Trump admin may wash hands of some of SEC's last-minute enforcement flurry

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Bloomberg News

Former SEC Chair Gary Gensler and other regulators showed no signs of slackening zeal in their last months in office, ending their appointed time with a flurry of enforcement actions.

But there's a good chance many of those cases will be reviewed and some even dropped under the new administration. Newly sworn-in President Donald Trump's appointment on Monday of Mark Uyeda as acting chair of the Securities and Exchange Commission is just the latest sign that regulators are likely to take a lighter touch with at least some aspects of financial markets.

Uyeda, a Republican long critical of what he deems regulatory overreach, will serve as the securities industry's top cop until Trump wins approval for a permanent successor to Gensler. Trump has nominated Paul Atkins, who also led the agency under former President George W. Bush, to be the next full-time head of the SEC.

Whoever takes over the agency will have a full plate of cases to pursue, thanks to a record number of enforcement actions regulators filed in the last few months of the Biden Administration.

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Among the parting shots announced by Gensler and crew on Friday were charges against the formerly registered investment advisor Scott J. Mason of Gladwyne, Pennsylvania, and his firms Rubicon Wealth Management and Orchard Park Real Estate Holdings. According to the SEC, Mason misappropriated more than $20 million from 13 clients in the decade leading up to 2024 and used the money to buy part of a miniature golf course in New Jersey, pay country club dues and move money to other clients. Rubicon Wealth did not respond to a message seeking comment.

Big day for settlements

But that was just one action among many announced just before Gensler's last day, officially Jan. 20. Friday also saw the SEC reach a $60 million settlement with Merrill and Wells Fargo over accusations that their cash sweeps policies weren't designed to look out for clients' interests; an $18 million settlement with LPL Financial over alleged failures to do enough to prevent money laundering; and a $106 million settlement with Vanguard Group over allegations that it had made misleading statements to clients holding popular retirement funds.

In announcing that the SEC had filed a record number of cases in its latest fiscal quarter, SEC enforcement division acting chair Sanjay Wadhwa said the agency "has not taken its foot off the pedal."

"On the contrary, the hard work of the dedicated staff in the Division, with assistance from throughout the Agency, has resulted in the busiest start to a fiscal year that I have witnessed in my 20-plus years at the Commission, providing invaluable protections to investors and promoting fairness and integrity in the securities markets," said Wadhwa, one of many regulators who departed the SEC last week.

Even before reaching the big settlements announced Friday, regulators stayed busy pressing charges at a record pace. The SEC filed 200 enforcement actions in the first quarter of its 2025 fiscal year, running from October to December. Seventy-five of those came in October alone. Of those, 118 were "standalone" actions — meaning they didn't arise from previous cases or charges. All three of those numbers set records, according to SEC data going back to 2000. The SEC said the investigations touch on everything from financial misstatements and failures by advisory firms to disclose conflicts of interest to alleged bribery schemes and fraud against retail investors.

Change of administration, change of direction

Christian Schulz, a former assistant chief litigation counsel in the SEC's Division of Enforcement and now a securities lawyer at Arnold & Porter, said the new administration will no doubt want to review some of the pending investigations and could decide to withdraw from some cases it no longer deems priorities. Most obviously, Schulz said, the SEC may pull back from enforcement actions involving cryptocurrency.

President Donald Trump has been an outspoken critic of Gensler's attempts to rein in the crypto industry, and regulators in his new administration are likely to be of a similar mind. On Monday, Uyeda announced the formation of a crypto task force charged with devising a regulatory framework for digital assets.  

But there are other types of cases that could take a backseat, Schulz said. Schulz said he particularly has in mind enforcement actions for recordkeeping missteps or other violations that don't necessarily result in obvious investor harm. If those sorts of breaches are invoked by the SEC, they're likely to be appended to larger fraud cases rather than brought up as standalone matters, he said.

"I don't think you are going to see sweeps focusing on off-channel communications like you've seen," he said, referring to the SEC's yearslong multibillion-dollar crackdown on firms failing to track business-related messages sent on WhatsApp and similar services.

Both Schulz and Amy Lynch, the founder and president of the regulatory consultant FrontLine Compliance, said they wouldn't expect regulators to move quickly to drop any pending enforcement actions. Lynch said the SEC's tendency under an acting chair is usually to make as few changes as possible until a full-time appointee can take over.

"They will continue to go through the investigation process until they have a firm chair in place," Lynch said. "And then they will submit their cases and determine which ones they want to push forward, which ones they want to seek settlements on and which cases they want to drop."

Fraud cases are meanwhile going to remain a priority, said Christina Zaroulis Milnor, who served in various enforcement capacities at the SEC from 2013 to 2024 and is now a member of the boutique law group Mincey Bell Milnor. Any change in direction is more likely going to be along the lines of moving away from Gensler's stance that the SEC should exercise strong enforcement authority over cryptocurrencies and other digital assets.

"There isn't going to be a lift of focus on outright fraud," Milnor said. "They may choose to have a different cop on the beat in the crypto space. But fraud is fraud."

The case against Mason and Rubicon Wealth

The SEC's allegations against Mason and Rubicon Wealth Management make up just the sort  of case that's unlikely to drop. Regulators accuse Mason and his firm of misappropriating millions of dollars their clients held in accounts at third-party brokerage and trust firms. A large part of the money, according to the SEC, went to Orchard Park Real Estate, which Mason formed in 2016 to manage rental properties in Geneva, New York. 

The SEC says Mason managed to get the brokerage and trust firms — unnamed in the complaint — to go along with the transfers either by using forged signatures or by lying to customers about his reasons for moving their money. He told some clients, for instance, that he was making investments in bonds and later produced fake account statements purportedly showing legitimate uses of their money.

"Mason instead used these funds for unauthorized purposes, including for his own investments and to pay personal expenses," according to the SEC.

Mason is accused of using Ponzi-like machinations to cover his tracks. One of his clients, for instance, asked Mason in spring 2024 about $3.2 million transferred out of his accounts. Mason sought to conceal the fact that the assets had been misappropriated by producing $162,500 in purported interest payments from bond investments. That money had actually come from another of Mason's clients, according to the SEC.

The alleged scheme was exposed when the client demanded the return of his money and found Mason couldn't heed the request, regulators say. Mason is separately faced with similar allegations in a criminal case filed on Friday by the U.S. Attorney's Office for the Eastern District of Pennsylvania. 

Besides the alleged fraud, prosecutors accuse Mason and Rubicon Wealth of failing to report income from the scheme on his tax returns. He's faced with a maximum of 80 years in prison and a fine of $6.76 million. 

Mason is also the subject of at least two civil suits from former clients, the industry publication ThinkAdvisor reported in August. One was filed in Montgomery County, Pennsylvania, by Stanley Tulin, a retired former chief financial officer for the financial services firm AXA Equitable. The other, also filed in Montgomery County, is from Mason's aunt.

The SEC's investment advisor public disclosure database shows that Mason is no longer registered with the SEC. His online record lists five customer disputes, all alleging misappropriations of funds or assets, and says he resigned from Rubicon Wealth in August. Rubicon, also no longer registered with the SEC, listed $231 million in assets under management and 115 advisory clients in a Form ADV filed in March.

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