Agency in transition

Since the presidential election, the SEC has been an agency in transition. On January 21, 2025, Commissioner Mark Uyeda became Acting Chair of the SEC, replacing Gary Gensler. Commissioner Uyeda held that interim role until Paul Atkins assumed the chairmanship on April 21, 2025. It then took several months to appoint a new Enforcement Director. Judge Margaret “Meg” Ryan began her tenure as Director on September 2, 2025, only to encounter an extended government shutdown that began at the end of her first month.

During this transition, the Enforcement Division faced a series of challenges, including significant personnel reductions – resulting in the loss of approximately 15% to 20% of its headcount – leadership restructuring, and changes to long-standing investigative and charging practices. At the same time, the Enforcement Division continued to grapple with constitutional challenges to its authority and devoted substantial resources to resolving legacy matters. Together, these factors constrained enforcement activity during 2025, but the Enforcement Division now appears positioned to move forward with renewed momentum.

Issuer reporting actions

As a result of these disruptions, the SEC’s enforcement statistics were markedly lower than in prior years. The number of actions for the first fiscal year of the second Trump administration fell substantially, with only 313 actions (as reported by SEC observers), with many of these actions brought in the waning months of the Gensler administration.

Notwithstanding this decline, the SEC’s enforcement activity indicates that the agency will continue to bring some of its most significant actions against companies and individuals operating in the pharmaceutical, life sciences, and healthcare industries. Historically, the Commission has brought a steady stream of cases in these sectors due to the complexity of clinical data, the central role of the FDA, and the outsized impact of scientific and clinical disclosures on share price movement. Several actions brought under the new administration illustrate this priority:

• In March 2025, the Commission announced a settled action against a public biopharmaceutical company arising from disclosures concerning the regulatory status of its drug candidate. According to the SEC, the biopharmaceutical company licensed a drug that had failed a clinical “superiority” trial. The company revisited the data through a noninferiority analysis of the same trial, changing a governing study metric from overall survival to progression-free survival. The FDA notified company executives that, without a new trial, any new drug application would be rejected. When the company announced the FDA’s rejection of its new application, its share price declined by approximately 31%. Without admitting or denying the SEC’s findings, the company settled to negligent misrepresentations and other reporting violations and agreed to pay a $1.5 million penalty.  The Commission then filed a litigated action against three individuals, alleging that the CEO made misleading statements, while two other senior executives took part in a broader effort to conceal the FDA’s alleged critique of the drug’s approval prospects. The SEC’s case relies not only on public filings but also on an investor presentation deck.
• The Commission’s action against a global life sciences company, announced in April 2025, offers a similar example. During the COVID-19 pandemic, certain pharmaceutical companies relied on the company to support vaccine manufacturing efforts. The company publicly represented that one of its facilities had the capacity and readiness to manufacture vaccines at scale. However, the Commission alleges that internal documents revealed that the FDA had repeatedly warned the company about readiness issues. Further, according to the SEC, internal communications showed that management was aware of substantial operational and quality-control deficiencies. The Commission found that the company materially misled investors by failing to disclose the readiness issues. Without admitting or denying the SEC’s findings, the company settled to negligent misrepresentations and books-and-records violations, paying a civil penalty of $2.5 million.
• Reflecting a similar enforcement focus, the Commission announced another action against a drug developer in September 2025. In that matter, the company publicly presented cardiovascular safety data for its drug candidate that appeared more favorable than internal analyses supported. The discrepancy stemmed from undisclosed post hoc changes to statistical stratification factors – changes that materially altered the interpretation of the drug’s safety profile. The misleading information allegedly was incorporated into earnings calls, SEC filings, investor presentations, and even a peer-reviewed publication. When the company disclosed the changes to the data, which showed that the drug was merely comparable to existing treatments, the share price dropped by more than 43%. Without admitting or denying the SEC’s findings, the company settled with the Commission for penalty exceeding $1 million. At the same time, the Commission filed a litigated action against the company’s former chief medical officer, alleging that she was responsible for the analysis, interpretation, and communication of the clinical data at issue.

Considering these actions, issuers, executives, directors, and auditors in the pharmaceutical, life sciences, and healthcare industries should expect continued scrutiny of accounting and public disclosures.

A more recent settled action suggests continued interest in what many might regard as subtle line-drawing related to clinical trials and regulatory evaluations. In January 2026, the Commission announced a settled action against two former senior executives of a clinical-stage biopharmaceutical company. According to the SEC, the action arose from statements concerning the efficacy of the company’s lead drug candidate during the FDA’s review of the company’s new drug application. The SEC alleged that, after the FDA review team identified as a “significant issue” the inclusion of certain patients in the efficacy analysis and expressed concern that its own analysis did not demonstrate efficacy, the executives continued to state publicly that the clinical trial had met its primary efficacy endpoint as specified in the protocol. Although the company had disclosed that the FDA had cancelled certain meetings due to “deficiencies with the FDA,” the SEC alleges that the executives’ statements were misleading because they did not disclose the FDA’s particular concern and seemingly did not “weigh” the risk assessment appropriately. When the company later disclosed the FDA’s contrary analysis and announced that it would cease commercialization efforts, the company’s stock price declined by 64%.

Without admitting or denying the SEC’s findings, executives settled to negligent misrepresentation violations, with the former CEO and CFO agreeing to pay $112,500 and $75,000 in civil penalties, respectively. Although the company announced on January 10, 2025, that it had received a Wells notice (a formal notification from the SEC staff that it has made a preliminary determination to recommend an enforcement action), the SEC did not announce any action against the company.

