July 2025 SEC Updates

1. On July 29, 2025, the North American Securities Administrators Association (NASAA) sought public comment on proposed amendments to four rules related to investment adviser advertising for State registered investment advisers. The proposal would update the NASAA rules to align them more closely to federal standards. By way of background, the SEC amended its investment adviser marketing rule (Rule 206(4)-1) in 2020. The SEC revised its rule to permit testimonials, endorsements, third-party ratings, and performance reports in investment adviser marketing provided certain regulatory standards are met. The proposal would update NASAA’s rules by making changes designed to more closely align them to the SEC’s current investment adviser advertising standards.

2. On July 29, 2025, the SEC obtained a final judgment against Jose Rocha, whom the SEC previously charged with running a Ponzi scheme in which he took over $1 million from 13 investors in the Cape Verdean community around the Boston area.  The SEC’s complaint was filed in August 2023 and charged Rocha with having promised investors he would invest their money in securities with guaranteed returns of 12% per month. Instead, the complaint alleged, Rocha used only a small percentage of the money to make highly leveraged, and highly unsuccessful, trades of stock and stock options. Rocha allegedly spent the balance of the funds, the vast majority, to feed his gambling habit and embark on a luxury lifestyle. According to the complaint, Rocha also used money from later investments to pay out on earlier investments. Rocha consented to the entry of a final judgment permanently enjoining him from participating in the offer or sale of any security to investors or potential investors.    On April 3, 2024, Rocha was sentenced to two years in prison and three years of supervised release. The Court also entered an order of forfeiture in the amount of $774,737. In September 2023, Rocha pleaded guilty to one count of securities fraud.  https://www.justice.gov/usao-ma/pr/investment-adviser-sentenced-two-years-prison-defrauding-investors-over-12-million and https://www.sec.gov/files/litigation/complaints/2025/comp26365.pdf

3. On July 29, 2025, the SEC instituted an order closing a Fair Fund (refund pool) and reimbursing investors in connection with a prior administrative proceeding against Kahn Brothers Advisors, LLC (“KIA”), a registered investment adviser, and Thomas Kahn, its principal owner and president. On June 6, 2022, the SEC settled an administrative against KIA and Kahn for making misstatements and omissions to KIA advisory clients and prospective clients relating to brokerage services provided by KIA’s affiliated broker-dealer, Kahn Brothers LLC (“KBD”). Specifically, KIA and Kahn (a) failed to fully and fairly disclose to advisory clients all material facts related to the conflict that arose from KIA’s use of an affiliated broker-dealer to execute client transactions; and (b) made misleading statements to clients and prospective clients that KIA would aggregate client transactions to reduce commissions. KIA and Kahn also failed to seek best execution for advisory clients, failed to conduct a best execution review of KBD, and failed to adopt and implement written policies and procedures reasonably designed to prevent violation of the Advisers Act.  According to KIA’s policies and procedures, Kahn was responsible for all aspects of KIA’s compliance program and its implementation, as well as the firms’ disclosure obligations. The SEC ordered KIA and Kahn to pay $701,799.00 in disgorgement, $146,100.00 in prejudgment interest, and a $250,000.00 civil money penalty, for a total of $1,097,899.00.  https://www.sec.gov/enforcement-litigation/distributions-harmed-investors/matter-kahn-brothers-advisors-llc-thomas-kahn-admin-proc-file-no-3-20880

4. On July 29, 2025, the SEC approved the use in-kind creations and redemptions for crypto ETFs, a move the would make the fast-growing market more efficient and cost-effective for investors.  The SEC voted to approve orders allowing authorized participants to create and redeem shares of Bitcoin and Ether exchange-traded products (ETPs) in kind, meaning they can receive the underlying cryptocurrency directly rather than cash.  Until now, spot Bitcoin and Ether ETPs approved in 2024 were restricted to cash-only transactions.  https://www.sec.gov/newsroom/press-releases/2025-101-sec-permits-kind-creations-redemptions-crypto-etps

