Takeaways for Corporate Counsel
Under Chairman Atkins, the SEC will focus on traditional “bread and butter” enforcement actions involving investor harm, fraud and high-impact, financially consequential cases with a lower focus on technical violations. Chairman Atkins has also maintained a view that high corporate penalties are counter to the SEC’s mission of investor protection and instead burden shareholders without holding the appropriate parties accountable for wrongdoing. The SEC is expected to scale back on “regulation by enforcement” and possibly lower penalties against companies. Nonetheless, it remains crucial for companies to remain vigilant and out of the crosshairs of more than hundreds of enforcement attorneys and accountants still in the job:
1. Safeguard material nonpublic information by implementing robust policies and training on protecting such information.
2. Monitor the cross-border risks and coordinate globally to detect patterns of trading in advance of significant events or announcements.
3. Ensure that the internal controls and reporting mechanisms are up to date and, to the extent companies receive internal reports from whistleblowers about such matters, they should engage counsel immediately to minimize any potential liability.
4. Investigate and remediate any whistleblower complaints as the SEC received 1,744 whistleblower tips in 2024, some of which have a statute of limitations of up to ten years.
5. Engage counsel immediately to minimize any misconduct and any potential liability.
6. Report, cooperate, and remediate to be rewarded, and companies should take proactive steps to monitor, report, and remediate potential violations.
