Uyeda calls flurry of SEC changes ‘methodical’

The investment industry can expect the SEC to slow the pace of its rulemaking, but won’t see drastic changes from the regulator, according to Mark Uyeda, who launched a series of major changes at the agency almost immediately after being named acting chair in January.

The SEC is not a speed boat designed to drive rapid change or alter direction quickly, Uyeda said during an appearance March 6 at a financial conference in New York, according to a Bloomberg story following the event.

The agency under former SEC chair Gary Gensler was “overly ambitious,” moving too quickly and too aggressively on too many fronts, including its effort to mandate disclosure of climate-change risk, institute a series of trading reforms and crack down on the trading of cryptocurrencies and other digital currencies.

“Think of us as one of those really long, super-sized freighters,” Uyeda said. “We may need to make course corrections, but you want to be very methodical, very thoughtful in how you change direction.”

Within weeks after Uyeda was named as acting chair, however, the SEC reversed its positions on both climate-risk disclosure and crypto regulation, backed off on Gensler-era efforts to make it more difficult for corporations to reject shareholder proposals and to force corporations to disclose more detailed information available through the consolidated audit trail.

The agency also anticipated a reported effort at cost-cutting by Elon Musk’s controversial Department of Government Efficiency (DOGE) by announcing that it would eliminate the jobs of 10 regional directors, end the lease on SEC offices in Los Angeles and Philadelphia – and launched a buy-out designed to cut the ranks of the 5,000-person SEC staff by offering $50,000 to staffers willing to resign by April 4.

The offer came in the form of a memo from SEC COO Ken Johnson, according to Reuters, which noted that Johnson’s memo announcing that the General Services Administration would end the leases of several SEC buildings was not “associated with any reorganization or reduction in force plan regarding SEC personnel.”

The SEC has not confirmed reports that attorneys working for the SEC might be less likely than other staffers to face cuts targeting staff listed as probationary because they were hired or promoted within the past two years.

The SEC has announced no specific goals for the size of the staff cuts or budget reductions and has not replied to media requests for confirmation or details about the plans.

Less regulation, lighter enforcement

Uyeda’s comments are consistent with the expectations of industry observers interviewed before the change of administration that a Trump-administration SEC would tone down its efforts at enforcement and slow the pace of regulations, however.

Changes at the SEC may be coming much more quickly and in much more dramatic a fashion than most expected, but those changes do so far reflect the priority changes the industry was led to expect, according to attorneys tracking those changes.

The change in direction on crypto and establishment of a Crypto Task Force led by SEC commissioner Hester Peirce, for example, reflects both the consensus of the currently three-person SEC commission and their intention to move away from “the enforcement-first approach,” especially regarding cryptocurrencies, according to a March 6 WilmerHale analysis.

The changes also reflect an overall effort by the SEC to return to the agency’s priorities under the first Trump administration, when it focused on fraud-and problems involving injury to retail investors rather than issues related to the technical structure and function of the market, according to the analysis.

During the next four years the SEC will likely “prioritize cases alleging investor fraud where there are clear misstatements or omissions of material facts, according to a March 3 analysis from Hunton Andrews Kurth.  “Other core SEC enforcement priorities such as insider trading, accounting fraud, Ponzi schemes, affinity frauds and other scams impacting retail investors will also likely see greater emphasis,” the analysis continued. “Cases alleging only technical rule violations without investor harm or pursuing cutting-edge theories of liability are likely to be less common.”