LITIGATION TRENDS 2025 | 139 T O C E M P E S G A N T I I P C A P R O W C S P O R T C O N T A C T I N T A P P P A T C C L S E C dollar-backed stablecoins, protecting and promoting crypto companies’ access to banking services, opening access to blockchain networks, and providing regulatory clarity while accounting for emerging technologies. With respect to enforcement, specifically, on January 21, 2025, SEC Acting Chairman Mark Uyeda introduced a new crypto task force focused on developing a “comprehensive and clear regulatory framework for crypto assets.” In the SEC’s press release—which began with the term “SEC Crypto 2.0” —the SEC acknowledged that it had previously “relied primarily on enforcement actions to regulate crypto retroactively and reactively, often adopting novel and untested legal interpretations along the way.” The SEC acknowledged the resulting “confusion about what is legal” and stated, “[t]he SEC can do better.” The SEC made clear that the Task Force’s focus will be to help the Commission draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously. Subsequently, the SEC dismissed several enforcement actions filed by the prior Commission in this space. Cybersecurity We expect the Commission to adopt a less aggressive stance against issuers with respect to investigating the adequacy of issuer disclosures (and issuers’ internal accounting and disclosure controls) following a cybersecurity incident. The Gensler Commission actively pursued such investigations, with the most high-profile enforcement action being the October 2023 action against SolarWinds charging the company and its CISO (chief information security officer) with several violations of the securities laws. While the action was largely dismissed in July 2024, a securities fraud claim as to both parties survived and is currently being litigated. (Because it was filed as a litigated action, the votes cast by the Commissioners in authorizing it are not publicly disclosed.) In October 2024, the SEC brought settled charges against four current and former public companies, all customers of SolarWinds, alleging that the companies had downplayed the extent of the impact suffered as a result of the SolarWinds’ software compromise. These actions, which were approved 3-2, drew a rebuke from Commissioners Peirce and Uyeda, who issued a lengthy dissent arguing that the common theme across the four actions was “the Commission playing Monday morning quarterback” and that the Commission “needs to start treating companies subject to cyberattacks as victims of a crime, rather than perpetrators of one.” We expect this to be the majority view in the Atkins Commission. SEC Registrants Many SEC registrants such as brokerdealers and investment advisers are subsidiaries of large financial institutions, which may also be issuers. While we see the Atkins Commission being active in enforcing violations of the anti-fraud provisions of the federal securities laws that harm retail investors, we also see it adopting a less forceful stance with respect to certain non-fraud violations by SEC registrants. That said, the statute of limitations for securities law violations is five years, which means that misconduct occurring currently will be subject to investigation by the next administration. On balance, our view is that the registrant community should continue to focus on proactive compliance and promptly consult with counsel if there are any indications of wrongdoing. SEC’s Marketing Rule Cases We expect to continue seeing the SEC pursue violations of the Marketing Rule, which was adopted during the first Trump administration, and which applies to registered investment advisers. The Gensler Commission conducted multiple sweeps that led to charges against advisers for violating the Marketing Rule by, for example, including hypothetical performance in their advertisements without C White Collar Defense 138 | Weil, Gotshal & Manges LLP
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