5. On July 24, 2025, the SEC issued an order closing a Fair Fund and reimbursing investors in connection with a prior administrative proceeding against Titan Global Capital Management USA LLC (“Titan”), a FinTech investment adviser that operated a technology-driven investment platform offering multiple investment strategies. On August 21, 2023, the SEC settled an administrative proceeding against Titan for using misleading hypothetical performance metrics in advertisements. The SEC also charged Titan with multiple compliance failures, including misleading disclosures about the custody of clients’ crypto assets, the use of improper “hedge clauses” in client agreements, the unauthorized use of client signatures, and the failure to adopt policies concerning employee crypto asset trading.  According to the SEC’s August 21, 2023 order, Titan, which offers multiple complex strategies to retail investors through its mobile trading app, made misleading statements on its website regarding hypothetical performance. For example, it advertised “annualized” performance results as high as 2,700 percent for its Titan Crypto strategy. The SEC found these advertisements misleading because they failed to include material information, such as the fact that the hypothetical performance projections assumed the strategy’s initial three-week performance would continue for an entire year. The SEC also found that Titan violated the marketing rule by advertising hypothetical performance metrics without having adopted and implemented the required policies and procedures or taking other steps mandated under the rule. Titan was ordered to pay $192,454 in disgorgement, $7,598 in prejudgment interest, and an

6. On July 24, 2025, the SEC announced settled charges against Caz Craffy (aka Carz Levinski Craffey), a former registered representative with Monmouth Capital Management. In addition to being a registered representative, Craffy worked full-time as a U.S. Army Financial Counselor, tasked in part with assisting Gold Star families. The SEC previously charged Craffy with using his position as a U.S. Army financial counselor to exploit grieving family members by directing them to transfer their benefits into brokerage accounts he managed outside of his official Army duties. Once the funds were deposited, Craffy engaged in unauthorized trading and transactions inconsistent with his customers’ risk profiles and investment objectives, repeatedly placing his own financial interests ahead of theirs.  Craffy implicitly recommended a series of transactions without a reasonable basis to believe the recommendations were not excessive, given the customers’ investment profiles. He also recommended trades that resulted in accounts being overly concentrated in one or a small number of corporate issuer stocks, which were unsuitable for those customers. The SEC referred the civil matter to the Justice Department, and on April 16, 2024, Craffy pleaded guilty to six counts of wire fraud, one count of securities fraud, making false statements in a loan application, committing acts affecting a personal financial interest, and making false statements to a federal agency. He was sentenced to 151 months in prison, followed by three years of supervised release. On January 7, 2025, Craffy was ordered to pay over $4 million in restitution. In light of these findings, the SEC barred Craffy.  https://www.sec.gov/files/litigation/admin/2025/34-103538.pdf  and https://www.justice.gov/archives/opa/pr/us-army-financial-counselor-pleads-guilty-defrauding-gold-star-families and https://www.sec.gov/files/litigation/complaints/2025/comp26363.pdf

7. On July 23, 2025, the Investment Adviser Association (IAA) recently released the results of its annual survey of compliance professionals. The findings provide valuable insight into how advisory firms are structuring and testing their compliance programs, as well as emerging trends and examination priorities.  Below are the key highlights:

  • Compliance focus remains strong. Under the new administration, SEC staff continue to emphasize the importance of maintaining a proactive compliance program.
  • Testing programs are under scrutiny. While 27% of respondents reported no issues in testing, SEC staff have suggested adjusting testing programs when no findings occur, as an active program typically reveals exceptions.
  • Mock exams are widely used. 45% of firms conducted mock exams, and 18% plan to do so. These exercises have uncovered best practices (35%) and non-material findings (42%), while also aiding in SEC exam preparation.
  • Alignment with SEC priorities is growing. Whistleblower rule testing remains low at only 3%, and less than one-third of firms review employee agreements or consultant arrangements.
  • Marketing rule FAQs are underutilized. Only 13% of firms updated their policies following the SEC’s recent marketing rule guidance, and many firms believe additional relief is needed.
  • Electronic consent and technology use vary. 53% of firms obtain affirmative consent, but over half report no testing in this area. Technology adoption remains cautious, with fewer than one-third using automation, and just 3.7% exploring AI applications.
  • Electronic communications practices are improving. 83% of firms require periodic certifications, train employees, and maintain approved communication methods.
  • AI is the new top compliance topic. It has overtaken off-channel communications, with AML, cybersecurity, and advertising close behind.
  • SEC exam activity remains steady. Despite a reduction in SEC staff resources, examination frequency and focus areas have stayed largely unchanged.

