Enforcement

SEC Bars Former Private Fund Adviser Following Fraud Findings

Summary: On March 17, 2026, the SEC issued an administrative order barring a former investment adviser from associating with financial institutions. According to the SEC, the underlying conduct involved a private fund adviser that, from 2012 through 2016, raised nearly $63 million for five private venture capital funds and allegedly defrauded the funds and their investors of more than $14 million through undisclosed and improper management fees and undisclosed, excessive incubator fees charged to portfolio companies. The order followed prior court findings and a final judgment tied to violations of Section 206(4) of the Advisers Act and Rule 206(4)-8.

Why it matters: This action reinforces the SEC’s continued focus on private fund fee practices, conflicted arrangements, and disclosure failures. The order is a reminder that advisers to private funds face significant regulatory risk where fees, affiliated-service arrangements, or other compensation structures are not fully and accurately disclosed to funds and investors. It also underscores that remedies can extend beyond monetary penalties to include industry bars that effectively end an individual’s ability to operate in the advisory industry.

Potential action: Private fund advisers should review fund governing documents, fee disclosures, and affiliated-service arrangements to confirm that all compensation streams are clearly disclosed and applied consistently. Compliance teams may also want to test whether portfolio company charges, management fees, and related-party payments aligned with offering documents, investor communications, and fiduciary obligations under the Advisers Act.

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SEC Settled Insider Trading Action Against Former Public Company Executive

Summary: On March 17, 2026, the SEC announced a settled enforcement action against a former public company executive for alleged insider trading. In a parallel criminal action, he pled guilty on January 9, 2026 to securities fraud. According to the SEC complaint, the individual sold company stock in advance of an earnings call while in possession of material nonpublic information concerning lower than expected sales. The SEC also alleges that, roughly a year later, the individual again traded the company’s securities before another earnings announcement while aware of additional negative internal information, including sales underperformance and a planned reduction in force. The SEC alleges that the trading generated approximately $2.53 million in profits and losses avoided.

Why it matters: This case underscores the SEC’s continued focus on insider trading involving senior corporate personnel with access to sensitive operating and financial information. It also highlights the Commission’s emphasis on timely and accurate insider transaction reporting, particularly where trades occur near earnings announcements or other market-moving events. For public companies, advisers, and compliance personnel, the action is a reminder that insider trading controls and Section 16 reporting obligations remain core enforcement priorities.

Potential action: Firms should review insider trading policies, blackout procedures, pre-clearance frameworks, and internal controls around employee access to material nonpublic information. Public companies may also want to reassess Section 16 reporting processes and training for senior personnel to ensure that trading activity and disclosure obligations are monitored closely, particularly around earnings periods and other significant corporate events.

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CFTC Secures $2.4 Million Judgment in Retail Forex Fraud Case

Summary: On March 13, 2026, the Commodity Futures Trading Commission announced that a U.S. District Court entered a default judgment against certain entities for engaging in retail forex fraud and acting unlawfully as commodity pool operators and commodity trading advisors. The court ordered over $2.4 million in restitution and civil monetary penalties and imposed permanent injunctions for violations of the Commodity Exchange Act. The court also found that the scheme targeted a vulnerable investor community, including individuals relying on non-English language communications.

Why it matters: This enforcement action reinforces the CFTC’s continued focus on retail fraud and misconduct involving forex trading and pooled investment vehicles. It also highlights heightened regulatory scrutiny of where firms target vulnerable or niche investor groups. For CPOs, CTAs, and other market participants, the case underscores that misrepresentations, misuse of investor funds, and failures to comply with registration and disclosure obligations remain key enforcement priorities.

Potential action: Firms engaged in forex or pooled investment activities should review marketing practices, investor communications, and fund structures to ensure compliance with anti-fraud provisions and registration requirements. Compliance teams may also want to revisit controls around investor onboarding and disclosures, particularly where targeting specific communities, and ensure supervisory frameworks are designed to detect and prevent misleading or abusive practices.

