SEC Expected to Focus on Fraud Enforcement Fundamentals in 2025

Securities Enforcement Defense Team Chair Jessica Magee spoke with Bloomberg Law about the U.S. Securities and Exchange Commission's (SEC) enforcement priorities for 2025. Ms. Magee predicted the SEC will focus more on individual wrongdoing and fraud instead of corporate misconduct, turning away from expansive penalties or novel enforcement tools used under the outgoing Biden Administration as it pivots to new leadership under the incoming Trump Administration. In addition to shifting its overall enforcement plan, she said, the SEC will likely adjust its approach to off-channel, or personal device, communications. She explained that Republican Commissioners Hester Peirce and Mark Uyeda have expressed concerns about the effectiveness of these cases, given such communications are so common, and that enforcement in this area will likely slow.

On the other hand, she commented, the SEC will maintain its focus on artificial intelligence (AI), specifically AI-washing, in which a company allegedly makes false or misleading statements about its use of AI. These cases have used "standard fare disclosure theories," and the goal of protecting investors will continue to prompt enforcement efforts.

"It will be interesting to see how much the SEC invests in hiring subject matter experts throughout the agency" to adapt to technological progress and the implementation of AI "in our daily lives," she said.

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