Late last month, the giant agribusiness Archer-Daniels-Midland agreed to pay a $40 million penalty to settle SEC fraud charges based on accounting irregularities at the company. The agreement is the culmination of a years-long controversy that forced the company to twice revise its financial reports, which led to heavy share losses and numerous shareholder lawsuits.
The ADM settlement would not ordinarily raise eyebrows. In 2023, the SEC settled a pair of similar accounting-fraud cases, one against Fluor Corp for $14.5 million and one against Newell Brands for $12.5 million. In 2024, the agency settled an accounting case against U.P.S. for $45 million. By these standards, the recent ADM settlement is hardly unusual. What makes the case noteworthy, however, is the fact that it constitutes the largest penalty case brought by the Trump Administration in the past thirteen months and one of only a handful of actions against public companies.
The evidence of a diminished SEC enforcement appetite is everywhere. One industry report reveals the SEC brought 19 financial reporting and disclosure cases in the first quarter of FY 2025 (before the administration change), and only seven more accounting and reporting enforcement actions against public companies or executives after January 2025, for a total of 26 such cases during the fiscal year. Another report found 52 of the 56 enforcement cases instituted against public companies in FY 2025 were filed during Gary Gensler’s tenure as chairman. Ironically, the ADM investigation was commenced during the Biden Administration.
According to a recent report released by Cornerstone Research Inc., the SEC brought 30% fewer enforcement actions against public companies and subsidiaries in fiscal 2025 compared to the prior year. That coincides with a 15% drop in enforcement staff and a 43-day layoff. Add to this mix the truncation of the agency’s crypto-enforcement program, the demise of the Foreign Corrupt Practices Act, and a slew of presidential pardons, you end up with a smaller, less active enforcement program.
Even with the tardy arrival of Paul Atkins (as Chairman) and Meg Ryan (as Director of Enforcement) last year, the prospects for an invigorated SEC enforcement program seem poor. While testifying before Congress this month, Chair Atkins defended his record claiming the Commission would work to fill “gaps” at the agency left by large staffing cuts made at the start of the Trump administration. SEC Enforcement Director Meg Ryan explained the downturn in Commission actions as part of an agency shift from “quantity” to “quality.”
Oddly, the SEC is still pursuing Elon Musk – who helped engineer the 15% agency staff cut – for alleged violations of Section 13(d) based on his failure to timely file required forms in connection with his accumulation of Twitter shares. Musk contends, in part, that the prosecution is unconstitutional and the result of selective enforcement. Politics does indeed make strange bedfellows.
Whether the ADM settlement represents continuity in SEC enforcement activity or is simply an outlier is unclear. SEC Enforcement Director Meg Ryan insists that “reports that enforcement work at the SEC has been tossed to the wayside are not only greatly exaggerated but flat out wrong.” Only time — and numbers — will tell.
RICHARD A. LEVAN is a partner at Dailey LLP specializing in securities industry matters.