Commission would grant a waiver of the attendant collateral consequences until after the settlement had been inked. Under the policy announced by Chair Atkins, respondents can request that the Commission consider both the proposed settlement and waiver request simultaneously, which “will enhance efficiency and certainty in the settlement process and avoid a siloed internal consideration of the matter, which are critical factors in reaching comprehensive settlements that are in the best interests of investors.”[3] This policy change will bring relief to registrants who settle Commission enforcement actions and, until now, have had to deal with the uncertainty of whether they will receive a waiver from any collateral consequences triggered by that settlement.

SEC FORMS CROSS-BORDER TASK FORCE TO COMBAT FRAUD

On September 5, 2025, the SEC announced the formation of a task force to strengthen the Division of Enforcement’s efforts to identify and combat cross-border fraud that harms US investors.[4] This Cross-Border Task Force will make initial efforts to investigate foreign-based companies’ potential federal securities law violations, such as market manipulation and “pump-and-dump” schemes. According to the announcement, particular attention will also be paid to “gatekeepers,” such as auditors and underwriters, that help foreign-based companies access US capital markets, as well as companies located in foreign jurisdictions where governmental control may pose unique investor risks. The announcement also called out China and other foreign jurisdictions “where governmental control and other factors pose unique investor risks.”

This new task force is another effort by Chair Atkins to align the Commission’s Enforcement program with the current administration’s priorities. Thus, while the administration has dialed back Foreign Corrupt Practices Act (FCPA) enforcement, which primarily targets US companies’ activities abroad, the task force demonstrates the Commission’s intention to crack down on foreign companies whose activities impact the US. We expect the announcement of this task force will lead to more inquiries from Enforcement to foreign market participants and the gatekeepers who assist them.

SEC AND CFTC ISSUE JOINT STATEMENT ON REGULATORY HARMONIZATION

On September 5, 2025, Chairman Atkins and Acting CFTC Chairman Pham issued a joint statement regarding the agencies’ alignment of regulatory priorities such that there not be “a regulatory ‘no-man’s land’ due to inaction by the agencies.”[5] In public remarks on September 29, 2025, Chairman Atkins emphasized that the agencies would “build[] a framework where [the] agencies coordinate seamlessly, reduce duplicative regulation, and give markets the clarity they deserve.”[6] We expect that the SEC and the CFTC will undertake steps to avoid duplicative enforcement actions, such as those we saw in the off-channel communications actions by both regulators in 2023 and 2024, and continue to coordinate oversight of securities and commodity derivatives in US capital markets.

SEC CHARGES PUBLIC COMPANY AND EXECUTIVE FOR ALLEGEDLY MATERIALLY MISLEADING STATEMENTS

On September 5, 2025, the SEC brought enforcement actions against a publicly traded biopharmaceutical company and its former chief medical officer (CMO) for making allegedly materially misleading statements about the results of cardiovascular safety analyses of the company’s then-primary drug candidate.[7] According to the SEC’s order, the company and the CMO made the false and/or materially misleading disclosures in an industry presentation, multiple SEC filings, an earnings call, and a published manuscript. The SEC charged the company and the CMO with violations of Section 17(a) of the Securities Act of 1933 (33 Act), as well as Section 10(b) of the Securities Exchange Act of 1934 (34 Act) and Rule 10b-5(b) thereunder. The company agreed to a $1.25 million penalty, payable over a one-year period.

The SEC also sued the CMO in an unsettled civil action.[8] This type of case seems to confirm that the SEC under Chairman Atkins will still bring disclosure-based fraud cases against public companies, particularly where the revelation of the allegedly material misstatements results in a significant stock price decline. This potentially signals that the SEC is prioritizing cases with quantitatively material impact to investors. This case also confirms that the SEC will continue to pursue individuals responsible for a company’s alleged misstatements.

SEC BRINGS VARIOUS ENFORCEMENT ACTIONS AGAINST INVESTMENT ADVISERS

The SEC’s Enforcement program shows no sign of letting up when it comes to investment advisers. September saw a handful of such cases involving the following activities:

Insider Trading

On September 5, 2025, the SEC filed settled insider trading charges against Ryan Squillante, who allegedly used confidential information that he obtained in the course of his employment at an investment firm to trade in the securities of at least 10 different publicly traded companies, earning approximately $216,965 in illegal trading profits.[9] In his role as head of equity trading, from May 2021 through December 2023, Squillante obtained material nonpublic information, including information concerning potential secondary offerings of securities by publicly traded companies. Squillante allegedly then traded based on material nonpublic information in his personal brokerage accounts on at least 11 occasions. Squillante consented to the entry of a judgment permanently enjoining him from violations of Section 10(b) of the 34 Act and Rule 10b-5 thereunder.

