Securities Enforcement Roundup – July 2026

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

In July 2026:

• The US Securities and Exchange Commission (SEC or the Commission) named Osman Nawaz Principal Deputy Director of the Division of Enforcement, succeeding Sam Waldon.
• The SEC continued to demonstrate its focus on insider trading actions, regardless of the size of the alleged illicit profits.
• The SEC brought offering fraud actions involving alleged misuse of retail investor funds, including a cryptoasset mining investment scheme.
• Our July 14 LawFlash Outside Experts Recommend Fundamental Changes to FINRA’s Enforcement Program proposed steps for member firms to consider in light of the recommendations published in the Financial Industry Regulatory Authority’s (FINRA’s) outside expert report.
• The Delaware Supreme Court held that plaintiffs were not entitled to a jury trial in state administrative proceedings and thus rejected the application of the Supreme Court’s holding in SEC v. Jarkesy to a state administrative tribunal.
• The SEC proposed allowing companies to replace three quarterly Form 10-Q filings with a semiannual Form 10-S filing, drawing both critics and supporters.
• The SEC hosted a virtual roundtable focusing on ways to support public companies in raising capital and maintaining their public status.

SEC NAMES NEW PRINCIPAL DEPUTY ENFORCEMENT DIRECTOR

Osman “Os” Nawaz was named as the SEC’s new Principal Deputy Director of the SEC’s Division of Enforcement.[1] Before returning to the SEC from private practice in June, Mr. Nawaz had served with the Commission from 2010 to 2024. He replaces Sam Waldon, who left the SEC after 14 years of service, including serving as Acting Director of the Division of Enforcement.

In his new role, Mr. Nawaz will work alongside his former colleague in private practice, David Woodcock, who was appointed in April as the Director of the Division of Enforcement. We do not expect Mr. Nawaz’s appointment to result in significant shifts in enforcement priorities given his lengthy career at the SEC and close working relationship with Director Woodcock.

SEC CONTINUES TO TARGET INSIDER TRADING AND OFFERING FRAUD

The SEC filed four notable civil enforcement actions in July involving two of its key priorities: insider trading and fraud against retail investors. While the cases vary in size, each centers on alleged deception, misuse of confidential information, or misappropriation of investor funds. Two actions involved trading before the announcement of corporate acquisitions.

In one settled action, the SEC charged a former pharmaceutical employee who participated in the due diligence review for the acquisition of Icosavax, Inc.[2] The employee allegedly acknowledged transaction-specific confidentiality requirements before receiving access to information about the transaction but then purchased Icosavax shares in his own account and his wife’s account.[3]

He allegedly sold the shares after the acquisition was announced, realizing $10,006 in profits. Under the terms of the consented final judgment, he is to pay $10,006 in disgorgement, $10,006 as a civil penalty, and $1,535 in prejudgment interest.[4]

A second insider trading complaint alleges a broader tipping scheme involving a former senior executive who also served as a member of the Board of Directors of Desktop Metal and three of his friends. According to the SEC, in the course of his work, the then-executive/then-director learned that Desktop Metal would acquire The ExOne Company at a substantial premium and communicated with each friend shortly before the acquisition was announced.[5]

The three friends then allegedly accumulated substantial positions in ExOne stock despite their limited or nonexistent previous trading history in the company, ExOne’s declining share price, and negative analyst coverage.[6] Following the announcement, they allegedly liquidated their positions and realized nearly $500,000 in combined profits.[7]

The former executive/former director agreed to a civil penalty of $497,124 and a bar from serving as an officer or director of a public company, while two of the alleged tippees agreed to pay disgorgement, prejudgment interest, and civil penalties.[8] The third alleged tippee is litigating the SEC’s action against him.[9]

The other two actions concern alleged offering fraud schemes directed at retail investors. The SEC charged the president of Mining Automatic with raising approximately $22 million through agreements promising passive income from cryptoasset mining.[10] Many investors allegedly were promised minimum monthly returns and repayment of their initial investments.[11]

