SEC Changes Course on Priorities, Unsurprisingly Continues Enforcing the FCPA, and Selects New Agency Leaders

Continuing its trend of reversing course from the last Administration, and with a nod to promoting innovation, the U.S. Securities and Exchange Commission (SEC or the Commission) announced on Thursday, June 12, 2025 that it plans to formally withdraw 14 Gensler-Era proposed rules as of June 17, 2025. The Commission explained that it does not intend to issue a final rule with respect to any of the fourteen notices of proposed rulemaking, all of which were issued between March 2022 and November 2023. 

Several of the proposed rules would have regulated aspects of investment management, including:

• Safeguarding of advisory client assets; 
• Outsourcing by investment advisers of certain services or functions; 
• Conflicts of interest associated with the use of predictive data analytics; 
• Cybersecurity risk management; 
• Enhanced disclosures about environmental, social, and governance (ESG) investment practices; 
• Best execution regime for broker-dealers;
• Competition rule regarding execution of retail orders;
• Compliance requirements for system integrity; 
• Large security-based swaps position reporting; and
• Comment period for amendments to Exchange Act Rule 3b-16.

The agency left open the possibility of taking regulatory action in these areas in the future, in which case the SEC would issue a new proposed rule. Funds and advisers should keep in mind, however, that the SEC may still raise concerns about the topics addressed in the withdrawn proposed rules in regulatory exams. 

In addition, investment advisers should note that they may be subject to minimum standards for anti-money laundering (AML) and countering the financing of terrorism (CFT) programs under the Financial Crimes Enforcement Network’s (FinCen) rule, which is still scheduled to go into effect on January 1, 2026. The related rule proposed jointly by the SEC and FinCen, which would extend customer identification program requirements to investment advisers, is still pending.

The Commission also withdrew a proposed amendment to Exchange Act Rule 14a-8 that would have changed certain substantive bases for exclusion of shareholder proposals, namely the substantial implementation exclusion, the duplication exclusion, and the resubmission exclusion. 

The Commission may take up new rulemaking with respect to Rule 14a-8, which could expand one or more bases for excluding shareholder proposals (or limit exceptions to those exclusions). In February, the Division of Corporation Finance issued Staff Legal Bulletin 14M, which rescinded the Gensler-era Staff Legal Bulletin 14L. Division staff thus reverted to an earlier position on the ordinary business and economic relevance grounds for exclusion.         

Key Regulatory Changes

In April and October of each year, Federal agencies, including the SEC, are required by law to publish an agenda identifying rules that the agency expects to propose or promulgate that are likely to have a “significant economic impact on a substantial number of small entities.” As of this writing, newly appointed Chair Paul Atkins has yet to release his own rulemaking agenda for the Commission. Still, the agency is already deviating from the agenda of former SEC Chair Gary Gensler, with the stated goal of promoting innovation and getting back to the basics. In particular, the SEC will abandon the following agenda items that Gensler made a priority:

Equity Market Reforms

Among the proposed rules that the SEC plans to formally withdraw is a package of proposed equity market reforms that former Chair Gensler asserted would have been the largest such reform in two decades. That package would have required brokers to develop written policies for how they plan to ensure that they make the best trade possible for customers; and would have required the creation of a system by which to auction access to certain individual buy or sell orders. 

When the agency initially introduced these proposed rules, there was pushback from industry, objecting to the ending of a practice that allows brokerage applications to offer their services free of charge.

ESG Disclosures

Former Chair Gensler argued that the proposed ESG disclosure regulations would help investors uncover whether the funds in which they were investing furthered ESG goals to the extent they promised. The Commission’s sole Republican member at the time that the proposal was issued argued that it would unnecessarily constrain fund managers’ ability to make sound investment decisions. Watch for a reversal in this area with questions being raised about ESG disclosure by the SEC, especially concerning the defensibility of metrics and whether ESG policies drive shareholder value.

Cybersecurity Risk Management

The Commission plans to withdraw several proposals that would regulate cybersecurity risk management, including by requiring that investment advisers and fund managers place their customers’ cryptocurrency assets under the management of a qualified custodian. Another proposal would regulate the use of predictive data analytics by brokerage firms and investment advisers. It remains to be seen whether the cybersecurity incident disclosure rule for issuers will be amended, repealed, or its application narrowed through rulemaking or guidance.

