List of major SEC enforcement actions (2009–12) The SEC's Enforcement Division took a number of major actions in 2009–12.
Regulatory action in the credit crunch The SEC announced on September 17, 2008, strict new rules to prohibit all forms of "
naked short selling" as a measure to reduce volatility in turbulent markets. The SEC investigated cases involving individuals attempting to manipulate the market by passing false rumors about certain financial institutions. The commission has also investigated trading irregularities and abusive
short-selling practices.
Hedge fund managers, broker-dealers, and institutional investors were also asked to disclose under oath certain information pertaining to their positions in
credit default swaps. The commission also negotiated the largest settlements in the history of the SEC (approximately $51 billion in all) on behalf of investors who purchased
auction rate securities from six different financial institutions.
Regulatory failures The SEC has been criticized "for being too 'tentative and fearful' in confronting wrongdoing on
Wall Street", and for doing "an especially poor job of holding executives accountable".
Christopher Cox, the former SEC chairman, has recognized the organization's multiple failures in relation to the
Bernard Madoff fraud. Starting with an investigation in 1992 into a Madoff
feeder fund that only invested with Madoff, and which, according to the SEC, promised "curiously steady" returns, the SEC did not investigate indications that something was amiss in Madoff's investment firm. The SEC has been accused of missing numerous red flags and ignoring tips on Madoff's alleged fraud. As a result, Cox said that an investigation would ensue into "all staff contact and relationships with the Madoff family and firm, and their impact, if any, on decisions by staff regarding the firm". SEC assistant director of the Office of Compliance Investigations
Eric Swanson had met Madoff's niece,
Shana Madoff, when Swanson was conducting an SEC examination of whether Bernard Madoff was running a
Ponzi scheme because she was the firm's compliance attorney. The investigation was closed, and Swanson subsequently left the SEC, and married Shana Madoff. Approximately 45 percent of institutional investors thought that better oversight by the SEC could have prevented the Madoff fraud.
Harry Markopolos complained to the SEC's Boston office in 2000, telling the SEC staff they should investigate Madoff because it was impossible to legally make the profits Madoff claimed using the investment strategies that he said he used. In June 2010, the SEC settled a
wrongful termination lawsuit with former SEC enforcement lawyer
Gary J. Aguirre, who was terminated in September 2005 following his attempt to subpoena Wall Street figure
John J. Mack in an insider trading case involving hedge fund
Pequot Capital Management;
Mary Jo White, who later served as chair of the SEC, was at the time representing Morgan Stanley and was involved in this case. While the insider case was dropped at the time, a month prior to the SEC's settlement with Aguirre the SEC filed charges against Pequot. On September 26, 2016, Democratic senator
Mark Warner sent a letter to the SEC, asking them to evaluate whether the current disclosure regime was adequate, citing the low number of companies' disclosures to date.
Inspector General office failures In 2009, the
Project on Government Oversight, a government watchdog group, sent a letter to Congress criticizing the SEC for failing to implement more than half of the recommendations made to it by its
Inspector General. According to POGO, in the prior two years, the SEC had taken no action on 27 out of 52 recommended reforms suggested in Inspector General reports, and still had a "pending" status on 197 of the 312 recommendations made in audit reports. Some of the recommendations included imposing disciplinary action on SEC employees who receive improper gifts or other favors from financial companies, and investigating and reporting the causes of the failures to detect the Madoff ponzi scheme. In a 2011 article by
Matt Taibbi in
Rolling Stone, former SEC employees were interviewed and commented negatively on the SEC's
Office of the Inspector General (OIG). Going to the OIG was "well-known to be a career-killer". Because of concerns raised by
David P. Weber, former SEC chief investigator, regarding conduct by SEC inspector general
H. David Kotz, Inspector General
David C. Williams of the
U.S. Postal Service was brought in to conduct an independent, outside review of Kotz's alleged improper conduct in 2012. Williams concluded in his 66-page Report that Kotz violated ethics rules by overseeing probes that involved people with whom he had
conflicts of interest due to "personal relationships". It concluded that while it was unclear when Kotz and Markopolos became friends, it would have violated U.S. ethics rules if their relationship began before or during Kotz's Madoff investigation.