The SEC alleged, however, that the defendants spent only about 13% of the funds on mining-related expenses and used substantial amounts for marketing, unrelated ventures, and personal expenses.[12] The president agreed to an officer and director bar, a conduct-based injunction and disgorgement, prejudgment interest, and civil penalties.[13]

The SEC also filed a settled action against the founders of S2A Modular, who allegedly raised approximately $65 million for modular construction facilities.[14] According to the complaint, investors selected particular “MegaFactories” to fund and were told their returns would depend on the performance of those facilities.[15] The founders allegedly transferred more than $20 million of investor money into a centralized account and redirected more than $8 million to a California factory without timely informing investors.[16]

They also allegedly overstated customer demand and repeatedly represented that hundreds of millions, and later billions, of dollars in institutional financing were imminent, even though the company lacked audited financial statements and never obtained institutional investment during the relevant period.[17] The defendants agreed to $200,000 in civil penalties and two-year officer and director bars.[18]

These cases reinforce several emerging enforcement themes, most recently articulated by Enforcement Director Woodcock: insider trading, offering fraud causing “significant losses for investors,” and the “SEC’s unwavering commitment to uncovering sprawling schemes and holding all participants accountable.”[19] Given the low profits involved in the Icosavax matter, it is clear that the SEC will continue to pursue all forms of insider trading, regardless of whether the defendant significantly profited.

Finally, the Mining Automatic case suggests that the SEC will continue bringing crypto-related actions grounded in conventional offering-fraud theories, particularly when retail investors have been harmed by the alleged conduct.

DELAWARE SUPREME COURT REJECTS JARKESY’S APPLICATION TO STATE ADMINISTRATIVE PROCEEDINGS

On July 16, the Delaware Supreme Court affirmed the Superior Court’s holding that Article I, Section 4 of the Delaware Constitution did not entitle plaintiffs to a jury trial in an administrative proceeding brought by Delaware’s Department of Justice Investor Protection Unit (IPU), alleging state securities fraud.[20] In doing so, the Delaware Supreme Court declined to extend to state administrative proceedings the Supreme Court’s decision in SEC v. Jarkesy, which held that defendants were entitled, under the Seventh Amendment, to a jury trial where the SEC sought civil penalties for securities fraud.[21]

The Delaware Supreme Court relied on its recent holding in Blue Beach Bungalows DE, LLC v. State of Delaware, which found that where a “‘litigant claims a jury-trial right in an action based on a statute that does not itself provide for the right, trial by jury is available only if the action is sufficiently analogous to a cause of action to which the right to jury at common law historically attached.’”[22]

The court held that the state statute was not sufficiently analogous to common law fraud because it was distinct in elements and purpose from common law fraud and securities fraud. Specifically, the court pointed to the Delaware statute’s lack of a scienter requirement and the Superior Court’s finding that the purpose of the statute was to protect the public rather than provide a remedy for an individual’s injuries.[23]

In declining to apply Jarkesy, the court also noted that the Seventh Amendment “has not been incorporated and applied to the states by the Fourteenth Amendment.”[24] Relying on Blue Beach, the court concluded that the IPU’s entitlement to civil penalties was irrelevant because “‘the measure of a jury trial for Delaware is the common law, not the remedy sought.’”[25]

The court separately affirmed the rejection of plaintiffs’ due process arguments related to their inability to access prior IPU decisions and funding information, finding that the claim was unripe or, alternatively, insufficient as a facial challenge.

While the Swan decision is grounded in Delaware law and premised on the Delaware Constitution, its commentary regarding the inapplicability of Jarkesy and the Seventh Amendment in state administrative actions could serve as a framework for other state courts. Indeed, Jarkesy’s application under state laws and constitutions is being litigated throughout the country.

SEC PROPOSAL REGARDING SEMIANNUAL REPORTING DRAWS WIDE RANGE OF COMMENTARY

On May 5, the SEC proposed amendments allowing new election options for public companies that are currently required to file Form 10-Q. Companies would be permitted to file one semiannual report on a new Form 10-S and one annual report on Form 10-K for each fiscal year instead of filing three quarterly reports on Form 10-Q and one annual report. The proposal would also amend Regulation S-X to facilitate semiannual reporting and revise rules governing the age of financial statements.[26] The formal comment period ended July 6, 2026.