Breach of Fiduciary Duties

On September 9, 2025, the SEC filed settled charges against Tomislav Vukota, a former Colorado resident, and two investment adviser entities (referred to as VCM and VGAM) he controls for breaching their fiduciary duties and making material misrepresentations to private funds and investors who purchased limited partnership interests in those funds.[10] The SEC’s complaint alleges that: (1) Vukota and VCM caused various private funds they advised to make short-term loans to VCM at below-market rates to, among other things, cover cash shortfalls at other private funds; (2) the private funds’ partnership agreements prohibited these loans, and neither the practice of providing such loans nor the resulting conflict of interest was disclosed to investors; (3) Vukota and VCM sent misleading letters to the investors in connection with Vukota’s attempt to buy the investors’ interests without disclosing Vukota’s conflicts of interest; and (4) Vukota and VGAM made material misstatements in marketing and offering materials concerning the existence of an auditor, the amount of assets under management, the investment strategy, and the filing status as an exempt reporting adviser.

The SEC’s complaint charges the defendants with negligence-based violations of the Investment Advisers Act of 1940 (IAA) and rules thereunder. Without admitting or denying the SEC’s allegations, the defendants agreed to settle the SEC’s charges, consenting to injunctions and total combined monetary relief of $6,943,212 in disgorgement, prejudgment interest of $1,766,582, and penalties of $1,000,000.

Reg S-P Violations

On September 10, 2025, the SEC charged Parker Terrill Austin and his investment advisory firm, Embarcadero Capital Advisors Inc. (Embarcadero), with fraud related to his efforts to obtain clients for Embarcadero.[11] According to the SEC’s complaint, Austin sent to his personal email nonpublic personal information belonging to his then-employer’s clients, including names and account balances, and directed clerical employees to send to his personal email client nonpublic personal information, including names, addresses, phone numbers, email addresses, account values, and fees charged.

Shortly after being terminated from his prior firm, Austin launched Embarcadero and, as alleged in the complaint, engaged in a scheme to fraudulently induce clients to join Embarcadero. The SEC charged Austin and Embarcadero with violations of the antifraud provisions Sections 206(1), 206(2), and 207 of the IAA, and Austin is charged with aiding and abetting Embarcadero’s violation of Sections 206(1), 206(2), and 207 of the IAA and violation of Rule 10 of Regulation S-P that requires advisers to maintain the privacy of client information.

Violations of the Marketing Rule

On September 4, 2025, the SEC settled charges against a Massachusetts-based investment adviser for violations of the Marketing Rule,[12] which was adopted in 2020 “to modernize rules that govern investment adviser advertisements. . . .”[13] The SEC’s order alleges that the adviser disseminated a website advertisement in which it claimed it “refuse[d] all conflicts of interest.” In reality, as alleged, the adviser recognized various conflicts of interest, including conflicts of interest disclosed in its Form ADV. The adviser also engaged in various alleged compliance failures. The adviser consented to the SEC’s order finding that it violated various negligence-based sections of the IAA and rules thereunder. In addition to a cease-and-desist order and censure, the adviser agreed to pay a $75,000 civil penalty and was ordered to engage in undertakings designed to correct the compliance failures.

These cases demonstrate the willingness of the Atkins-led SEC to pursue pure negligence-based cases against investment advisers, continue to combat insider trading, police improper disclosure of client information obtained by advisers, and closely scrutinize advertisements by advisers against their existing disclosures, particularly when it comes to disclosures about conflicts.

SEC CONTINUES ITS FOCUS ON TRADITIONAL RETAIL INVESTOR FRAUD

On September 3, 2025, the SEC filed a complaint in the Eastern District of Pennsylvania charging Daryl Heller and his companies Prestige Investment Group LLC (Prestige) and Paramount Management Group LLC (Paramount) with operating a multi-year Ponzi scheme that resulted in investor losses of approximately $400 million.[14] According to the complaint, from January 2017 to June 2024, Heller and Prestige raised more than $770 million from approximately 2,700 investors, many of whom are retail investors, to invest in ATMs operated by Paramount.

Many of the investors were members of the Amish and Mennonite communities in the Lancaster, Pennsylvania area, the same area where Heller resides. Heller is alleged to have made material misrepresentations to investors and also to have misappropriated more than $185 million of investor funds for his own benefit. The SEC charged Heller, Prestige, and Paramount with violations of the antifraud provisions of Section 17(a) of the 33 Act and Section 10(b) of the 34 Act and Rule 10b-5 thereunder. In a parallel action, the US Attorney’s Office for the Eastern District of Pennsylvania announced criminal charges against Heller.