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What Regulators are Saying

SEC Clarifies Application of Federal Securities Laws to Crypto Assets

Summary: On March 17, 2026, the SEC issued interpretive guidance clarifying how federal securities laws apply to crypto assets and related transactions. The guidance introduces a framework distinguishing between different categories of digital assets, including digital commodities, collectibles, tools, stablecoins, and digital securities, and confirms that most crypto assets are not inherently securities. It also explains how a “non-security” crypto asset may become subject to securities laws if it is offered or marketed as part of an investment contract, as well as how such status may evolve over time. The guidance further addresses specific activities such as staking, mining, airdrops, and token wrapping.

Why it matters: This release represents one of the most significant steps toward regulatory clarity in the digital asset space. By articulating when crypto assets fall within (or outside) the definition of security, the SEC is attempting to reduce longstanding uncertainty for market participants. The joint alignment with the CFTC also signals a more coordinated regulatory approach, particularly in distinguishing between securities and commodities. For advisers, fund managers, and crypto market participants, the guidance underscores that substance—not labels—will determine regulatory treatment, especially where investor expectation of profit is present.

Potential action: Firms engaging with crypto assets should reassess their asset classifications, offering structures, and marketing practices considering the SEC’s framework. Attention should be paid to whether activities could create an investment contract (and therefore trigger securities law obligations), even where the underlying asset is not itself a security. Compliance teams may also want to monitor forthcoming rulemaking or “safe harbor” proposals referenced by the SEC, as well as continued coordination between the SEC and CFTC that could further define jurisdictional boundaries.

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CFTC Issues Advisory on Prediction Markets and Event Contracts

Summary: On March 12, 2026, the CFTC’s Division of Market Oversight issued a staff advisory addressing the listing and trading of event contracts in prediction markets. The advisory encourages growth and innovation in these markets but reminds designated contract markets (DCMs) that they remain responsible for complying with the Commodity Exchange Act and CFTC regulations when listing these products. It specifically highlights DCM obligations under CEA section 5(d), Part 38, Core Principle 3, Appendix C guidance, and product submission requirements. The advisory also notes that certain sports-related event contracts may present heightened manipulation or price-distortion risks, particularly where outcomes depend on the actions of a single person or small group, such as injuries, officiating decisions, or on-field altercations.

Why it matters: The advisory signals that the CFTC is supportive of innovation in prediction markets but expects exchanges to apply scrutiny before listing event contracts. For firms operating, designing, or trading in these markets, the CFTC is underscoring that event contracts must not be readily susceptible to manipulation and that exchanges must maintain effective surveillance, compliance, and enforcement controls. The advisory also reiterates that insider trading, misuse of confidential information, and other manipulative conduct in contracts listed on a DCM can trigger CFTC anti-fraud enforcement under Regulation 180.1.

Potential action: Exchanges and market participants involved in prediction markets should review the advisory and assess whether existing event contracts, especially sports-related or narrowly tailored contracts, present elevated manipulation, surveillance, or settlement-risk concerns. DCMs should also revisit their product submission processes to ensure that self-certifications or approval requests include sufficiently detailed compliance analyses and supporting data. Firms considering novel event contracts may also want to engage with CFTC staff early in the product-design process where manipulation or settlement concerns could arise.

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Rulemaking

California Diversity Reporting Delayed for VCs

Summary: California suspends April 1 deadline to comply with the California VC diversity reporting law (the "Fair Investment Practices by Venture Capital Companies Law" (FIPVCC)).The California Department of Financial Protection and Innovation (DFPI) has announced that it plans to initiate rulemaking in response to stakeholder comments relating to the FIPVCC. Implementation and enforcement of the law have been suspended pending completion of the rulemaking process and the adoption of final regulations. As a result, the DFPI has confirmed that it will not require covered entities to submit registrations or file reports by the April 1, 2026, deadline. The agency intends to begin the rulemaking process later this year and will seek input from venture capital companies, industry associations, founders, investors, and other stakeholders. Once formal rulemaking begins, it must be completed within one year.

Why it matters: This announcement provides immediate regulatory relief for venture capital firms that were preparing to comply with upcoming registration and reporting obligations. However, the suspension is temporary and signals that a revised regulatory framework is forthcoming. Firms should expect that new rules may introduce clarified or potentially expanded compliance expectations, shaped by industry feedback. The rulemaking process also highlights increased regulatory focus on venture capital industry practices, particularly around transparency and reporting.

