SEC litigation spike

Lawsuits against the Securities and Exchange Commission have surged just as the agency’s own enforcement docket has shrunk to its lowest level in decades. (corpgov.law.harvard.edu) The SEC said on April 7 that it filed 456 enforcement actions in fiscal 2025, down from 583 in fiscal 2024. The 2025 total included 303 stand-alone cases and 69 follow-on administrative proceedings. (sec.gov) Brattle Group researchers said the slowdown continued into the first half of fiscal 2026, with 92 new enforcement actions filed from Oct. 1, 2025 through March 31, 2026. Risk.net and other legal analysts have described the recent pace as a 20-year low. (brattle.com, law.com) The litigation wave is aimed less at one-off fraud cases than at how the SEC writes and applies rules. Amanda Rose of Vanderbilt Law School wrote this week that empirical research shows litigation against the agency rose in the 2010s and then “skyrocketed” in the 2020s. (corpgov.law.harvard.edu) One driver is the courts. In SEC v. Jarkesy on June 27, 2024, the Supreme Court said defendants are entitled to a jury trial when the SEC seeks civil penalties for securities fraud, cutting back the agency’s ability to pursue those cases in-house before its own administrative law judges. (supremecourt.gov) Another driver is the SEC’s own rulemaking agenda colliding with business groups, states, and trading firms. A federal judge in Texas vacated the SEC’s dealer rule on Nov. 21, 2024, and the agency’s 2024 climate-disclosure rules have been on hold while the Eighth Circuit waits for the SEC to say whether it will amend or scrap them. (natlawreview.com, news.bloomberglaw.com) The current SEC leadership has embraced that contrast. In its fiscal 2025 results, the agency said prior years put too much weight on “media headlines and run up numbers,” and said the current commission is refocusing on fraud, market manipulation, insider trading, and other cases involving direct investor harm. (sec.gov) That leaves firms operating in a market where the rules are more likely to be challenged and less likely to be settled quickly. Rose wrote that broad statutory language, combined with SEC guidance, safe harbors, no-action letters, and exemptive relief, has long let the agency shape market behavior without constant court fights; that balance has now shifted. (corpgov.law.harvard.edu) For companies with strong legal and compliance teams, that shift can make litigation or slower-roll compliance a more realistic option than it was a few years ago. For the SEC, the result is a smaller case count, more courtroom tests of its authority, and a thicker layer of uncertainty around rules that used to be absorbed as a cost of doing business. (corpgov.law.harvard.edu, sec.gov)