Despite significant changes at the Securities and Exchange Commission under Chairman Paul Atkins, securities fraud enforcement remains a priority—particularly insider trading and schemes targeting retail investors. According to recent enforcement roundups, the SEC continues bringing cases involving pharmaceutical company insiders, market manipulation, and crypto fraud targeting everyday investors.
For anyone working with material non-public information or in industries where such information flows freely, understanding the current enforcement landscape is essential to avoiding criminal exposure.
Current Enforcement Priorities
The SEC’s enforcement priorities have shifted under new leadership, but insider trading remains firmly in the crosshairs. Recent cases demonstrate continued focus on:
Life Sciences and Pharmaceutical Insider Trading: The SEC charged a consultant and his firm with insider trading after he traded on confidential clinical trial results obtained while performing consulting services. The trades generated over $489,000 in gains. Notably, the U.S. Attorney’s Office also announced criminal charges—meaning the consultant faces both civil penalties and potential imprisonment.
Prediction Market Manipulation: U.S. Attorney Jay Clayton has made clear that prediction markets are not beyond the reach of fraud statutes. When betting markets involve corporate events like earnings or M&A outcomes, trading on inside information can implicate the full suite of federal securities fraud statutes. Enforcement risks in prediction markets are growing rapidly.
Pump-and-Dump Schemes: The SEC has suspended trading in over a dozen companies since September, more than the prior three years combined, targeting apparent pump-and-dump schemes often involving foreign issuers. A new Cross-Border Task Force focuses specifically on these schemes.
The Criminal-Civil Parallel Track
What makes securities fraud particularly dangerous is the parallel track enforcement model. The SEC brings civil enforcement actions seeking disgorgement, civil penalties, and industry bars. Simultaneously, the DOJ can bring criminal charges for the same conduct.
Civil cases have a lower burden of proof (preponderance of the evidence) compared to criminal cases (beyond a reasonable doubt). The SEC often moves first, and evidence developed in civil proceedings can support later criminal charges. Worse, statements made in SEC testimony can be used against defendants in criminal proceedings.
The Supreme Court will decide a significant case this term on the SEC’s disgorgement authority, which could reshape the enforcement landscape. But regardless of the outcome, criminal prosecution remains fully available for securities fraud.
Insider Trading: The Basics That Trip People Up
Insider trading law is deceptively complex. Many people understand that trading on “inside information” is illegal, but the details matter enormously:
Who is an insider? Not just corporate officers and directors. Anyone with access to material non-public information who owes a duty of trust and confidence—including consultants, accountants, lawyers, printers, and even family members who receive tips—can face insider trading charges.
What is material? Information is material if there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision. Clinical trial results, merger negotiations, earnings surprises, and regulatory decisions all qualify.
The tipper-tippee chain: If you receive inside information from someone who breached a duty by disclosing it, and you know (or should know) that the disclosure was improper, trading on that information is illegal. The chain can extend through multiple people.
Defending Securities Fraud Cases
Securities fraud cases require sophisticated defense strategies. The government must prove that the defendant knew the information was material and non-public, that there was a duty breached, and that the trades were made on the basis of that information.
Experienced white collar defense counsel can challenge each element, examine whether information was truly non-public, question the materiality analysis, and explore whether any duty existed or was breached. Technical defenses involving trading algorithms, pre-arranged trading plans (10b5-1 plans), and timing can also be decisive.
What to Do If You’re Under Investigation
If you receive a Wells Notice from the SEC, a target letter from the DOJ, or learn that you are a subject of a securities investigation, contact an experienced federal criminal defense attorney immediately. Do not assume that civil exposure is your only concern—criminal charges can follow.
At The Chetson Firm, Damon Chetson has defended clients in complex federal white collar matters throughout North Carolina. As a Board Certified Specialist in Federal Criminal Law, he brings the knowledge and trial experience necessary to navigate securities investigations and build effective defenses.