Cross-cutting themes in a reduced enforcement era

Viewed together, these cases illuminate several themes about how the SEC is exercising its discretion during a period of significantly reduced enforcement volume. First, the Commission is displaying a marked preference for cases in which the facts are, to the SEC, indicative of overt fraud. Relatedly, between the changes in leadership and Wells process (a pre-filing procedure that allows defense counsel to understand and respond to the SEC staff’s recommended action), we expect the SEC to require that staff attorneys provide strong, admissible evidence of these violations. Public remarks by staff suggest that the search for individual responsibility will be comprehensive, but that the Enforcement Division is unlikely to rely on stray problematic emails or documents without more evidence. Ambiguous or hindsight cases will be less likely.

Second, even as its overall enforcement actions declined, the SEC continued to pursue disclosure cases involving the pharmaceutical, life sciences, and healthcare sectors. In part, that enforcement interest is based on the unmistakable materiality of FDA-related disclosures, exemplified by the pronounced market effect of announcing clinical data, regulatory feedback, and drug safety. This Commission is likely to conclude that investor harm is present when these announcements are, in its view, false or misleading. In these cases, it is critical to help explain clinical and industry nuances that may not be apparent to SEC enforcement attorneys with (understandably) limited background in these areas.

Third, and critically, these matters underscore that the SEC’s emphasis on individual accountability has not diminished. In recent actions, the Commission paired corporate resolutions with litigated actions against individuals occupying senior leadership positions.  This approach reflects a deliberate enforcement strategy in which the Commission pursues corporate settlements while simultaneously seeking to hold individuals responsible for their roles in making, approving, or disseminating challenged disclosures. Expect document requests and testimony focused on these questions of intent and responsibility. The actions described above demonstrate that individual accountability will continue to be a top priority, even in a more selective enforcement environment.

Parallel FDA developments

Recent developments at the FDA may further complicate the landscape. As discussed in more detail in a prior publication, in July 2025, the FDA announced a shift toward increased transparency, including a policy of publicly releasing more information regarding the status of drug and biologics applications – most notably through the publication of complete response letters (CRLs) that historically were treated as confidential between the agency and the applicant.

This change, and the related collaboration between the FDA and the SEC, has the potential to affect public company disclosure practices – and hence enforcement risk – by narrowing the gap between what the FDA communicates publicly and what companies have traditionally disclosed through SEC filings or investor communications. As a result, companies may face heightened scrutiny regarding the timing, accuracy, and completeness of their disclosures concerning regulatory setbacks, deficiencies, or requests for additional data, particularly where FDA statements become publicly available before or contemporaneously with issuer disclosures. Although the FDA’s policy does not alter existing SEC disclosure standards, it may influence materiality assessments by shaping investor expectations and increasing the likelihood that discrepancies between internal regulatory communications and public statements are identified and questioned by regulators, analysts, or investors. Indeed, the Commission’s January 16, 2026, order illustrates that the SEC closely examines how companies describe FDA interactions and that management and boards should carefully consider whether evolving regulatory feedback, even during an ongoing deliberative process, is adequately and accurately reflected in public disclosures.

Insider trading

Insider trading is another area of consistent exposure for public companies in these industries. Although public companies are rarely a target of these investigations, responding to investigations can be burdensome and distracting. Insider trading investigations also can compromise key executives and directors. Of course, for the individuals subject to enforcement scrutiny, an SEC investigation can be existential.

In the past year, the SEC brought a comparable number of insider trading actions, many of which involved parallel criminal investigations or actions. Trading based on the undisclosed true status of a company’s drug or medical device has long been a rich source of SEC insider trading actions. As with the issuer reporting cases, many insider trading investigations involve developments at pharmaceutical, life sciences, and healthcare companies.

For example, in January 2026, the SEC charged an individual consultant with insider trading in the stock of a clinical-stage biopharmaceutical company. According to the SEC’s complaint, the consultant became aware of positive clinical trial results for a flagship multiple myeloma and non-Hodgkin lymphoma drug while he was performing biostatistical consulting work for the company. In a parallel action, the consultant also was charged criminally.

This interest is unlikely to wane in the current administration, as the SEC and FINRA maintain robust detection capabilities. Furthermore, a new rule requiring public companies to file insider trading policies could fuel SEC scrutiny, as the agency could compare policies within the same industry, potentially flagging companies whose policies appear insufficient. In-house counsel and compliance officers also would be wise to consider recent regulatory and press interest in the potential use of confidential information in prediction markets.

Implications for public companies and their boards

Companies should not interpret the decrease in enforcement volume as an indication that the SEC is less attentive to financial reporting or disclosure obligations. If anything, the selectivity of recent actions heightens the importance of understanding the characteristics of cases the Commission still chooses to bring. The SEC appears focused on matters involving clear-cut, meaningfully material misstatements, significant investor harm, and deviations from internal documentation that are difficult to justify under scrutiny. Companies would be well served to revisit and strengthen internal processes, disclosure controls, and oversight functions designed to ensure the accuracy of public announcements of clinical and regulatory developments – and consistency with internal data and developments.

In an environment that emphasizes individual accountability, executives should remain mindful that the SEC continues to enforce and litigate with vigor. Boards may wish to revisit training programs and oversight structures to ensure that executives understand both the scope of their responsibilities and the heightened personal exposure that persists, even in a reduced enforcement environment.

Conclusion

The SEC’s enforcement actions declined significantly in 2025. However, after a period of transition, the Enforcement Division is likely to begin opening and pursuing investigations again in earnest. Expect the Commission to focus on matters that present clear, significant, and well-documented violations, including those involving public companies and executives in the pharmaceutical, life sciences, and healthcare industries. Public companies can control that risk through robust internal and disclosure controls surrounding clinical and regulatory developments, close collaboration between life sciences and disclosure counsel, and increased training of executives involved in SEC filings and other investor communications.