FCPA Enforcement

As we have been advising, the death of FCPA enforcement was greatly exaggerated.  Rather, the Department of Justice (DOJ)’s new Guidelines for Investigations and Enforcement of the Foreign Corrupt Practices Act (FCPA), issued on June 9, 2025, outlines the areas of focus for enforcement, which reflect a cross-border focus especially around China-based issuers, areas in which the Administration feels there has been unfair competition from abroad, or in which it perceives national security interests to be at stake. The SEC, which has its own FCPA unit, has previously indicated that it will follow the Justice Department’s lead regarding a pause in FCPA enforcement. Thus, it is worth paying close attention to DOJ’s new guidance for an indication as to the SEC’s likely approach to FCPA enforcement. Some key takeaways regarding enforcement priorities include:

Cartels and Transnational Criminal Organizations (TCOs)

The recent DOJ guidance provides that links to cartels and TCOs should be a primary consideration in deciding whether to pursue an FCPA investigation and enforcement action. This guidance aligns with President Trump’s Executive Order regarding the elimination of cartels and TCOs, and Attorney General Pamela J. Bondi’s memorandum directing the FCPA Unit to prioritize investigations relating to conduct facilitating cartels and TCOs. It also aligns with the enforcement priorities of DOJ’s Criminal Division by targeting companies that have any link, no matter how minor, to cartel or TCO activities. Under these enforcement priorities, US corporations with business interests in countries like Mexico—where cartels are so enmeshed in legitimate business activities that it can be difficult to uncover their involvement let alone avoid it—are at risk of unexpectedly becoming the subject of FCPA or criminal enforcement proceedings. Compounding this risk is the designation of cartels as foreign terrorist organizations, which creates a path for criminal enforcement against corporations under the U.S. Anti-Terrorism Act for providing material support to terrorism, even where the conduct at issue appears to be routine business activity. 

Economic Prosperity and National Security

In addition, the guidance identifies as an enforcement priority conduct that undermines the furtherance of economic growth and U.S. business opportunities abroad, as well as corruption occurring in sectors key to U.S. national security interests. Deep water port, minerals, and conduct that disadvantages U.S. issuers and market participants were specifically called out in the discussions surrounding FCPA enforcement.

Serious Misconduct

Finally, the DOJ guidance states that FCPA enforcement should prioritize serious misconduct and should not focus on routine business conduct or “accepted business courtesies.” The focus on egregious or intentional misconduct is consistent with the broader focus on limiting securities law enforcement at the SEC.

The guidance makes clear that these factors are not exhaustive, and that other relevant factors may be considered in determining whether to pursue an FCPA investigation or enforcement action.

For a detailed analysis of these guidelines and additional key takeaways, please see our June 11, 2025 blog entitled “The FCPA Awakens: DOJ Announces New Enforcement Guidelines.”

New Leadership 

These changes come as SEC Chair Atkins named new leaders to key divisions within the agency:

Brian Daly, who will lead the Division of Investment Management, previously represented fund managers and advisers as a partner at Akin Gump Strauss Hauer & Feld LLP and served as a partner in the investment management group of Schulte Roth & Zabel LLP. He was also a founding equity partner and the Chief Legal and Compliance Officer at Kepos Capital, a quantitative investment management firm.

Jamie Selway, the incoming leader of the Division of Trading and Markets, was most recently a partner at Sophron Advisors, where he advised clients on capital markets issues. Selway has also served as an adviser to financial technology companies. He has held senior positions at Investment Technology Group, a global institutional broker, and White Cap Trading, an institutional brokerage that he co-founded.

Kurt Hohl, the new Chief Accountant, most recently founded Corallium Advisors, following 26 years as partner at Ernst & Young. He previously served as Associate Chief Accountant in the SEC’s Division of Corporation Finance.

Erik Hotmire, who will serve as Chief External Affairs Officer and Director of the Office of Public Affairs, comes to the agency with prior SEC experience, including as the Senior Advisor and spokesman to former SEC Chairman Christopher Cox, and Senior Advisor to the SEC’s Division of Enforcement. Hotmire also served as a domestic policy spokesman for President George W. Bush. More recently, he held senior roles at corporate affairs advisory firms.

What now?

The shifts in SEC priorities and personnel signal potential changes in various areas affecting issuers, investment advisers, and other market participants. The withdrawal of various proposed rules does not itself change regulation in the short-term but rather scraps changes that were pending the issuance of a final rule. The SEC may still choose to regulate in these areas, which would require a new round of the notice-and-comment rulemaking process, but the clock is running and there are competing demands on the Commission’s time with crypto regulation, repeal of the climate rule, and Harmonization 2.0 (including a probable expansion of the accredited investor definition) likely taking up most, if not all, of the Commission’s time and attention.