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The U.S. Securities and Exchange Commission is “carefully monitoring” fraud and manipulation in the private credit industry amid a rise in default rates, SEC Chair Paul Atkins said Monday at the Milken Institute Global Conference in Los Angeles. […]
There have been recent signs of stress in the roughly $2 trillion private credit market, with rising default rates at major private credit funds. Many large creditors defaulted on their debts in the past year, according to an analysis by JPMorgan Asset Management, and accounting fraud has been alleged in many of those cases.
Overall, businesses that borrowed from private credit defaulted at a record 9.5% rate in 2025, according to credit rating firm Fitch Ratings.
The growing risk to private credit comes amid the Trump administration’s push to increase investment in private markets. In March, Treasury released its proposed rule to “democratize” access to private markets in 401(k) retirement plans, following an executive order by President Donald Trump.
Source: SEC Monitoring Fraud Risks in Private Credit as Defaults Rise, Atkins Says | Law.com
The Securities and Exchange Commission’s most powerful monetary remedy is disgorgement—the equitable mechanism that strips defendants of their ill-gotten gains regardless of whether any victim can be identified or any dollar of loss can be traced.
In theory, disgorgement simply puts a wrongdoer back where they started. In practice, it operates as something closer to a penalty: A court orders the defendant to pay the full amount of profits derived from the violation, and those funds go into a Fair Fund for eventual distribution to harmed investors—if any can be found.
The US Supreme Court is about to consider whether that “if any” qualifier matters. In Sripetch v. SEC, scheduled for argument on April 20, the Supreme Court could resolve a circuit split on a question that goes to the foundation of the SEC’s remedial authority: Must the SEC show that its enforcement target’s conduct caused pecuniary harm to investors before a court can award disgorgement?
The stakes are real. In fiscal year 2024, the SEC secured more than $6 billion in disgorgement and related prejudgment interest—nearly three-quarters of the SEC’s total financial remedies. The answer in Sripetch will reshape settlement negotiations, litigation strategy, and the SEC’s institutional incentives in every enforcement action where disgorgement is on the table.
Source: The Supreme Court Could Defang the SEC’s Most Powerful Remedy
Dennis Kelleher, president of the SEC watchdog group Better Markets, lambasted the commission’s low enforcement figures, accusing the SEC of abandoning its oversight responsibilities and investor protection mission.
“The SEC’s 2025 enforcement record is a pathetic and indefensible dereliction of duty and its attempt to characterize its failures as success would make George Orwell envious of the agency’s double-talking duplicity,” Kelleher said in a statement.
The SEC in releasing its enforcement results repeatedly criticized the Biden administration’s approach.
The SEC under Gensler used resources to “pursue media headlines and run up numbers, and in turn, led to misguided expectations on what constitutes effective enforcement,” the SEC stated.
Marlier, now a partner at Morrison & Foerster, questioned the SEC’s characterization.
“In my experience, there was a pretty robust process for determining whether or not to charge a securities law violation, and the staff and the supervisors were very conscientious about that process, including under the first Trump administration,” said Marlier, who left the SEC in 2020.
Source: SEC Decries Biden-Era ‘Rush’ as Enforcement Numbers Fall | Law.com
The US Securities and Exchange Commission is creating a new enforcement team to target “bad actors” in the auditing profession after the agency cut the budget of the independent board that traditionally polices those responsible for vetting company financial statements.
In a federal jobs posting, the SEC’s enforcement division said it is seeking applications for a senior attorney and manager in its new “SOX Group” — a reference to the landmark Sarbanes-Oxley Act passed after the collapse of Enron Corp. The new unit will investigate and litigate matters involving potential violations of Sarbanes-Oxley auditing standards and provisions, according to the posting.
Source: SEC Targets Auditing ‘Bad Actors’ With New Enforcement Team
The Securities and Exchange Commission is preparing a proposal to eliminate the requirement to report earnings quarterly and instead give companies the option to share results twice a year, according to people familiar with the matter.
The regulator could publish the proposal as soon as next month, the people said. In preparation for the proposal, regulators have been talking to officials at the major exchanges to discuss how they may need to adjust their rules.
Once the proposal is published, it will be subject to a public comment period. After that period, which typically lasts at least 30 days, the SEC will vote on it. There are no guarantees it will ultimately happen.
The rule is expected to make quarterly reporting optional, not eliminate quarterly reports altogether.
Source: SEC Prepares Proposal to Eliminate Quarterly Reporting Requirement – WSJ
In conjunction with the MOU, the agencies created a Joint Harmonization Initiative to advance coordinated oversight and promote regulatory clarity in areas of common regulatory interest. The initiative will support coordination across the policymaking, examination and enforcement functions of each agency, particularly for joint applications and shared policy efforts, including:
–Clarifying product definitions through joint interpretations and rulemakings.
–Modernizing clearing, margin, and collateral frameworks.
–Reducing frictions for dually registered exchanges, trading venues, and intermediaries.
–Providing a fit-for-purpose regulatory framework for crypto assets and other emerging technologies.
–Streamlining regulatory reporting for trade data, funds, and intermediaries.
–Coordinating cross-market examinations, economic analyses, risk monitoring, surveillance, and enforcement.The Joint Harmonization Initiative will be co-led by Robert Teply (SEC) and Meghan Tente (CFTC).
Source: SEC and CFTC Announce Historic Memorandum of Understanding Between Agencies
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Commissioner Caroline Crenshaw has devoted more than a decade of distinguished service to the Securities and Exchange Commission. Over those years, she has been a steadfast advocate for the agency’s mission – demonstrating clarity of purpose and generosity of spirit. Commissioner Crenshaw has listened carefully, engaged substantively, and approached every day with the purpose of safeguarding investors and strengthening our…