In a similar action, on September 5, 2025, the SEC filed a complaint in the Northern District of Texas against Arsalan Rawjani and the business enterprise he operated, Trade with Ayasa LLC (Ayasa), which operated through various corporate forms, for allegedly conducing an affinity fraud and operating a Ponzi scheme centered in the North Texas Ismaili community, where Rawjani was an active member and community leader.[15]

According to the complaint, between 2021 and 2024, Rawjani held himself out in his community as an expert in options trading and solicited investments for his company by falsely promising that the investors’ money would be pooled for trading options contracts and that investors would be paid a guaranteed monthly dividend, typically three to five percent, from Ayasa’s options trading profits. The SEC charged Rawjani and his companies with violating the antifraud provisions of Section 17(a) of the 33 Act and Section 10(b) of the 34 Act and Rule 10b-5 thereunder. The complaint further charges the defendants with violating the registration provisions of Sections 5(a) and 5(c) of the 33 Act.

FINRA AND SEC BOTH DISMISS ENFORCEMENT ACTIONS AGAINST INDIVIDUALS

On September 23, 2025, the SEC dismissed an administrative proceeding filed against former hedge fund manager Gregory Lemelson in a long-running matter first filed in 2018.[16] On November 5, 2021, a jury found Lemelson and LCM liable for making three false and misleading statements about a public company.[17] The jury did not find the defendants liable on certain other charges and allegations. On appeal, the US Court of Appeals for the First Circuit affirmed the jury’s verdict and the district court’s imposition of a five-year injunction but quoted the district court’s statement that “a lifetime ban would be excessive.”[18]

On April 20, 2022, the SEC instituted an administrative proceeding against Lemelson under the IAA, based on the district court’s issuance of a five-year injunction against Lemelson. The Division of Enforcement, however, sought a permanent bar against Lemelson from the securities industry. Lemelson moved to dismiss the proceeding based on several allegedly prejudicial acts by the SEC. The SEC denied Lemelson’s motion to dismiss but dismissed the administrative proceeding anyway, writing, “[G]iven the combination of circumstances surrounding the Commission’s underlying civil proceeding against Lemelson—including, but not limited to, the split jury verdict; the time-limited injunction that expires in early 2027; and the courts’ statements about imposing a bar—we have determined that conducting further proceedings, including a hearing, would not be in the public interest. We therefore find it appropriate to dismiss this proceeding as a matter of discretion.”[19]

A somewhat similar issue arose in September when FINRA’s National Adjudicatory Council (NAC) dismissed the violations and reversed all sanctions imposed by a FINRA hearing panel six years prior.[20] Subsequent to the hearing panel’s decision, FINRA’s Chief Hearing Officer informed the parties that there was an “independent review of potential conflicts and bias” in connection with the case. Two weeks later, the chief hearing officer advised the parties that the independent review was complete, but apparently FINRA did not provide any details to the respondent about the investigation.

As a result, the NAC concluded that it was “currently left to consider a record that lacks the information necessary to determine the fairness of the proceedings” and concluded that remanding the proceedings would “subject [respondent] to additional time, legal fees, and other burdens to address an issue that he did not create but rather resulted solely from FINRA’s shortcomings, including FINRA’s denials of his repeated requests for additional information about the issue.”

Both cases show that vigorous challenges to seemingly routine enforcement actions can gain traction in the current regulatory environment.

FINRA SETTLES WITH BROKERAGE FIRM OVER SOLICITATION OF PRIVATE PLACEMENT OFFERINGS

Finally, September saw a notable settled action by FINRA alleging that a brokerage firm failed to establish, maintain, and enforce a system reasonably designed to supervise the firm’s solicitation of private placements to its customers.[21] Rule 506(b) of Regulation D provides a safe harbor for private offerings of unregistered securities if certain conditions are met, including that the offering not involve a general solicitation to market the securities. As alleged, over a two-year period, the firm sold 14 private placements in reliance on Rule 506(b). However, the firm did not establish or implement a system reasonably designed to identify general solicitation of private placement offerings and lacked written procedures on this issue.

Further, the firm’s written procedures did not prohibit its registered representatives from engaging in general solicitations of private placement offerings. The firm’s registered representatives made hundreds of thousands of calls to prospective investors despite lacking a reasonable system to ensure that the firm established substantive relationships with those investors prior to soliciting them for a specific private investment. Accordingly, the firm was found to have violated FINRA Rule 3110(a) and was fined $50,000.