Securities Enforcement Forum West 2026: The Enforcement Division Recalibrates Amid Record Lows

Key Takeaways

• SEC enforcement activity has dropped to record lows, but new leadership is signaling a “quality over quantity” approach focused on investor harm, financial reporting, insider trading, and emerging risks.
• Recent Enforcement Manual updates may make the Wells process more transparent and cooperation credit more meaningful, while rescission of the “no admit, no deny” policy could reshape settlement strategy.
• AI, cybersecurity, prediction markets, and auditor oversight are likely to draw increasing attention as the Division of Enforcement recalibrates and builds out new enforcement priorities.

Leading securities enforcement practitioners, government officials, and industry experts gathered for the Securities Enforcement Forum West on May 21, 2026, in San Francisco. Notably, no SEC personnel participated, so panelists drew on enforcement trends and recent developments to predict the agency’s direction. Panelists focused on SEC activity and developments nearly one and a half years into the current administration and offered predictions on what to expect moving forward.

Enforcement State of Play

Enforcement Activity 

Panelists emphasized the significant decline in SEC enforcement activity in the first half of this fiscal year compared with last year and prior years. Several factors contributed to this decline, including the delayed appointment of former Enforcement Director Judge Margaret Ryan, her departure six months later, and reduced staffing and resources. Relatedly, parallel investigations have also decreased, though panelists expect such investigations to increase when an issue makes headlines, like those involving significant financial impact, emerging industries, insider trading, or prediction markets. In fact, the DOJ brought its first case involving prediction markets, with allegations akin to insider trading, just last month. Even so, panelists described how agency leadership is looking to bring more cases, particularly in emerging areas, which will take time as those areas develop. Moreover, panelists noted that the plaintiffs’ bar and state attorneys general have become more active, potentially filling the gap left by reduced federal enforcement.

New Leadership 

Earlier this month, Enforcement Director David Woodcock’s appointment became effective. Unsurprisingly, in his first statement as Enforcement Director, Woodcock noted that he is aligned with Chairman Paul Atkins’ back-to-basics vision and emphasized the Division of Enforcement’s (Division) shift to quality over quantity. Perhaps in an effort to justify all-time enforcement lows, panelists’ remarks were consistent with Woodcock’s statement that the Division will be focused on real harm and not “honest mistakes that cause no investor harm.” 

Despite the record low number of enforcement actions, the Division (re)established two new groups: (1) The Retail Fraud Working Group will be reinstated, focusing on retail investor protection and “strengthening coordination” with federal and state partners; and (2) a new “SOX” group that will focus on auditors will be established. Panelists expect that the new SOX group will comprise individuals with expertise and background in generally accepted accounting principles (GAAP) and generally accepted auditing standards (GAAS). However, panelists noted that auditor liability issues boil down to whether auditors fulfilled their duties. These new groups build on the Division’s recalibration efforts, which can also be seen in the termination of the Foreign Corrupt Practices Act Unit, the creation of a Cross-Border Task Force, and the replacement of the Crypto Assets and Cyber Unit with the Cyber and Emerging Technologies Unit (CETU).

Enforcement Manual and Policy Updates

In addition, earlier this year, the Division announced updates to the Enforcement Manual emphasizing transparency in the Wells process and the Division’s framework for evaluating cooperation. 

Wells process. Panelists gave an overview of the updates, which the SEC previously noted are designed to promote open dialogue between respondents and staff, with the goal of facilitating timely resolutions or recommendations. Panelists predicted that the SEC will be willing to share more of the investigative file to facilitate meaningful Wells submissions. Panelists noted that the new provision calling for the scheduling of a Wells meeting within four weeks of a Wells submission will provide additional opportunity for respondents to make a case and explain the defense theories of the case. While they remarked that they expect these changes to bring greater consistency across matters, specific aspects of each case may still likely turn on the particular staff working on the matter. 

Cooperation. Panelists also discussed the Division’s updated cooperation analysis, which is intended to provide examples of “effective” remediation, such as disciplining employees involved in misconduct, clawing back executive compensation, making prompt corrective disclosures, hiring new financial and accounting staff to address accounting and disclosure issues, retaining independent compliance consultants to advise on other remedial measures, and improving training for relevant personnel. “Exemplary” cooperation involves “educat[ing] the staff,” as one panelist explained, through measures such as sharing factual findings from internal investigations and identifying key documents and witnesses that “meaningfully advance the Commission’s investigation.” Given this, panelists discussed the importance of clearly identifying the issue for the staff, providing a defensible and credible way of quantifying the impact of the issue, and explaining remedial efforts undertaken. Panelists predicted that cooperation credit under the current administration may yield more tangible benefits for respondents, as the Commission looks to demonstrate meaningful, measurable outcomes from its cooperation program as compared to the program under the prior administration.

Also top of mind for panelists and consistent with this evolving SEC, this month, the SEC rescinded its policy colloquially referred to as the “gag rule” or “no admit, no deny rule,” which prohibited defendants and respondents from denying allegations in the complaint or order for proceedings in any civil lawsuit brought by the Commission or in any administrative proceeding of an accusatory nature pending before it. This is a sea change for enforcement action settlements, with panelists noting that the outcome could be a “mixed bag,” which could result in the staff including stronger language in its allegations or even press for stipulated facts.

Priorities

Panelists discussed current enforcement priorities, including financial reporting and accounting fraud and insider trading. Financial reporting and accounting fraud is seen as the Division’s “bread and butter” work fitting within Atkins’ call for a back-to-basics approach. Panelists noted that there will likely be a focus on non-GAAP disclosures because of their importance to investors.

Insider trading remains top of mind at the SEC and DOJ and is likely the source of parallel investigations, according to panelists. Earlier this month, the DOJ charged 30 individuals comprising corporate lawyers and financial professionals in a global insider trading scheme, and the SEC brought charges against 21 of these individuals in a parallel action. Lloyd Farnham, Chief of the Corporate and Securities Fraud Section of the U.S. Attorney's Office for the Northern District of California, emphasized that the department and its partners are adopting new technologies and AI tools, which are essential to capturing patterns of insider trading. Panelists also discussed the importance of having strong policies surrounding trading and ensuring that employees understand the policy. 

AI and Cyber 

AI

AI remains a hot topic, and the SEC and DOJ are playing catch up. Panelists expect that the SEC’s use of AI will focus on exams and enforcement. The DOJ is using it to identify crime patterns, such as price fixing and collusion. Recently, the DOJ’s Health Care Fraud Section’s Data Fusion Center used “cutting-edge” data analytics to support its Minnesota healthcare fraud takedown resulting in charges against 15 defendants. Panelists warned that AI privilege considerations are not clear and that the weakest argument for privilege is if an open model is used not at the direction of an attorney. AI references have increased in earnings disclosures, particularly with its attendant risks, such as inaccurate or biased output, regulatory uncertainty, competitor and disruption risk, reputational risks, and risks associated with cybersecurity and data privacy.

Cyber

Even with the new CETU, enforcement activity has been relatively low for cyberincidents, which could be due in part to the use of Item 1.05 of Form 8-K requiring public companies to disclose material cybersecurity incidents. Regardless, panelists emphasized the constantly evolving capabilities of threat actors, especially as advances in technology have narrowed the skills gap necessary for a cyberattack. While this focus may not yield high volumes of enforcement activity, it remains front of mind. 

Conclusion

The Forum highlighted an enforcement program in recalibration. Case volume has slowed, but new leadership, updated policies, and renewed working groups signal a sharper focus on investor harm and emerging risks.