Masters in Business

The New Deregulatory SEC

December 24, 2025

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  • The current SEC appears to be operating under a deregulatory, corporate-friendly stance characterized by reduced enforcement actions, partly due to significant staff departures (around 28% since early 2021). 
  • The new SEC Chairman, Paul Atkins, is known as a strong proponent of cryptocurrency, leading to a perceived focus on crypto regulation while potentially neglecting other areas, contrasting sharply with the previous chairman, Gary Gensler. 
  • There is concern that proposed deregulation, such as eliminating quarterly earnings reporting, would disproportionately harm less sophisticated investors by reducing timely access to material company information. 

Segments

SEC Enforcement Decline
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(00:02:48)
  • Key Takeaway: SEC enforcement activity, measured by case numbers and settlement sizes, is significantly reduced compared to the past, partly due to staff attrition exceeding 20%.
  • Summary: The SEC is exhibiting a deregulatory stance, with studies showing fewer enforcement cases and smaller settlements. Staff headcount has reportedly dropped by about 28% since January 20th, 2021, impacting enforcement capacity. The dismissal of several high-profile cases further signals a less active regulatory environment.
New SEC Chairman’s Philosophy
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(00:06:12)
  • Key Takeaway: New SEC Chairman Paul Atkins, a former commissioner and crypto advocate, is prioritizing the cryptocurrency sector, leading to a focus described as ‘crypto, crypto, crypto.’
  • Summary: Chairman Atkins is known for his strong support of crypto, having represented crypto firms in private practice. The commission is currently operating with only four members instead of the usual five, with no Democratic commissioner named yet. This structure means only one commissioner is actively voicing caution regarding the intense focus on crypto.
IPO Market and Regulation Trimming
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(00:08:15)
  • Key Takeaway: While some reporting requirements could be trimmed, a wholesale approach to eliminating regulation, such as proposed changes to IPO reporting, is viewed as overkill.
  • Summary: The Chairman wants to ‘jumpstart’ the IPO market, suggesting burdensome reporting keeps companies private longer. The expert believes that while minor adjustments are possible, a complete overhaul is excessive. For instance, climate change disclosures are necessary because climate risk presents a genuine risk to investors.
Quarterly Reporting Elimination
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(00:09:37)
  • Key Takeaway: Eliminating quarterly earnings reporting would be detrimental to the majority of investors, as significant business changes can occur within a three-to-six-month window.
  • Summary: Publicly traded companies solicit investor money and must provide accountability, making the proposal to eliminate quarterly reports (10-Qs) problematic. While the detailed earnings call and PowerPoint presentation might be excessive, reporting earnings every six months is considered very bad news for investors. A lot can happen in three months that investors need to know about.
Executive Compensation Trends
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(00:11:15)
  • Key Takeaway: The approval of Elon Musk’s large compensation package appears to be setting a precedent, leading to an increase in other executives receiving what seem like outsized equity awards.
  • Summary: Stock grants are common for rewarding good performance, but recent awards seem excessive, often following the Tesla precedent where shareholders overwhelmingly approved compensation. An example cited is a founder receiving nearly 10 million shares after 18 years, even when the stock was not performing well. Compensation should align with strong stock performance, not be used as an incentive when performance is lagging.
Compensation Clawbacks
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(00:14:00)
  • Key Takeaway: Executive compensation clawbacks are primarily driven by plaintiff lawyers in response to earnings restatements, rather than being a common action initiated by the SEC or the companies themselves.
  • Summary: Plaintiff lawyers actively sue companies following missed earnings forecasts to attempt clawbacks. Although most companies have clawback policies, actual compensation clawbacks are rare events. The SEC is not frequently seen initiating these actions.
Crypto Regulatory Framework
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(00:15:07)
  • Key Takeaway: The current SEC has adopted a ’laissez-faire’ approach to crypto, representing a 180-degree turn from the previous administration’s focus on regulation and scam prevention.
  • Summary: The current SEC seems almost exclusively focused on crypto regulation, contrasting sharply with Gary Gensler’s tenure. This new approach is seen as making it easier for people to enter the crypto market. This ease of access is problematic for those concerned about less sophisticated investors, like ‘someone’s grandma,’ participating in crypto.
Cybersecurity Disclosure Rules
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(00:16:29)
  • Key Takeaway: New SEC rules require companies to disclose cybersecurity incidents in a specific section of an 8K filing, though compliance remains inconsistent.
  • Summary: Rules implemented in 2022 mandate more disclosure regarding cybersecurity incidents, requiring them to be filed in a specific section of the 8K for easy location. Companies often disclose these incidents haphazardly, failing to use the required section. Determining the financial impact of a hack can take time, as initial disclosures may underestimate the eventual cost.