- SEC Disgorgement: A Growing Circuit Split Raises Stakes for Enforcement and Strategy
- Draft Bill Would Put Crypto Primarily Under CFTC Oversight
- SEC and FBI Probes Highlight Federal Approach to Investor Fraud Cases
- What Public Companies Should Know as SEC Accounting and Auditing Enforcement Actions Witness Significant Drop
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The Regulatory & Enforcement Focus newsletter identifies and articulates practical takeaways on the regulatory and enforcement landscape, including those related to SEC compliance, DOJ and other white collar government investigations, and whistleblower risks. We will provide regular analysis on the latest trends and issues impacting businesses and other organizations.
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SEC Disgorgement: A Growing Circuit Split Raises Stakes for Enforcement and Strategy
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The split among federal circuit courts on when the Securities and Exchange Commission (SEC) can obtain disgorgement as a remedy in civil enforcement cases has prompted a man recently convicted of engaging in a "pump and dump" scheme to file a petition for review with the U.S. Supreme Court. After being found liable of engaging in a fraudulent penny stock scheme, Ongkaruck Sripetch was ordered to pay $2.25 million to the SEC in disgorgement of ill-gotten gains. The Ninth Circuit ultimately denied Sripetch’s challenge to the disgorgement order, but it acknowledged contradictory holdings by other federal circuit courts. Disgorgement is a legal remedy that requires companies or an individual to pay back profits that were obtained illegally or unethically.
The Second Circuit held in SEC v. Govil that disgorgement under the Securities Exchange Act of 1934 must be "awarded for victims," which, in the SEC’s view, requires a finding of pecuniary harm before a court may order disgorgement; where no such harm is shown, disgorgement is improper. In contrast, the First Circuit concluded in SEC v. Navellier that a showing of pecuniary harm is not required because disgorgement is a remedy aimed at depriving wrongdoers of net unlawful gains, not merely compensating investors for measured losses. In its recent decision in SEC v. Sripetch the Ninth Circuit expressly aligned with the First Circuit, rejecting the Second Circuit’s approach in Govil, and holding that neither section of the Securities and Exchange Act cited in the other two cases imposes a pecuniary-harm prerequisite to disgorgement.
This split carries immediate practical implications. The SEC litigates a substantial share of its contested enforcement actions in the Second and Ninth Circuits, which now apply opposing standards. Unless and until the Supreme Court intervenes, forum-dependent outcomes are likely to persist, encouraging the SEC to steer cases toward circuits that do not require proof of investor loss and prompting defendants to seek transfer to jurisdictions that do.
Read more here.
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Tiffany Rowe, Counsel
(o) 202.854.2826 | Email | vCard
Tiffany Rowe helps public and private companies design and implement industry-specific compliance policies and internal controls that meet fast-developing federal regulatory requirements. She provides practical counsel in a manner that mitigates business and legal risk for broker-dealers, investment advisers, and other highly regulated entities.
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Joel Schwartz, Partner
(o) 202.854.2811 | Email | vCard
Joel Schwartz is a former federal prosecutor and public defender who advises clients on white collar criminal defense, civil enforcement, and congressional and special investigations. With over 30 years of legal experience, clients turn to Joel for his ability to navigate negotiations and litigation in high profile, highly complex cases.
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Jack Belk, Associate
(o) 919.835.4498 | Email | vCard
Jack Belk focuses his practice on business disputes. He has experience with shareholder derivative actions, class actions, unfair and deceptive trade practices, breach of contract claims, and other complex litigation in state and federal courts, including the North Carolina Business Court.
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Draft Bill Would Put Crypto Primarily Under CFTC Oversight
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A bipartisan discussion draft of a bill by Sen. John Boozman (R-AR) and Sen. Cory Booker (D-NJ) proposes giving primary oversight of cryptocurrency to the Commodity Futures Trading Commission, lessening the jurisdiction of the Securities and Exchange Commission. Determining the appropriate regulator to handle cryptocurrency has been at issue for several years.
Recently, SEC Chairman Paul Atkins announced that the SEC and CFTC were working to "harmonize" their crypto regulatory regimes to avoid uncertainty resulting from conflicting SEC and CFTC rules, and to drive innovation. Boozman and Booker’s bill appears to be a proposal of just how that "harmonization" would work, and in in some part mirrors the Clarity Act that already passed in the U.S. House of Representatives.
Democrats, including Booker have reservations about tasking the CFTC, which regulates commodities and commodity derivatives, with oversight of cryptocurrency and crypto markets. One concern is whether the CFTC will have adequate capacity to handle the fast-growing digital currency. The bill would give CFTC regulatory authority over the crypto market structure, classification of individual cryptocurrencies as digital commodities, creation of registration requirements, and the discretion to require certain disclosures and assess new fees on certain crypto transactions. While the CFTC is a bipartisan commission, a series of resignations have left a single commissioner at the helm of the agency. Cuts in staff across the federal government have also eliminated a significant portion of the staff.