8. On July 22, 2025, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) announced its intention to postpone the effective date of the final rule establishing Anti-Money Laundering/Countering the Financing of Terrorism Program and Suspicious Activity Report Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers (“IA AML Rule”) and to revisit the scope of the IA AML Rule at a future date.  FinCEN anticipates delaying the effective date of the IA AML Rule from January 1, 2026, until January 1, 2028.  FinCEN said they recognize that the rule must be effectively tailored to the diverse business models and risk profiles of the investment adviser sector. FinCEN also said that recognizes that extending the effective date of the rule may help ease potential compliance costs for industry and reduce regulatory uncertainty while FinCEN undertakes a broader review of the IA AML Rule. While FinCEN works through the rulemaking process to extend the effective date, FinCEN intends to provide the IA sector with regulatory certainty by issuing appropriate exemptive relief delaying the effective date.  During the delayed effective date, FinCEN intends to revisit the substance of the IA AML Rule through a future rulemaking process and, together with the SEC, also intends to revisit the joint proposed rule establishing customer identification program rule requirements for investment advisers.

9. On July 22, 2025, the SEC instituted administrative proceedings against Steven Jacobson, who was an investment adviser representative with Advisor Resource Council (“ARC”), a registered investment adviser, for engaging in a cherry-picking scheme.  Jacobson engaged in option trading in ARC’s block account and failed to properly pre-allocate those trades.  Jacobson disproportionately allocated favorable option trades to his account, his mother’s account, and the accounts of three favored clients and disproportionately allocated unfavorable trades to other client accounts. Jacobson was suspended for twelve months.  https://www.sec.gov/files/litigation/admin/2025/ia-6899.pdf

10. On July 21, 2025, House Republicans proposed cutting the SEC’s budget by 7% for the upcoming fiscal year. A House Appropriations subcommittee voted to advance a $23.3 billion funding plan outlining proposed fiscal year 2026 budgets for multiple agencies, including the SEC. The plan would reduce the overall budget by nearly 8%, or approximately $410 million, compared to the fiscal year ending September 30. Subcommittee Chair Dave Joyce stated that the measure is intended to rein in wasteful spending. Under the proposal, the SEC would receive just over $2.03 billion for 2026 — a 7% cut, or $153.9 million less, than its fiscal year 2025 budget. The proposed budget is also lower than the $2.149 billion requested by the SEC last month to support 4,101 full-time staff. Additionally, the Republican-led plan would bar the SEC from using funds to collect personally identifiable information through its long-standing system for tracking equity and options trading activity. Among other restrictions, the SEC would also be prohibited from using funds to create new rules governing private securities offerings.

11. On July 21, 2025, the SEC announced that it has designated George Botic to serve as Acting Chair of the Public Company Accounting Oversight Board (PCAOB), effective July 23, 2025. Current PCAOB Chair Erica Y. Williams has resigned from the Board, effective July 22, 2025.  Mr. Botic is a Certified Public Accountant and became a PCAOB Board Member on October 25, 2023. Prior to joining the Board, he served as the Director of the PCAOB’s Division of Registration and Inspections, where he oversaw the registration and inspection of all domestic and foreign accounting firms that audit public companies whose securities trade in the U.S., as well as all broker-dealer audits. He previously served in various roles at the PCAOB, including as its Director of the Office of International Affairs, Special Advisor to former Chairperson James R. Doty, and Deputy Director of the Registration and Inspections Division. Earlier in his career, Mr. Botic was a Senior Manager with PricewaterhouseCoopers. He is a graduate of Shepherd University and received a Master of Accountancy from Virginia Tech.

12. On July 21, 2025, the Equal Opportunity for All Investors Act of 2025 bill passed the House of Representatives and now moves on the Senate. The bill would move to allow sophisticated retail investors to qualify as accredited investors and expand investment opportunities for them. The bill would direct the SEC to establish certification exams for individuals seeking accredited investor status, expanding investment opportunities while ensuring investors understand the risks of private securities. The examination must:

  • be designed with an appropriate difficulty level such that an individual with financial sophistication or training would be unlikely to fail,
  • include methods to determine competency and knowledge in certain areas such as the disclosure requirements of different securities, and
  • be administered by a registered national securities association and offered free of charge to the public.

