SEC Restructuring in 2025
Main Contributors: Elizabeth Cope, CPA, CSCP, CIPM, CEO & Lead Consultant & Gretchen Sturdivan, CSCP, Compliance Manager & Creative Director
Background
With every new administration comes a shift at the SEC. During his tenure, the new SEC Commissioner, Paul Atkins, has publicly stated his goal to de-politicize the department and streamline the agency. He is focusing on the basics of preventing investor harm through billing, valuation, and disclosures rather than the recent focus areas of record keeping and off-channel communications. Alongside a description of the staff changes, we will provide a summary of office location changes and the workforce reduction. The SEC has seen a significant amount of change throughout the first half of 2025, and we will only be able to see the impact of these changes with time.
New SEC Chairman
The Securities and Exchange Commission has five Commissioners who are appointed by the president of the United States with the advice and consent of the Senate. Terms last five years and are staggered so that one Commissioner's term ends on June 5 of each year. The Chairman and Commissioners may continue to serve up to approximately 18 months after terms expire if they are not replaced before then.
To ensure that the Commission remains non-partisan, no more than three Commissioners may belong to the same political party. The President also designates one of the Commissioners as Chairman, the SEC's top executive.
Paul Atkins was sworn into office as the 34th Chairman of the Securities and Exchange Commission on April 21, 2025, after being nominated by President Donald J. Trump on January 20, 2025, and confirmed by the U.S. Senate on April 9, 2025. He was previously appointed as SEC Commissioner from 2002-2008 by President George W. Bush. He also served on the SEC Staff from 1990-1994.
Atkins wants to promote, rather than stifle, innovation at the SEC; “The markets innovate, and the SEC should not be in the business of telling them to stand still.”
Focus as SEC Chairman
Digital Assets and cryptocurrency – shifting toward a more measured enforcement approach with clear, rational, coherent, and principled regulations.
During the SEC Speaks Conference on May 19, 2025, Atkins stated that he wants to make it possible for Broker Dealers to custody and trade cryptocurrencies, so that they are part of a regulated environment, regardless of whether or not the assets are considered securities.
Market Efficiency – promoting streamlined regulations to enhance capital formation and innovation
Cost-Saving Measures – implement efficiency measures to reduce federal spending
Integrate FinHub into other parts of the agency.
Investigate the costs of the system “CAT” and review the reporting requirements.
Depoliticizing Regulation – keep political considerations separate from securities law to maintain integrity
Investing in Private Funds – allowing closed-end funds to invest more than 15% in private funds without the current restrictions in place.
Investor Harm – including actual fraud, repayment, and reimbursement to investors.
However, certain non-fraud fundamentals will remain areas of enforcement focus, including compliance, valuation, billing and disclosure (focus on retail investors).
In practice, we expect this shift will mean renewed interest in investment advisers’ and broker-dealers’ non-fraud fundamentals, as opposed to the recent focus on record keeping and off-channel communication matters.
Elimination of Regional Director Roles
In April 2025, the SEC removed positions of Regional Directors across its ten offices. Regional Directors oversaw both the office’s enforcement group as well as the examination program and managed the administration of their office. Regional Directors would also interact with regulators and law enforcement.
The functions that a Regional Director performed in each of the ten offices will be reallocated to three Deputy Directors who will oversee three new regions:
West
Northeast
Southeast
There will also be a deputy director for specialized units. The current regional directors were reassigned into new roles. Despite these changes, the SEC’s Regional Offices will still have directors to handle operations. This effort of consolidation aims to streamline management and reduce costs. It may impact the speed of investigations.
Closure of Regional Offices
In March 2025, the government’s General Services Administration stated that they would be ending the leases for the following offices:
Salt Lake City office closed in 2024 (due to a high-profile failure in a crypto case)
Los Angeles Regional Office lease terminated (by September 2025)
Philadelphia Regional Office lease terminated (by August 2025)
Chicago Regional Office lease is intended to be terminated (by August 2025)
The closures were made to “reduce space and related costs,” according to the COO Ken Johnson, of the SEC. He clarified that the lease terminations are not associated with any reorganization or reduction in personnel. Staff will work remotely full-time if new spaces are not ready before the leases are up.
Workforce Reduction
Reuters reported in April 2025 that the SEC had lost approximately 16% of its staff. This figure included 600 staff members who left in February 2025, accepting offers to resign and retire early. Departures include senior staff members. Divisions with greater losses and gaps in coverage include Trading and Markets and Office of the General Counsel.
Trading and Markets - Oversees the major components of the securities markets, including broker-dealers, exchanges, clearing agencies, and other market participants.
Office of the General Counsel - Acts as the chief legal advisor to the SEC and provides counsel on all legal matters involving the agency.
Centralization of Enforcement Authority
In March 2025 the SEC issued a final rule to rescind delegation of formal investigative authority from the Enforcement Divisions director. Since 2009, after the financial crisis, the head of the Division of Enforcement was able to issue orders of investigation and lower-level enforcement staff could issue subpoenas for documents by testimony in pursuit of that investigation. Now, only a majority vote of the sitting Commissioners can authorize formal orders of investigation. The SEC’s goal with this change is to centralize control of enforcement actions.
Legislative Reforms
The SEC Reform and Restructuring Act (H.R. 8339) has been introduced in Congress. The bill was first introduced in the House on May 10, 2024, aiming to reduce costs and create efficiencies by proposing measures such as:
transferring the Public Company Accounting Oversight Board (PCAOB) to be under direct SEC control,
mandating periodic reviews of final rules, and
requiring semiannual testimony to Congress on SEC activities.
During the SEC Speaks Conference on May 19, 2025, Atkins felt that the SEC could handle the PCAOB’s tasks, if they did integrate, and that adequate funding has been worked into the bill. Others have expressed concern in eliminating the PCAOB as an independent entity. Founding PCAOB members noted that adding auditor oversight to the SEC could dilute both the PCAOB’s function and the SEC’s ability to fulfill its investor protection mission. Currently, the SEC oversees the PCAOB without investing its limited resources in daily auditor oversight, a model they believe works well. The decision on this bill will ultimately fall upon Congress.
Conclusion
Change seems overwhelming when it all comes at once, but ultimately, these changes are attempting to consolidate and streamline the SEC’s staff and functions for efficiency and cost savings. We have yet to see the impact on investment advisers. In our opinion, we don’t expect examinations to slow down, but rather that enforcement may become more practical and aimed at client harm, rather than administrative matters.