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    May 21, 2026

SEC’s Latest Enforcement Results and Budget Request Affirm Focus on Fraud

On April 7, 2026, the SEC announced its fiscal year (FY) 2025 (FY2025) enforcement results, which indicate an emphasis on pursuing fraud aggressively while deemphasizing certain types of violations that prior SEC leadership pursued. The SEC also released its FY2027 Congressional Budget Justification Annual Performance Plan and appointed David Woodcock as the new director of its Division of Enforcement, on the heels of Margaret Ryan’s resignation. Although the budget plan requests lower allocations for most programs than the SEC sought for the prior fiscal year, that does not translate into a smaller operating budget or limited effectiveness, in the view of former SEC officials interviewed by the Hedge Fund Law Report. Thus, it is imperative for fund managers to stay vigilant about compliance. This article summarizes the FY2025 enforcement results and compares them to earlier years; analyzes the SEC’s current priorities and their role in the latest totals; breaks down the SEC’s FY2027 budget request; examines the Commission’s stance on artificial intelligence as set forth in that request; and considers Woodcock’s appointment, with expert legal commentary. See “2026 Securities Enforcement Forum Panel Discusses Current Enforcement Climate” (Mar. 12, 2026).

U.K. FCA Emphasizes Need for “Completeness and Clarity” in Applications for Authorization

Although the U.K.’s Financial Conduct Authority (FCA) and His Majesty’s Treasury have been considering ways to reduce regulatory burdens on fund managers, the prospect of a lighter regulatory touch does not mean managers should be complacent when applying for authorization from the FCA. Managers must avoid errors and oversights that could delay or derail their applications. On April 9, 2026, the FCA published an alert on its website addressing concerns with asset managers’ applications for authority. Similar to an SEC risk alert, the FCA’s publication addresses the issues it identified, as well as the good practices and areas for improvement it observed, from the applications it reviewed. Common themes running through the alert include providing clarity and completeness in applications; ensuring consistency across all application documents; and tailoring documents to the applicant’s business model. This article discusses the FCA’s findings. See “U.K. Regulators Propose Changes to AIFM Rules to Ease Compliance Burden on Fund Managers” (Sep. 25, 2025).

SEC Speaks: 2026 Priorities, Enforcement, Collaboration, Innovation, Crypto & Retailization

The current SEC leadership has publicly endorsed innovation in the private funds market and a more expansive use of protocols, such as the Wells process, designed to promote transparency and guarantee due process to potential respondents in enforcement actions. Yet any claims that the SEC has “stood down” during a deregulatory zeitgeist, or shirked its core mission of ensuring stability and integrity in the markets and protecting investors, are wide of the mark, claimed the speakers in the Division of Investment Management (Division) panel of the SEC Speaks in 2026 conference held March 19‑20, 2026. The panel was moderated by Division Director Brian Daly and featured former Commissioner Daniel M. Gallagher; Robert McDavid Holowka, assistant director in the Investment Adviser Regulation Office; Rachel Loko, senior counsel in the office of the Division’s chief counsel; and Christian Sandoe, assistant director in the Division’s Disclosure Review and Accounting Office. This article presents key takeaways from the discussion. For a recap of a panel at the 2025 SEC Speaks conference, see “Division of Investment Management Staff Discuss Staffing, Operations, Rulemaking and Other Developments” (Jul. 31, 2025).

Contracting With Vendors to Mitigate Third-Party AI Risk

When companies and law firms purchase an artificial intelligence (AI) tool from a vendor, they need to consider the risks and controls they can put in place to mitigate those risks. They will have no control over associated risks unless their contracts with those vendors provide such rights. This article synthesizes insights shared during a BARBRI program on risks from use of third-party AI tools and considerations for approaching contracting with vendors. It also offers practical advice from the speakers, including Simon Boehme, COO of BillingNav; Chris Draper, CEO and co-founder of morriganAI; and William Galkin, a partner and founder of Galkin Law, LLC, on six key AI vendor contract clauses to help companies transform an AI governance program from just policy statements into enforceable operational safeguards. See “The Core Benefits and Burdens of AI Use in Financial Services” (Apr. 23, 2026).

SEC Action Targets Management Fee Overcharges and Misrepresentations to Private Fund Investors

SEC Chair Paul Atkins has focused the agency on getting “back to basics,” including combating conduct that harms investors. Consistent with that focus, the SEC has commenced an enforcement action against an unregistered fund adviser and its principal, who allegedly defrauded investors in a small private fund with assets of just a few million dollars. The defendants allegedly took purported management fees equal to nearly one-quarter of the fund’s contributed capital in the first year of the fund’s operation. They also allegedly failed to deliver financial statements to investors in contravention of the fund’s limited partnership agreement and made material misrepresentations to investors concerning capital commitments to the fund, its holdings, its audit status and its principal’s credentials. This article details the SEC charges. See “Chair Atkins’ ‘Back to Basics’ Vision for the SEC’s Division of Enforcement” (Apr. 23, 2026); and “2026 Securities Enforcement Forum Panel Discusses Current Enforcement Climate” (Mar. 12, 2026).

Morgan Lewis Expands Paris Office

Morgan Lewis has strengthened its global investment management, fintech and digital assets offerings with the arrival of Arnaud Grünthaler as a partner. Based in the Paris office, he advises a broad range of financial institutions and market participants on regulatory, structuring and distribution considerations, including market entry into France and engagement with supervisory authorities. He also counsels on emerging areas such as blockchain-based applications and disintermediated finance. For another new addition to Morgan Lewis, see “Andrew Cross Joins Morgan Lewis in Pittsburgh” (Feb. 12, 2026).

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Trailblazing Women – Contributions, Achievements and Observations of Outstanding Leaders

To mark International Women’s Day, Law Report Group editors, along with our colleagues across ION Analytics’ products, interviewed outstanding women in the industries and jurisdictions we cover. In this article, Jill Abitbol, Robin Barton, Rorie Norton and Megan Zwiebel profile notable women in the data privacy, cybersecurity, AI, private funds and anti-corruption law fields, including (i) Paula Howell Anderson, (ii) Gwendolyn Lee Hassan, (iii) Audrey Koh, (iv) Stacy Feuer, (v) Heather Egan, (vi) Jeewon Serrato, (vii) Stephanie Breslow, (viii) Anne Choe, (ix) Heather Wyckoff, (x) Angie Batterson, (xi) Jacqueline Eaves, and (xii) C. Dabney O’Riordan.

Enjoy reading their inspiring remarks here.