Currently, accredited investors must satisfy certain requirements indicating their reduced exposure to financial risk, including those related to income, net worth, or knowledge and experience.

13. On July 17, 2025, President Trump signed into law the Guiding and Establishing National Innovation for U.S. Stablecoins Act (“GENIUS Act”). The GENIUS Act is aimed at regulating stablecoins, a type of cryptocurrency designed to maintain a stable value. The Act establishes a framework for licensing and oversight of stablecoin issuers, ensuring consumer protection and promoting responsible innovation in the digital asset space. Paul Atkins, Chairman of the SEC, stated that the GENIUS Act provides necessary guidance for a crucial element of the emerging crypto asset ecosystem. Clear payment stablecoin regulation will allow companies and individuals to transact in ways that boost efficiency and lower costs. Payment stablecoins are expected to play a significant role in the securities industry moving forward

Below are key aspects of the GENIUS Act:

  • Stablecoin Definition: The Act defines “payment stablecoins” as digital assets used for payments or settlements, redeemable for a fixed amount of monetary value, and maintaining a stable value relative to a fiat currency (like the US dollar).
  • Licensing and Oversight: Issuers must obtain licenses, either through a national trust bank charter with the Office of the Comptroller of the Currency or state-level money transmission licenses, to operate nationally.
  • Prioritizing Consumer Protection: The Act prioritizes stablecoin holders’ claims in the event of an issuer’s insolvency, ensuring they are repaid before other creditors.
  • Federal and State Roles: The Act outlines a tiered oversight model, balancing federal authority with ongoing roles for state regulators.
  • Penalties for Violations: Unlicensed issuance of stablecoins is subject to significant civil and criminal penalties, including fines and potential imprisonment.
  • Federal Oversight: Issuers with over $10 billion in market capitalization will be subject to oversight from federal agencies like the Federal Reserve, OCC, FDIC, or NCUA.
  • Superpriority Claims: In bankruptcy, stablecoin holders have a superpriority claim over reserves and, if needed, other assets of the issuer.
  • Rulemaking: Regulatory agencies have a specific timeframe to establish rules for various aspects of stablecoin regulation, including capital requirements, liquidity standards, and risk management.
https://www.congress.gov/bill/119th-congress/senate-bill/394/text

14. On July 17, 2025, it was reported that the CFTC plans to lay off around two dozen staff members and restructure its enforcement division by eliminating certain management positions. The enforcement division will be split into two teams: one focused on investigations and the other on prosecutions. Between six and eight management positions in the division, including regional office directors and chief trial attorneys, will be eliminated. Staff attorneys will now report to associate directors rather than the eliminated management roles.  The CFTC had 636 full-time equivalent staff positions in fiscal year 2025. The regulator has also recently reduced staff through a series of voluntary resignation programs, similar to those offered by other agencies. For example, in March 2025, hundreds of SEC employees accepted voluntary buyouts and resignation offers as part of a broader federal workforce restructuring initiative by the Trump administration. By late March, over 600 SEC staff members had formally agreed to resign, including more than 150 enforcement staff. These departures represent approximately 10% to 12% of the SEC’s total workforce.

15. On July 17, 2025, the SEC charged Joseph D’Ambrosio of New York with running a multi-year investment fraud through Hereford Holdings, L.L.C., a company he established to manage funds for family and friends but instead used to misappropriate approximately $5.5 million for personal expenses. The SEC alleges that D’Ambrosio concealed the scheme by issuing false statements about investment performance and had drained nearly all of Hereford’s funds by December 2024, when he self-reported his conduct.  The matter is being litigated.  https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26354

16. On July 16, 2025, a longstanding SEC employee resigned after it was discovered that they had falsely reported being in good standing with a state bar association, according to the SEC’s Inspector General report. The Inspector General investigated allegations that an SEC attorney falsely certified to the SEC that they had an active bar membership in good standing when they did not. All SEC attorneys in the SK-0905 job series are required to self-certify annually that they hold an active bar license in one or more U.S. jurisdictions. A current, valid license, with eligibility to practice law in a state, the District of Columbia, or any U.S. territory or commonwealth, is a required condition of employment with the SEC. The OIG found that the SEC attorney falsely certified active membership in good standing with a state bar at the time of their hiring in 2008. Furthermore, on at least 13 occasions between 2015 and 2024, the attorney submitted false certifications of an active state bar license in good standing. State bar records from the jurisdiction where the attorney claimed membership indicated that they had not been in good standing since 2004, and their license was administratively revoked in 2010 for failure to pay into the state’s lawyers’ fund. The SEC placed the attorney on administrative leave, after which the attorney resigned.

