SEC muni enforcement down sharply in 2025
3 min read
Bloomberg News
Municipal securities enforcement actions by the Securities and Exchange Commission have totaled just three so far this year, putting 2025 on track to record a noteworthy decline from the enforcement level pace it has maintained going back to at least 2019.
In addition, all three of those 2025 actions came in the first half of the year. By contrast, 2024 saw at least a dozen muni-related enforcement actions brought by the regulator at intervals spread more evenly throughout that calendar year, a
So, what might the slowdown portend for SEC muni enforcement cases in 2026? Kathleen Marcus, a partner at Stradling Yocca Carlson & Rauth, said while muni cases haven’t been “a primary focus of commentary” in the way that other areas such as cryptocurrency have received attention, it’s likely that “SEC staff will continue to select their municipal enforcement actions carefully.”
Given that SEC Chairman Paul Atkins has indicated his strong distaste for regulation by enforcement, “it is likely that the staff will opt to bring cases with clear hallmarks of fraud in the municipal space, as they are doing across industry sectors,” said Marcus, a former attorney with the SEC’s Division of Enforcement.
Ed Fierro, a partner at Bracewell who previously served as senior counsel to the director of the SEC’s Office of Municipal Securities, said based on 2025 muni enforcement actions, “it appears that fraud, as well as unregistered municipal advisory activity, will likely continue to be a priority in 2026.”
The decline in municipal enforcement actions seen this year “is consistent with an overall significant decrease in SEC enforcement actions since 2023,” added Eric Pruitt, a partner at Quarles & Brady.
“A primary driver of this decline in enforcement activity is the significant increase in employee attrition at SEC beginning in 2024, including significant numbers of terminations of probationary employees as well as early retirements and resignations of experienced attorneys and staff,” said Pruitt, a former assistant U.S. attorney.
Indeed, while the municipal space has seen a drop in SEC enforcement actions this year versus last, it’s far from alone. According to a recent
Not only were the SEC’s 506 FY25 enforcement actions well below the average of 716 for the FY18 through FY25 period, the data also revealed “a stark contrast between the first and second halves of FY25, roughly coinciding with the change in SEC leadership,” according to the Oct. 28 report, authored by Adrienna Huffman, a senior associate at Brattle, and Jan Jindra, a principal there.
Atkins was sworn in as the SEC’s 34th chairman on April 21. Gary Gensler, the agency’s 33rd chair served from April 17, 2021, through Jan. 20 2024. On Jan. 21, the SEC announced that President Donald Trump had designated Mark Uyeda to serve as the agency’s acting chairman.
“Compared with the first half of FY25, the latter period saw an unprecedented decline in enforcement activity,” according to the report, which looked at annual SEC enforcement activity over the eight-year period from FY18 through FY25. “While the swearing-in of a new chair is typically followed by a temporary slowdown in enforcement activity, the decline in FY25 was well outside the historical norms.”
At just 144, the second half of FY25 had “the fewest enforcement actions of any fiscal semi-annual period analyzed,” the report said.
