Like with many government agencies, the Securities and Exchange Commission (SEC) made headlines when it cut 15% of its workforce in early May. Downsizing is only one aspect of sweeping changes in the SEC, a critical organization for protecting investors and ensuring a stable market.
As a regulatory body, the purpose of the SEC is to reduce fraud and enforce compliance to the benefit of investors and the market. How to best accomplish this task is often up for debate. But regardless of your political affiliation, the truth is efficient markets are a balancing act—and what is required may change based on several factors.
My goal is not to prove or suggest what works at a policy level. That is not my expertise. But as a fiduciary, I am obligated to follow policies set by the SEC. Maintaining compliance and ensuring full transparency for clients and prospects is something I am happy to do, because it helps me do my job better while protecting investors across America.
That said, there are clear shifts taking place in financial policy. I want to summarize some of these changes for you. While no one expects investors to understand these policies in detail, it can help you to create more meaningful conversations about your portfolio.
This is Paul Atkins’s second appointment as chair to the United States Securities and Exchange Commission, his first tenure being in George W. Bush’s administration from 2002-2008. This shouldn’t come as a surprise: Atkins has always been supportive of free market economics and deregulation. Furthermore, the SEC commissioner is a strong advocate for financial technology, cryptocurrency in particular, making him a clear choice for the current administration.
As with any government agency, policy decisions hinge on committees. The lean towards conservative appointments translates into acts that will mirror Atkin’s and the GOP’s platform. One example is the recent appointment of Natalia Díez Riggin, who was the Acting Director since January 2025, as the Senior Advisor and Director of Legislative and Intergovernmental Affairs, or Senate Banking Committee Chairman Tim Scott. Both have advocated for policies that extend access to capital while deregulating the markets.
To get a better idea of what to expect, let’s take a look at some of the changes already in place.
We are in the early days of this new administration, but a series of executive orders and expected policies can give us insight into the major departures from former approaches.
In February, the President passed the Ensuring Accountability for All Agencies Executive Order, which levies heavy reporting requirements on government agencies. This will slow down rulemaking and enforcement, especially when combined with staff cuts.
What does this look like, in practice? One example of this is the requirement that agencies submit for review all proposed and final significant regulatory actions to the Office of Information and Regulatory Affairs, which intensifies the review process.
Scrutiny is vital to reduce fraud and ensure compliance. But reporting requirements should also be proportionate to capacity and security. The government should be completely transparent, but if extensive reporting hinders the agency from regulating private brokers and advisors, this can create problems. This is, of course, not a definite outcome, but a consideration for any reporting update.
One of Atkins’ key tenants has always centered on investigating investor harm. This can include fraud and repayment, as well as compliance, valuation, and disclosures. In particular, he is interested in assessing penalties against public companies caught in fraud cases to ensure fair redress to shareholders.
This is incredibly important, and aligned with the mission of the SEC. It will be interesting to see how the anti-fraud strategy is addressed. For successful enforcement, the agency will need both a full and competent workforce, alongside modernized technology. With staffing cuts, I am curious to know the process for identifying and addressing investor harm in a timely manner.
Since deregulation is core to Atkin’s work, it’s likely we’ll see a reduction in required disclosures for public companies, as well as decreased reporting obligations.
It will be interesting to see how movements to stay climate disclosures will affect Atkin’s push to protect investors. Disclosures are key to helping investors make informed decisions about financial products, and climate impact is a key concern among investors. A recent study from the MSCI Sustainability Institute found that over 90% of institutional investors feel that climate will affect investment performance over the next five years. .
Already, we have seen a 15% cut in SEC Staff as a part of the President’s early restructuring initiatives. It’s likely that these workers will not be replaced. With the administration’s emphasis on downsizing, it’s possible that we’ll see additional layoffs in the future — although that is speculation and has not been announced.
Either way, we are looking at a slimmer SEC staff, which will put strain on the remaining workforce to enforce policies. Modernizing technology might reduce some of the labor, but that may also require re-skilling and training.
As a long-time advocate for cryptocurrencies and digital assets, Atkins has already streamlined meetings to evaluate the current state of affairs. The SEC has already held multiple meetings since April on whether crypto should be traded as a security, trading cryptocurrencies, and the chain of custody.
We do need additional regulations on cryptocurrencies, if only to reduce fraud and protect investors. Over the past decade, many individuals have turned to cryptocurrencies as an alternative investment, but it remains a high risk asset.
It’s impossible to tell the future, but it is easy to identify main concerns. It often seems like initiatives are opposed. Increased investor protections is challenging to achieve while reducing the workforce tasked with enforcing those protections. Adding support and regulation on cryptocurrency is critical to expand those protections but, again, this requires people to develop the policies and enforce them. It is also possible that deregulation and lax disclosure rules for private companies will conflict with investor protection priorities.
It is, frankly, too early to tell how these changes will impact the market. But it is important to be aware of these shifts as we make investment decisions going forward.
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