Chairman Paul Atkins framed the proposal as part of a broader effort to encourage companies to become and remain public.[27] In particular, Chairman Atkins stated the appropriate reporting cadence may depend on issuer-specific factors, including preparation costs and management time, investor expectations, capital-market effects, and business model and other disclosure channels, while emphasizing that materiality should guide the content of interim reports.[28]

The comment record reflects materially different views. Opponents argued that the proposal would reduce the frequency of standardized, reviewed, and certified financial information; widen information asymmetries, particularly for retail investors; impair comparability and price discovery; and increase reliance on voluntary earnings releases that are generally furnished rather than filed.[29]

They also questioned whether the anticipated cost savings and long-term benefits would be significant and expressed concern that less frequent reporting could delay identification of financial-reporting, internal-control, or fraud issues.[30]

Supporters generally argued that optional semiannual reporting could reduce recurring preparation, review, and advisory costs; lessen pressure associated with the quarterly earnings cycle; and allow reporting practices to reflect issuer-specific circumstances.[31] They also maintained that earnings releases, Form 8-K reporting, Regulation FD, and market expectations would continue to promote timely disclosure, and that many issuers would continue to provide quarterly updates even if they elected to file Form 10-S.[32]

SEC ROUNDTABLE EXAMINES IPO AND PUBLIC-MARKET ACCESS

The SEC held a virtual roundtable on July 13 to consider modernizing the initial public offering (IPO) process and improving public-market access.[33] Participants discussed registered offering reform, filer-status thresholds and scaled disclosure, optional semiannual reporting, and the ongoing costs of remaining public.[34]

The discussion also addressed the potential capital-raising benefits and investor-protection tradeoffs of earlier and broader shelf-registration access for newly public and smaller issuers, limits on smaller-company shelf offerings, pre-IPO communications and testing-the-waters practices, the role and timing of research analysts, direct listings and other alternatives to a traditional IPO, liability exposure, and ongoing compliance costs.[35]

PREPARING FOR POTENTIAL FUNDAMENTAL CHANGES TO FINRA’S ENFORCEMENT PROGRAM

As discussed in our June Roundup, on June 30, FINRA published the results of its outside expert report, drafted by Professor Paul Eckert of William & Mary Law School and former SEC Commissioner Troy Paredes, titled “Recommendations Based on a Review of the Policies, Procedures, Processes, and Practices of FINRA’s Enforcement Program” (the Report).[36]

The Report issued 24 recommendations to overhaul FINRA’s Enforcement program. Many of the recommendations, if adopted, would fundamentally change the landscape of FINRA’s current enforcement program. As detailed in our July 14 LawFlash Outside Experts Recommend Fundamental Changes to FINRA’s Enforcement Program, there are a number of steps that member firms can consider taking in the interim, in light of the Report’s recommendations. Those steps include:

• Consider potential new paths of escalation that may be available under the current reporting structure and the recommendation made in the Report that FINRA CEOs be more actively engaged in enforcement matters.
• Consider raising the Report’s comments on limitations periods in aged matters to press for their timely resolution.
• Continue to meaningfully engage with Enforcement staff on the scope, burden, and timeline of Rule 8210 requests.
• Consider using the recommendation in the Report that Enforcement staff avoid active participation in discussions and communications with member firms in matters that have not been referred to Enforcement except in exigent circumstances to push back on Enforcement’s active participation in any current or future matter that has not been referred, where appropriate.
• Develop and execute a plan from the beginning stages of a matter if seeking cooperation credit.
• Request that the staff provide the types of evidence described in the Report, such as quantitative methodology and data analysis, and engage in meaningful debate about the facts and legal conclusions drawn by FINRA at the earliest possible stage of any investigation.
• Consider pressing the staff for an early and fair resolution, considering the Report’s recommendation to expediate resolution of certain matters.