17. On July 16, 2025, the SEC updated its previous announcement to remind EDGAR filers to comply with the SEC’s EDGAR Filer Access and Account Management rule and form amendments, known as EDGAR Next, effective September 15, 2025, to avoid interruptions in filing on EDGAR. To comply with EDGAR Next, filers must be enrolled (or granted access via Form ID on or after March 24, 2025) and must authorize individuals to act on their behalf in EDGAR. Filers must also ensure that these individuals use Login.gov credentials and complete multifactor authentication to access EDGAR. https://www.sec.gov/newsroom/whats-new/keep-filing-enroll-edgar-next-now?utm_medium=email&utm_source=govdelivery

18. On July 16, 2025, the SEC instituted administrative proceedings against Rajesh Markan, who was associated with two dually registered broker-dealers and investment advisers. Markan was previously associated with Hilltop Securities and Merrill Lynch. He was charged with making false and misleading statements and engaging in a fraudulent scheme in connection with the offer and sale of securities. Markan solicited approximately ten of his brokerage customers from three states to invest a total of approximately $2.9 million in a purported private equity fund. He falsely told investors that a well-known New York private equity firm advised the fund and provided them with a sham prospectus describing the offering. In reality, the fund did not exist, it was not associated with the New York private equity firm, and Markan misappropriated most of the investors’ money. Markan has been barred.  https://www.sec.gov/files/litigation/admin/2025/34-103479.pdf

19. On July 16, 2025, the SEC instituted administrative proceedings against Gary Costello, formerly a registered representative and investment adviser representative with Aegis Capital Corp. Costello had Aegis cancel certain losing trades he had placed in his personal brokerage account and then rebill them to some of his clients’ and customers’ accounts (cancel-rebills). At the time of the cancel-rebills, Costello had significant unrealized losses on those trades. By moving those trades from his own account to some of his clients’ and customers’ accounts, Costello transferred his unrealized trading losses to some of his clients and customers. Costello was ordered to pay disgorgement of $1,291,491, prejudgment interest of $184,681 and a civil money penalty of $195,000.  https://www.sec.gov/files/litigation/admin/2025/33-11380.pdf

20. On July 15, 2025, Erica Williams announced her resignation as Chair of the Public Company Accounting Oversight Board (PCAOB), effective July 22.  Paul Akins, SEC chairman, asked Williams to resign.  The SEC declined to comment on who would be the acting PCAOB chair.  Akin’s predecessor, Gary Gensler fired almost the entire board in 2021.  https://pcaobus.org/news-events/news-releases/news-release-detail/chair-williams-to-depart-pcaob-july-22-following-record-accomplishments

21. On July 15, 2025, the SEC instituted administrative proceedings against Suzanne Ballek, a former investment adviser representative with Inland Investment Advisors, for altering her employer’s records before providing them to SEC staff during an examination. Ballek modified dates and/or filled in missing information on many forms, which in many cases had been completed after the trades occurred and after any oral trade authorizations were given. By doing so, she created the false appearance that certain forms were properly completed and signed on the date of the transactions. In some instances, where no form had been completed for a particular trade, Ballek created a form and affixed the trader’s signature without the trader’s knowledge or authorization before submitting them to SEC exam staff. Ballek was ordered to pay a civil money penalty of $40,000.  https://www.sec.gov/files/litigation/admin/2025/ia-6896.pdf

