What the SEC’s Enforcement Reset Means for the Boardroom

The SEC’s revised priorities highlight areas that directors are well positioned to oversee through audit, risk management and corporate policy functions.

In the first half of 2026, the SEC continued recalibrating its enforcement priorities as part of a broader trend that began taking shape in 2024. The SEC’s enforcement priorities appear focused on fewer, more targeted enforcement actions that deal with protection against fraud and manipulation of markets, rather than compliance-based initiatives. Those trends may be amplified in the latter half of 2026 and beyond, as signaled by the SEC’s announcement of a new task force dedicated to pursuing financial reporting fraud.

A Shift from Volume to Focus

The SEC brought 456 enforcement actions in 2025, a 22 percent decline year over year, and closed nearly 1,100 matters without taking action. Notably, the majority of monetary relief from completed 2025 enforcement actions stemmed from a single enforcement action. Setting aside that action, disgorgement and civil penalties fell about a third from the prior year. The first half of 2026 has seen even fewer enforcement actions as compared to the same period for 2025, though the number of enforcement actions has been on the rise throughout the year.

The SEC has been candid about its enforcement strategy. Chairman Paul Atkins acknowledged that the agency intends to “put a stop to regulation by enforcement” and refocus on matters involving meaningful investor protection and the strengthening of market integrity, such as insider trading, fraud, market manipulation and other abuses of trust. To be clear, the SEC’s policy should not be mistaken for a diminishing appetite for enforcement but instead a refocusing of actions.

Financial and Accounting Targets

In August 2026, the SEC announced the creation of a new, specialized task force within the Division of Enforcement called the Financial Reporting and Accounting Unit. The new task force consists of a dedicated team of attorneys and accountants specialized in analyzing financial reporting, accounting and auditing in securities regulation. The task force is designed to provide expertise, focus and capacity to pursue accounting and financial reporting fraud cases as well as general misconduct in the accounting and auditing areas, and is led by an attorney with prior experience with an international law firm as well as at an international accounting and professional services firm.

Recent Examples of Enforcement Priorities

Several recent enforcement settlements highlight the SEC’s new enforcement priorities. Earlier this year, a large agricultural, supply chain and food processing company agreed to a $40 million penalty over allegations that, when a company segment was at risk of falling short of its operating-profit forecast, executives directed employees to identify adjustments that would move profit out of other segments and into the affected segment. Mechanisms such as retroactive rebates and pricing terms not available to third parties were alleged by the SEC to have rendered the company’s intersegment transaction disclosures false.

In another settled action announced in April 2026, the SEC again focused on financial reporting and internal controls lapses at companies. In that case, employees at a company plant recorded fictitious work-in-process entries in a given period only to reverse the entries after period end. The scheme had the effect of inflating reported income for that period. A company officer was alleged to have directed part of the scheme. Despite the receipt of an internal complaint concerning this misconduct on the morning of the company’s scheduled earnings release, and over the advice of the company’s auditor, the company pressed ahead with releasing earnings as scheduled. The SEC’s settlement found that the company’s materiality analysis of the misconduct was inadequate in light of the circumstances and settled charges against the company and its officer.

Although still relatively nascent, the SEC has also pursued enforcement action for several cryptocurrency matters. Notably, however, the SEC has framed the allegations in conventional anti-fraud terms, rather than attempting to create novel arguments to capture the cryptocurrency endeavors themselves.

The SEC’s enforcement division has also flexed its muscles in several recent enforcement actions based on allegations of insider trading. In one recent case, the SEC charged 21 individuals in a global insider-trading ring involving misappropriation of material nonpublic information by an attorney regarding transactions involving his firm’s clients. In that case, the SEC targeted numerous parties in the scheme as the information was tipped through several levels of contacts and kickback payments were provided in return. In a number of other similar actions, the SEC has charged and/or settled insider-trading allegations against individuals for conduct that follows a similar pattern where an individual violates his or her position of trust or confidence and trades or tips information to others in expectation of a financial benefit. These cases — and this conduct — are increasingly easy for regulators to spot using advanced analytics that can uncover suspicious activity and identify multiparty trading schemes.

Responding to the SEC’s New Priorities

Taken together, the Financial Reporting and Accounting Unit and the Division’s recent enforcement activity emphasize the SEC’s return of financial reporting, internal controls, insider trading and fraud to the heart of the agency’s enforcement program. These areas of focus are also not new; the SEC has always targeted baseline fraud and corporate accounting and auditing malfeasance, but the refocusing of priorities provides a helpful opportunity for corporate maintenance. Companies and their boards should be mindful of the current state of their financial controls and procedures, corporate conduct policies and communications with auditors.

The SEC’s revised priorities also, in many ways, highlight areas that directors are well positioned to oversee through the audit, risk management and corporate policy functions.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.