Read more here.
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Tiffany Rowe, Counsel
(o) 202.854.2826 | Email | vCard
Tiffany Rowe helps public and private companies design and implement industry-specific compliance policies and internal controls that meet fast-developing federal regulatory requirements. She provides practical counsel in a manner that mitigates business and legal risk for broker-dealers, investment advisers, and other highly regulated entities.
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Joel Schwartz, Partner
(o) 202.854.2811 | Email | vCard
Joel Schwartz is a former federal prosecutor and public defender who advises clients on white collar criminal defense, civil enforcement, and congressional and special investigations. With over 30 years of legal experience, clients turn to Joel for his ability to navigate negotiations and litigation in high profile, highly complex cases.
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SEC and FBI Probes Highlight Federal Approach to Investor Fraud Cases
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On November 4, 2025, Jay Clayton, the U.S. Attorney for the Southern District of New York, unsealed the indictment of Bradley Heppner, founder of Beneficient Company Group LP, a financial services startup, who has been charged with multiple crimes related to an alleged yearslong fraudulent scheme executed to divert funds for his personal gain. According to the indictment, Heppner’s fraud left investors and lenders to absorb more than $1 billion of losses. The indictment was unsealed shortly after he was arrested by federal authorities. The investigation is an important reminder for companies and individuals how much federal authorities are maintaining an aggressive enforcement approach related to investor fraud.
According to the indictment, Heppner allegedly orchestrated a scheme to misappropriate more than $150 million from GWG Holdings Inc., a publicly traded company, through a shell entity he controlled called Highland Consolidated Limited Partnership (HCLP).
The charges include securities fraud, wire fraud, conspiracy to commit securities fraud and wire fraud, making false statements to GWG’s independent auditors, and the falsification of records.
Read more here.
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Tiffany Rowe, Counsel
(o) 202.854.2826 | Email | vCard
Tiffany Rowe helps public and private companies design and implement industry-specific compliance policies and internal controls that meet fast-developing federal regulatory requirements. She provides practical counsel in a manner that mitigates business and legal risk for broker-dealers, investment advisers, and other highly regulated entities.
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Madelyn Candela, Associate
(o) 704.371.6197 | Email | vCard
Madelyn Candela is part of a team of litigators who represent clients before state and federal courts, governmental agencies, and national and international arbitration panels in the Southeast and around the world.
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What Public Companies Should Know as SEC Accounting and Auditing Enforcement Actions Witness Significant Drop
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During last month’s Securities Enforcement Forum in Washington, DC, securities enforcement and white collar criminal defense attorneys highlighted an important shift of priorities happening within the Division of Enforcement at the U.S. Securities and Exchange Commission.
In recent years, the agency has initiated markedly fewer Accounting and Auditing Enforcement actions (AAERs). AAERs investigate potentially material misstatements or omissions in a reporting company’s SEC filings. The AAER examines whether a public company’s internal controls over financial reporting were not sufficient to protect against material misstatements or omissions regarding the company’s financial position, as opposed to the misstatement or omission resulting from intentional fraud or other improper acts. In other words, the internal controls must provide the company, and its independent auditor, reasonable assurance that the financial statements fairly present all material aspects of the company’s financial position.
The decline in AAERs suggests that emerging issues like crypto, foreign investment, and other priorities may be taking precedence over these cases, and the trend will likely continue under SEC Chairman Paul Atkins. In 2023, the SEC’s Division of Enforcement initiated a total of 83 AAERs. Fiscal year 2024 saw a decrease to 45 AAERs, and the number further declined to only 37 in fiscal year 2025.
Read more here.
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Tiffany Rowe, Counsel
(o) 202.854.2826 | Email | vCard
Tiffany Rowe helps public and private companies design and implement industry-specific compliance policies and internal controls that meet fast-developing federal regulatory requirements. She provides practical counsel in a manner that mitigates business and legal risk for broker-dealers, investment advisers, and other highly regulated entities.
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Brian Cromwell, Partner
(o) 704.335.9511 | Email | vCard
Brian Cromwell is a former state and federal prosecutor who counsels clients on internal investigations, white collar criminal defense, regulatory enforcement issues, and civil litigation. His clients include financial institutions such as broker-dealers and banks, healthcare providers, sports and entertainment clients, and manufacturers.
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Government Investigations & White Collar Defense
Parker Poe's Government Investigations & White Collar Defense Group helps companies to understand the foundation of an allegation by building an investigative strategy, conducting an independent investigation, providing conclusions and recommended courses of action and, if appropriate, dealing with relevant regulators and law enforcement. Click here to learn more about the team.
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