22. On July 11, 2025, the SEC filed a joint stipulation with Defendants Pinnacle Advisors, LLC, a registered investment adviser and certain of its officers and fund trustees, to dismiss, with prejudice, the Commission’s ongoing civil enforcement action against them.   On May 5, 2023, the SEC charged Pinnacle with aiding and abetting Liquidity Rule violations by a mutual fund it advised and whose Liquidity Risk Management Program it administered. The SEC also charged the fund’s two independent trustees and two officers of both Pinnacle Advisors and of the fund it advised, with aiding and abetting Liquidity Rule violations by the fund. In the exercise of its discretion and as a policy matter, the SEC determined that the dismissal of this action was appropriate without stating further information on the matter. https://www.sec.gov/enforcement-litigation/litigation-releases/lr-25715

23. On July 11, 2025, the SEC filed an order setting an administrator’s bond in connection with a settled administrative proceeding against Pinnacle Investments, LLC, a registered investment adviser and broker-dealer, for making false and misleading statements in SEC filings regarding reviews of advisory client accounts.  In 2013, the SEC’s Division of Examinations (“EXAMS”) examined Pinnacle and found that the firm had not conducted sufficient periodic reviews of client advisory accounts to determine whether the accounts were being managed according to their investment mandates. EXAMS also determined that Pinnacle did not have a chief compliance officer at that time who was sufficiently knowledgeable about the Advisers Act and who was empowered to enforce Pinnacle’s compliance program. Pinnacle told EXAMS that it would implement periodic reviews of advisory accounts to ensure client portfolios were being managed in line with client objectives and that it would maintain documentation of these reviews. However, Pinnacle failed to conduct these reviews as promised.  Specifically, Pinnacle did not perform the account reviews described in its brochures because it failed to review a “representative sample of accounts” at least quarterly and did not review the securities in advisory accounts “continuously.” While Pinnacle conducted event-driven trade reviews of the securities in advisory accounts, it still failed to conduct the account reviews as disclosed, even after revising its disclosures in March 2017 to include “delegates” of the named officers (e.g., Pinnacle’s IARs). Pinnacle did not confirm that any delegate actually performed the reviews, nor did it provide training, written procedures, or oversight to delegates for conducting such reviews.  As a result, from 2015 through 2018, more than 100 Pinnacle advisory accounts experienced at least one year of no trades, with no documented evidence that the IARs contacted the clients or provided advisory services. Eleven accounts had no activity or contact for three years, and twenty-two accounts had none for two years. Despite this, Pinnacle continued charging advisory fees, totaling $201,843, of which Pinnacle retained $83,462 while paying the remainder to its IARs.  Beginning in January 2019, Pinnacle manually reviewed certain advisory accounts with low trading activity. However, until October 2022, Pinnacle continued failing to review a “representative sample of accounts” quarterly or all securities within accounts “continuously.” Furthermore, Pinnacle did not document the criteria or results of these low trade activity reviews.  Additionally, Pinnacle failed to adequately disclose conflicts of interest related to outside business activities and compensation arrangements of an Investment Adviser Representative associated with an affiliated fund. During the 2013 examination, EXAMS found that Pinnacle failed to disclose a conflict of interest involving its financial interest in notes purchased by an advisory client. Pinnacle told EXAMS that, going forward, it would disclose potential conflicts of interest to advisory clients when offering investments in affiliated entities.  Pinnacle also failed to adopt and implement policies and procedures reasonably designed to prevent Advisers Act violations concerning account reviews and conflicts of interest, and it failed to deliver required information about advisory personnel as outlined in Form ADV Part 2B (the “brochure supplement”).  Pinnacle was ordered to pay disgorgement of $83,462, prejudgment interest of $11,874, and a civil money penalty of $393,381.  https://www.sec.gov/files/litigation/admin/2025/34-103441.pdf

24. On July 11, 2025, the SEC instituted administrative proceedings against Gary Gordon, who was the President of American Portfolios Advisors Inc. (“APA”), and Colin Moors, who was the Chief Compliance Officer, for production of backdated documents purportedly documenting APA’s annual review of its compliance policies and procedures to SEC staff during the course of a compliance examination of APA.  Gordon was ordered to pay a civil money penalty of $20,000.   Moors was ordered to pay a civil money penalty of $10,000.  https://www.sec.gov/files/litigation/admin/2025/34-103438.pdf   and https://www.sec.gov/files/litigation/admin/2025/34-103437.pdf

