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In this Client Alert, Stephanie Monaco, a partner in Sullivan & Worcester's Investment Management practice, discusses the transition from an aggressive enforcement era at the U.S. Securities and Exchange Commission — under former Chair of the SEC Gary Gensler — to a potentially more compliance-focused approach under new leadership.

Despite fewer enforcement actions in 2024, the penalties were unprecedented, with significant fines for off-channel communications and other infractions. This Alert highlights key lessons from recent enforcement actions, including insider trading, conflicts of interest, outsourcing, off-channel communications, AI usage, timely filings and marketing practices. It emphasizes the importance of updating compliance programs and Form ADV amendments in light of these lessons.

This Alert also anticipates continued enforcement interest in areas where investment advisers prioritize their interests over clients, fail to correct practices or have discrepancies between Form ADV and actual practices. It also offers guidance on navigating these regulatory challenges and encourages proactive compliance measures.