SEC and cryptocurrency On June 5, 2023, the SEC filed 13 charges against
Binance entities and its founder
Changpeng Zhao, citing allegations of mishandling customer funds and operating without proper registration. The following day, the SEC charged
Coinbase for operating as an unregistered securities exchange, broker, and clearing agency, further signaling its intensified scrutiny of major players in the industry. A key point of contention between the SEC and the crypto industry lies in defining what constitutes a security. The SEC applies the
Howey Test, derived from a 1946 U.S. Supreme Court decision, which defines a security as "an investment of money in a common enterprise with profits to come solely from the efforts of others." The agency has classified many crypto assets as securities based on this test, asserting that their value often depends on the efforts of developers or other central parties behind blockchain projects. Critics argue that the test is outdated and ill-suited to the decentralized nature of cryptocurrencies, leaving regulatory definitions unclear and fostering uncertainty. Research by economists found that unpredictable SEC enforcement actions under
Gensler, classifying
cryptocurrencies as securities without clear guidelines, caused prolonged destabilization in crypto markets. Unclear guidelines raise doubts about the agency's ability to maintain fair and orderly markets. In December 2025, the Securities and Exchange Commission provided the
Depository Trust & Clearing Corporation (DTCC) with a no-action letter that allows the organization to hold and record tokenized equities and other real-world assets on blockchain networks. The authorization enables DTCC to deliver tokenization-related services on approved blockchains for a period of three years.
SEC and Cybersecurity Risk On July 26, 2023, the SEC adopted the Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure rule to encourage public companies to more transparently and effectively manage and disclose cybersecurity risk. However, according to a
CIO analysis of a proposed AI disclosure rule and its connection to the earlier cybersecurity disclosure regime, some experts argue that the cybersecurity rule’s broad, materiality-based thresholds and reliance on company-defined terms create challenges for consistent reporting, as many disclosures have resorted to boilerplate language and offered limited investor insight.
Climate disclosure rule In 2024, the SEC decided on a climate disclosure rule, The Enhancement and Standardization of Climate-Related Disclosures for Investors. It requires companies to disclose information on their risk to be impacted by
climate change and a company's risks to profit by a growing number of climate change regulations, concerning direct and indirect
greenhouse gas emissions produced.
Consolidated Audit Trail The Consolidated Audit Trail, or CAT, is an SEC-mandated reporting system that collects data regarding trading in the U.S. equities and options markets. The SEC first proposed CAT in 2010 when the limitations of pre-CAT reporting facilities were highlighted by the Flash Crash.2 The final CAT rule was adopted by the SEC in 2012, a more detailed plan for CAT was approved by the SEC in 2016, and reporting into CAT was implemented in phases from 2018 to 2024. On July 11, 2012, the U.S. Securities and Exchange Commission (SEC) voted to adopt Rule 613 under Regulation NMS requiring the national securities exchanges and national securities associations listed below (collectively, the SROs) to submit an NMS plan (Plan) to the SEC to create, implement, and maintain a consolidated audit trail (CAT). CAT participants and Consolidated Audit Trail, LLC operating committee members: BOX Exchange LLC, Investors’ Exchange, Nasdaq ISE, Cboe Exchange, LTSE, Nasdaq MRX, Cboe BYX Exchange, MEMX, Nasdaq PHLX, Cboe BZX Exchange, Miami International Securities Exchange, New York Stock Exchange, Cboe C2 Exchange, MIAX Emerald, NYSE Arca, Cboe EDGA Exchange, MIAX PEARL, NYSE American, Cboe EDGX Exchange, MIAX Sapphire, NYSE Texas, FINRA, The Nasdaq Stock Market, NYSE National, Nasdaq Texas, 24X National Exchange, Nasdaq GEMX. In creating a Consolidated Audit Trail (CAT) pursuant to SEC Rule 613, the SROs have developed the following Guiding Principles: The CAT must meet the specific requirements of Rule 613 and achieve the primary goal of creating a single, comprehensive audit trail to enhance regulators’ ability to surveil the U.S. markets in an effective and efficient way. The reporting requirements and technology infrastructure developed must be adaptable to changing market structures and reflective of trading practices, as well as scalable to increasing market volumes. The costs of developing, implementing, and operating the CAT should be minimized to the extent possible. To this end, existing reporting structures and technology interfaces will be utilized where practicable. Industry input is a critical component in the creation of the CAT. The SROs will consider industry feedback before decisions are made with respect to reporting requirements and cost allocation models. How is the Consolidated Audit Trail, LLC managed? The CAT NMS Plan provides that the Consolidated Audit Trail, LLC will be managed by its Operating Committee. Each Participant appoints one member of the Operating Committee and each Participant appointee has one vote. The CAT NMS Plan sets forth certain provisions relating to the Operating Committee, including identification of those actions requiring a Majority Vote, a Supermajority Vote or a unanimous vote, and the management of conflicts of interest. CAT represents a huge privacy risk to all clients of American broker dealer firms. https://www.finra.org/media-center/blog/cat-should-be-modified-to-cease-collecting-personal-information-on-retail-investors https://www.americansecurities.org/post/asa-urges-secretary-bessent-to-end-cat-s-use-of-american-investor-personal-information-in-wake-of-an == Whistleblower program ==