25. On July 11, 2025, the SEC instituted administrative proceedings against American Portfolios Advisors, Inc. (“APA”), a formerly registered investment adviser, for breaching its fiduciary duty to certain of its advisory clients by failing to fully and fairly disclose the nature and extent of conflicts of interest associated with certain compensation paid to APA’s affiliated broker-dealer, American Portfolios Financial Services, Inc. (“APFS”) by an unaffiliated clearing broker. APFS served as the introducing broker for transactions executed on behalf of APA’s advisory clients and received compensation from the clearing broker related to execution, clearing and custody services provided to APA’s clients by clearing broker. APA was ordered to pay a civil money penalty of $1,750,000.  https://www.sec.gov/files/litigation/admin/2025/ia-6893.pdf

26. On July 9, 2025, the SEC obtained final judgment against Eric Cobb, a former investment adviser representative, who engaged in a long-running fraudulent trade allocation scheme, commonly referred to as “cherry-picking.” Cobb disproportionately allocated profitable trades to his personal and wife’s accounts, and unprofitable trades to certain client accounts. Cobb was ordered to pay disgorgement of $114,093, prejudgment interest of $22,293 and a civil money penalty of $25,000.  https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26342

27. On July 3, 2025, the SEC charged P/E Capital Investment Management Partners and its CEO, Eliseo Prisno, for fraudulent billing practices. Prisno and P/E Capital charged more than $2.4 million in fees to its clients that were unauthorized and undisclosed. In some instances, Prisno and P/E Capital deceptively circumvented their brokerage firm’s requirement that clients directly authorize any additional fees by using their clients’ login credentials without their consent. This matter is being litigated.  https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26339

28. On July 1, 2025, the SEC obtained final judgments by consent against Antony Caine, Anish Parvataneni, LJM Funds Management, Ltd. (“LJMFM”) and LJM Partners, Ltd. (LJM), whom the SEC previously charged with defrauding investors by making false and misleading statements about the risks of LJM’s “net short” options trading strategy and LJM’s risk management practices. The defendants breached their fiduciary duties and made material misrepresentations relating to the worst-case loss estimates for the LJM managed funds and the funds’ risks. The misrepresentations allowed defendants to grow their assets under management, resulting in them receiving millions of dollars of compensation. During a large spike in market volatility, the Funds suffered more than $1 billion in trading losses. LJMFM and Caine was ordered to pay disgorgement of $1,720,317 with prejudgment interest of $699,129. LJM Partners and Caine was ordered to pay disgorgement of $1,567,713 with prejudgment interest of $637,112. Parvataneni was ordered to pay disgorgement of $512,724 with prejudgment interest of $208,368. The final judgment further ordered Caine to pay a $500,000 civil penalty and Parvataneni to pay a $200,000 civil penalty.  https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26338

29. On July 1, 2025, the SEC’s Division of Corporation Finance has issued guidance to clarify how federal securities laws apply to crypto asset exchange-traded products (ETPs), which are investment vehicles listed on national securities exchanges and typically structured as trusts holding spot crypto assets or derivatives. These issuers must comply with registration and anti-fraud requirements under the Securities Act of 1933 and the Exchange Act of 1934, though they are not registered as investment companies under the Investment Company Act of 1940. The guidance highlights disclosure expectations in prospectuses and registration statements, covering areas such as the trust’s investment objectives, management policies, risks, custody of assets, fees, and conflicts of interest. Issuers are expected to provide plain-English summaries of key information, including details about underlying crypto assets, network operations, and the calculation of net asset value (NAV).  The SEC also emphasizes the need for transparent risk disclosures, addressing factors like price volatility, cybersecurity threats, fraud risks, and operational issues on trading platforms. Issuers must detail business operations, including the roles of sponsors, custodians, and other service providers, as well as material agreements and fees. Additional requirements include descriptions of securities and voting rights, plans for distribution, and disclosures about management and conflicts of interest. Financial reporting obligations may require separate statements for each series within a trust or partnership. This guidance is based on observations from SEC reviews of crypto asset ETP filings and aims to help issuers address common disclosure issues while tailoring information to their specific facts and circumstances.  https://www.sec.gov/newsroom/speeches-statements/cf-crypto-asset-exchange-traded-products-070125

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