SEC & CFTC Enforcement Update

Actions initiated by the SEC and CFTC in October - December 2025

Number of actions, by matter type

Types of defendants/respondents

Public company disclosures and accounting

SEC settles action against firearms company and brings action against former executives for accounting and disclosure fraud

In the Matter of Ammo, Inc. N/K/A Outdoor Holding Company (A.P., Dec. 15, 2025, Settled)

SEC v. Frederick W. Wagenhals, Robert D. Wiley and Christopher D. Larson (D. Ariz., Dec. 15, 2025, Contested) 

The SEC settled claims against a publicly-traded firearms company and brought claims against three of the company’s former executives for alleged accounting violations and misstatements made in the company’s SEC filings. 

Between August 2020 through July 2023, the company filed multiple Form 10-Ks and one Form 10-K/A. The SEC alleges that the company failed to name one of the individual defendants as an officer and failed to disclose two related party transactions with that officer. The SEC further alleges that the undisclosed defendant was a SEC-sanctioned accountant subject to an officer and director bar, and that the other individual defendants made representations to external auditors to allegedly conceal the barred defendant’s employment and dealings with the company.  

Additionally, the SEC alleges that improper accounting contributed to misstatements in the company’s financial statements, including allegations that the company improperly capitalized on investor relations expenses. The SEC also alleges that the individual defendants manipulated the company’s EBITDA by including the company’s excise taxes.  The company then published a press release that stated its alleged EBITDA profitability. 

The company engaged a compliance consultant and agreed to adopt and implement all recommendations within two years. The SEC also seeks injunctive relief, civil penalties, disgorgement with prejudgment interest and reimbursements from the individual defendants. 

SEC litigation release | SEC order | SEC complaint

Insider trading

SEC brings action against six individuals for insider trading and market manipulation

SEC v. Muhammad Saad Shoukat, Gyunho Kim, Muhammad Arham Shoukat, Muhammad Shahwaiz Shoukat, Izunna Okonkwo and Daniyal Khan (D.N.J., Dec. 22, 2025, Contested)

The SEC brought claims against six individuals, including an investment banker, for alleged insider trading and market manipulation schemes. 

In the insider trading scheme, the SEC alleges the investment banking analyst tipped his friend with material nonpublic information (MNPI) regarding nine potential corporate acquisitions pending at his bank. The analyst obtained this information through his work on the deals, access to virtual data rooms, and participation in the firm’s internal communications platform, in violation of his firm’s policies. In return, the friend allegedly gave the banker a Rolex watch, job advice, and assistance in editing a confidential work project. Besides using the MNPI to trade himself, the SEC also alleges the friend disseminated relevant information to four other individuals, who placed profitable trades in advance of some of the corporate acquisitions, purchased call options or engaged in spread betting.

In one market manipulation scheme, the SEC alleges the investment banking analyst’s friend and his brother impersonated physicians through spoofing emails to steal confidential information about a company’s clinical trials and then impersonated patients to publish false clinical trial results that increased the company’s stock price. The friend and his brother allegedly sold their stock at a profit before the stock price fell due to the company reporting actual clinical results. In the other market manipulation scheme, the SEC alleges the friend and his two siblings bought another company’s stock after the investment banking analyst informed them about a potential acquisition of the company. When the acquisition delayed for a couple of months, the three brothers allegedly threatened the company’s management and utilized imposter accounts to disseminate a false press release announcing a fabricated partnership deal for the company which increased its stock price and allowed the individuals to sell their stock profitably.

The SEC seeks civil penalties and disgorgement of ill-gotten gains with prejudgment interest against each of the six individuals. The U.S. Attorney’s Office for the District of New Jersey brought a parallel action against the same individuals.

SEC litigation release | SEC complaint

Investment adviser

SEC brings actions against investment advisers for misrepresentations in their Forms ADV

SEC v. Bluesky Eagle Capital Management Ltd. (S.D.N.Y., Nov. 13, 2025, Contested) 

SEC v. Supreme Power Capital Management (S.D.N.Y., Nov. 13, 2025, Contested) 

SEC v. AI Financial Education Foundation Ltd. (D. Colo., Nov. 13, 2025, Contested)

SEC v. AI Investment Education Foundation Ltd. (D. Colo., Nov. 13, 2025, Contested)

SEC v. Invesco Alpha Inc. (D. Colo., Nov. 13, 2025, Contested)

SEC v. Adamant Stone Limited (D. Colo., Nov. 13, 2025, Contested)  

The SEC brought claims against six investment advisers for alleged misrepresentations in forms filed with the Commission.

Investment advisers must register with the Commission or state securities regulators by submitting Form ADV, which requires information about an investment adviser’s ownership and business. According to the SEC, the six firms claimed they operated in New York City and Denver, Colorado, managed assets ranging from $1 to $10 million, and advised various private funds. The SEC alleges that these business addresses did not actually exist and that they found no records of the purported private funds. The investment advisers allegedly did not respond to the Commission’s request to provide records to substantiate claims on their Forms ADV. 

The SEC seeks civil penalties against each of the six investment advisers.

SEC litigation release | SEC complaint 1 | SEC complaint 2 | SEC complaint 3 | SEC complaint 4 | SEC complaint 5 | SEC complaint 6

SEC settles claims against firm for deficient cybersecurity policies

In the Matter of M Holdings Securities, Inc. (A.P., Nov. 25, 2025, Settled) 

The SEC settled claims against a firm dually-registered as a broker-dealer and an investment adviser that operated a network of 120 branch offices for alleged failure to adopt policies to protect client records and information as required by the Safeguards Rule and the Identity Theft Red Flag Rule.

