At a Washington conference, Securities and Exchange Commission (SEC) Commissioner Hester Peirce said that under Chair Paul Atkins, the commission will likely emphasize capital formation more than during the previous administration when Gary Gensler headed up the agency. Gensler put a heavy focus on investor protection in formulating rule changes.
“So that means spending time thinking about how smaller companies can get access to capital,” Peirce said during a fireside chat at the Accountants’ Liability 2025 hosted by the America Law Institute Continuing Legal Education on June 2. “There’s some changes that we can make on that side.”
The regulator will also take a look at why companies are reluctant to go public or delay going public, which Peirce believes is bad for retail investors who primarily access markets through public venues.
The commissioner emphasized that it is still early days for Atkins, who was sworn in on April 21, is in the process of hiring staffers and naming division heads, and is setting his agenda priorities.
Nonetheless, she expects significant changes at the agency, including its approach to enforcement.
“I think you will see an emphasis on issues where there is quantifiable retail investor harm,” she said.
Enforcement Stays Relatively Consistent
She hastened to add that, in general, cases the SEC brings stay relatively consistent over time.
“Enforcement doesn’t change that much over administrations,” Peirce said. “So I think we’ve already been bringing a lot of the kinds of cases that you’ll continue to see.”
Enforcement actions are determined by market activities.
“Enforcement obviously follows where the bad activity is,” she said.
An enforcement official, who also spoke at the conference but during a different session, emphasized that the division is open even during transitions. The Trump administration has been streamlining the federal government, and the SEC was also affected with about a 15% reduction in headcount.
Pei Y. Chung, an associate director in the enforcement division, said that while the number of staff members is down, “we absolutely continue our enforcement efforts, including rooting out fraud and protecting investors.”
“I will say that the enforcement division is still open, and despite the challenges we remain on the beat,” Chung said.
SEC Expects Auditors to Do Their Job But Will Not Second Guess
Regarding auditors, Peirce said, “you have a job to do, and we expect you to do that job…and so I think that certainly won’t change.”
However, she said that the current SEC might change how it enforces the rules a little bit.
“Recognizing the value of the role of the auditor requires understanding that auditors bring judgment to the job. We don’t want auditors to turn into robotic check-the-list people because that would completely undermine their value to the system,” Peirce said. “And so whatever approach we take on enforcement will recognize that, I think, and will not seek to second guess the judgment that auditors exercise.”
But “if an auditor is not doing her job, or if she is subverting the audit, then that’s an area where I think you could continue to see cases being brought,” she added.
And the SEC is likely to reduce from the prior emphasis on private fund issues, Peirce said.
“Private fund investors are represented by sophisticated people, whereas retail investors, interacting with financial professionals, don’t have that level of protection,” she said. “To the extent that there are conflicts that are not being disclosed and …those kinds of issues I think are going to be ones that matter. Obviously, if there’s a retail money stolen, that’s going to be a big issue. So I think it is probably not wise to expect just dramatic changes in the types of cases, as much as just looking where there’s real investor harm.”
Enforcement Versus Exam
The SEC has a complicated set of rule books, and some violations do not clearly harm investors. In such cases, she said that the agency could think about a remedy through examinations rather than enforcement.
“I think that’s something that a lot of attention will be paid to: What tools should we be using? Should we be doing this through exams? Or should we be doing it through enforcement?” Peirce explained.
For example, Genlser’s SEC went after investment firms for off-channel communications.
“That got a lot of attention and generated huge penalties across the entire industry that we regulate,” Peirce said.
She believes it makes more sense to handle it through a regulatory approach that first looks at the agency’s record-keeping rules.
“Let’s figure out how they need to be updated for the modern era that we work in,” she said. “We know that a lot changed with COVID when everyone went home, and a lot more was being done through electronic communications that might previously have been done by people talking to each other. So, what can we do to figure that out? because we want to have long-term, durable solutions instead of just the hit of enforcement action after enforcement action.”
Cost-Benefit Analysis
In rulemaking, Peirce believes that the SEC will emphasize cost-benefit analysis more.
When she was a counsel to then Commissioner Atkins, there was a greater effort to identify problems before attempting to solve them, which she believes is fundamental but has been somewhat overlooked in recent years. The SEC will better assess market failures and determine solutions accordingly.
She also mentioned a “pretty dramatic change” regarding crypto assets, with Atkins emphasizing clear regulatory guidelines.
Even before Atkins was confirmed by the Senate, the SEC staff issued statements on certain crypto assets, such as meme coins and stablecoins.
“I think that we’ll try to get some rules in place and then enforce them,” Peirce said.
Gensler was criticized for regulating cryptos through enforcement.
This article originally appeared in the June 4, 2025, edition of Accounting & Compliance Alert, available on Checkpoint.
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