Potential action: Venture capital firms should pause implementation efforts tied to the prior April 1, 2026, deadline, but continue monitoring DFPI communications closely. Firms may also consider participating in the forthcoming stakeholder engagement process to help shape the final regulations. In the interim, it may be prudent to maintain internal readiness by accessing data collection capabilities and governance frameworks, so that compliance can be implemented efficiently once final rules are issued.

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In the News

SEC Enforcement Director Resigns After Less Than Seven Months

Summary: On March 16, 2026, the SEC announced that Judge Margaret A. Ryan resigned from her role as Director of the Division of Enforcement, effective immediately. Principal Deputy Director Sam Waldon was named Acting Director. Ryan had served in the role since September 2, 2025, meaning her tenure lasted a little over six months. Reports noted that her departure comes during a period of slower enforcement activity and broader transition inside the agency.

Why it matters: Leadership changes at the top of the SEC’s Enforcement Division can signal shifts in enforcement priorities, case selection, and overall regulatory posture. For investment advisers, fund managers, broker-dealers, and other market participants, this transition is notable because the Enforcement Division plays a central role in shaping how aggressively the SEC pursues fraud, disclosure failures, and compliance-related violations. Sam Waldon’s appointment as Acting Director suggests continuity in the near term, but the eventual permanent replacement may offer further insight into the Commission’s longer-term enforcement direction.

Potential action: Firms should continue monitoring SEC enforcement developments and public statements for signs of any change in priorities under interim and permanent leadership. Compliance teams may also want to watch whether the Division continues to emphasize traditional fraud and market-manipulation matters over more technical rule-based cases, as that could affect examination, investigation, and enforcement risk areas going forward.

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SEC Publishes New Market Data on Public and Private Offerings

Summary: On March 17, 2026, the SEC’s Division of Economic and Risk Analysis published updated statistics and data visualizations covering public and private offerings, municipal advisors, transfer agents, securities-based swap dealers, and structured finance activity. The update shows increased market activity across several categories in 2025, including 374 IPOs raising more than $70 billion, up from 246 IPOs raising $39 billion in 2024. The SEC also reported that Regulation D offerings increased from 32,554 in 2024 to 34,553 in 2025, with capital raised rising from $2.1 trillion to $2.4 trillion. In addition, the staff released a separate report on the financial condition of security-based swap dealers.

Why it matters: The release offers a useful snapshot of capital formation and market activity trends across both registered and exempt offerings. For private fund managers, advisers, and capital markets participants, the jump in Regulation D activity is especially notable, as it underscores the continued importance of private markets as a capital-raising channel. The updated data may also help firms with benchmark fundraising trends, monitor issuance activity, and assess where investor demand and market momentum are developing.

Potential action: Firms involved in capital raising, private offerings, or broader market analysis may want to review the SEC’s updated data visualizations and related reports to better understand current issuance trends and how their activity compares with the broader market. Advisers and fund sponsors relying on exempt offerings should also consider whether changing market volumes and fundraising patterns affect their own planning, disclosure, or competitive positioning.

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Events

SEC Announces Roundtable on Options Market Structure Reform

Summary: On March 5, 2026, the SEC announced that it will host a public roundtable on April 16, 2026, to discuss listed options market structure. The discussion will focus on competition in a quote-driven market, the customer experience, and opportunities and challenges tied to the market’s continued growth. The roundtable will be held at SEC headquarters, streamed live on SEC.gov, and will also accept public comments under File No. 4-887.

Why it Matters: The announcement reflects continued SEC attention to the rapid growth of the U.S.-listed options market, particularly among retail investors. For market participants, the roundtable may offer insight into how the SEC is thinking about competition, investor experience, and potential future market structure reforms in the listed options space.

Potential Action: Broker-dealers, exchanges, market makers, and other firms active in the options market should consider monitoring the roundtable and any related agenda materials, speaker announcements, or comment submissions. Firms with a stake in listed options market structure may also want to evaluate whether submitting comments would be appropriate.

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