According to the SEC, the firm, which was dually registered since 2000, did not have written safeguarding policies and had not implemented safeguarding procedures for its branch offices until September 2020. After September 2020, a significant number of branch offices allegedly failed to adopt these procedures, including multi-factor authentication requirements, incident response policies, and annual security awareness trainings. The SEC claimed that the firm was aware of noncompliance but did not revise its policies and procedures to address these deficiencies. The SEC also alleged that because of the lack of cybersecurity policies and procedures, 17 email accounts belonging to registered representatives and employees were compromised by unauthorized third parties that were able to access records for 8,500 individuals between July 2019 and March 2024. In addition, the firm failed to periodically update its written Identity Theft Prevention Program policies to reflect changes in risks. 

The SEC noted that the firm has undertaken remedial measures, including hiring officers in charge of cybersecurity, privacy, and technology, implementing formal risk assessments at branch offices, requiring annual compliance attestations, contracting with a third-party vendor to engage in risk oversight, and conducting additional training.

The firm agreed to pay a $325,000 civil penalty as part of its settlement with the SEC. 

SEC AP summary | SEC order 

Crypto

SEC brings action against three crypto asset trading platforms and four investment clubs for confidence fraud

SEC v. Morocoin Tech Corp., Berge Blockchain Technology Co., Ltd., Cirkor Inc., AI Wealth Inc., Lane Wealth Inc., AI Investment Education Foundation Ltd. and Zenith Asset Tech Foundation (D. Colo., Dec. 22, 2025, Contested) 

The SEC brought claims against three crypto asset trading platforms and four investment clubs for alleged misappropriations of investor funds.

According to the SEC, the four investment clubs operated WhatsApp chats that claimed to offer investment advice and recommendations from experienced financial professionals. The SEC alleges that the investment clubs would build trust with investors and then direct the investors to open accounts on the crypto asset trading platforms. The investment clubs and platforms would allegedly then recommend fictitious “Security Token Offerings” purportedly issued by legitimate businesses and equated to initial public offerings of stock. They also allegedly demanded advance fees if investors attempted to withdraw their money. The SEC alleges that the offerings and issuing companies were fictitious and $14 million was ultimately misappropriated from investors in the scheme. 

The SEC seeks injunctive relief, disgorgement with prejudgment interest and civil monetary penalties.

SEC press release | SEC complaint

CFTC action

CFTC brings action against two individuals and their company for defrauding clients

CFTC v. Brian Mitchell, Kevin Mack, Jr., and Young Pros Investment Group LLC (E.D. Mich., Nov. 21, 2025, Contested) 

The CFTC brought claims against two individuals and their company for alleged fraudulent solicitation practices to raise funds for a commodity pool to trade commodity futures contracts. 

According to the CFTC, the individuals and the company raised funds through misrepresentations about trading success, false guarantees of profit and protections against loss, and failure to disclose the risks involved in futures trading. The CFTC alleges the individuals were not successful traders, incurred losses most months they traded on behalf of the pool, and lost about 75% of the raised funds. To conceal their losses, the individuals allegedly provided false monthly account statements to pool participants and used the principal deposits of newer pool participants to pay purported profits to previously established pool participants. The CFTC also claims the individuals failed to register the pool and themselves as associated persons of the pool, did not operate the pool as a separate entity, and commingled pool participants’ funds with their own. By engaging in the commodity pool, one individual also allegedly violated a CFTC order issued against him prohibiting him from trading on any CFTC-registered entity or engaging in any activities requiring CFTC registration for three years. 

The CFTC seeks restitution with prejudgment and post-judgment interest, disgorgement with prejudgment and post-judgment interest, civil monetary penalties, permanent trading and registration bans, a permanent injunction and rescindment of agreements with clients.

CFTC press release | CFTC complaint

Other SEC, CFTC announcements

CFTC announces revisions to agency’s Wells process 

On December 1, 2025, the CFTC announced amendments to its Rules of Practice and its Rules Relating to Investigations, aimed at enhancing transparency and due process. Our prior client update on the announcement is here. The CFTC now will also provide respondents with at least 30 days to make a Wells submission and require enforcement staff “to provide an objective memorandum that adheres to the applicable rules of professional conduct, provides a comprehensive explanation of the factual and legal foundation for the recommendation, and distinguishes unfavorable facts or legal precedents.” In addition, all written statements will now be forwarded to the CFTC, and the Division of Enforcement will give written notice or written confirmation of an oral notice identifying the specific charges to the potential respondents or defendants.

CFTC press release | CFTC amendments 

CFTC swears in new CFTC Chairman 

On December 22, 2025, Michael Selig was sworn in to serve as the 16th chairman of the CFTC. The U.S. Senate previously confirmed his nomination on December 18, 2025. 

CFTC press release

SEC Division of Enforcement leadership changes 

The SEC announced several recent leadership changes, including:

• Samuel Waldon as Deputy Director in the Division, having previously served as Chief Counsel. 
• David M. Morrell as Deputy Director in the Division overseeing the agency’s enforcement program in the New York, Boston, and Philadelphia Regional Offices.
• Paul H. Tzur as Deputy Director in the Division overseeing the agency’s enforcement program in the Chicago, Atlanta, and Miami Regional Offices.
• Mark Cave as Chief Counsel, having previously served as one of the Division’s Home Office Associate Directors. 
• J. Russell “Rusty” McGranahan as SEC General Counsel.

SEC press release 1 | SEC press release 2 | SEC Division of Enforcement Directory