By Jonathan Dixon, Head of Surveillance, eflow Global
We’re now well into the second half of President Trump’s first year back in the Oval Office, and clear signs are emerging regarding how this administration will take a different approach to the regulation of financial markets. In the last six months, we’ve already seen DOGE’s relentless cost-cutting and dismantling of agencies, as well as Gary Gensler’s resignation as Chair of the SEC, underscoring the new style of regulatory enforcement that we can expect to see under the Trump administration.
Following a record-breaking first quarter in which the SEC and CFTC issued over $100 million in market abuse penalties and announced more than 200 enforcement actions, Q2 saw a notable drop in enforcement activity with just 114 actions, a 43% quarter-on-quarter decline, and no fines for market abuse or insider trading in the U.S.
The dramatic reduction in fines is a result of the new administration restructuring under new leadership, combined with an outgoing administration which accelerated enforcement with 188 actions before leaving Washington’s power center. While the significant decrease in fines and enforcement action is at odds with the enforcement-heavy approach adopted by U.S. regulators in recent years, it is perhaps understandable in the context of DOGE restructuring and the resulting uncertainty in terms of future capacity.
So, does this mark a permanent change in approach from regulators? I don’t believe so. While regulators are undoubtedly talking more openly around the need for greater collaboration with firms, financial penalties remain the most effective deterrent to market abuse. And while President Trump is clearly a fan of lighter touch regulation as a stimulus of growth, it remains very difficult to see how this would be practical in established financial markets when measured against the need for long-term stability. I suspect that as the new administration fully beds in over the remainder of 2025, we will see a return to the volume of enforcement actions and financial penalties that we’ve seen in recent years, albeit not quite to the same record levels. Ultimately, time and the markets will be the judge of how DOGE cutbacks and new policies will impact market risk.
The new administration has already indicated its intent to tackle market abuse as a priority throughout the rest of the year, and the SEC has signaled a “back to basics” approach. Senior officials at the SEC have outlined plans to focus on enforcing core areas: insider trading, accounting and disclosure fraud, market manipulation and breaches of fiduciary duties. Specifically, the SEC has consolidated regional oversight and reorganized specialized units to improve efficiencies. The new Market Abuse Unit, headed by Robert Cohen and Joseph Sansone, will focus on complex insider trading rings and sophisticated market manipulation, including alternative trading systems.
In April, the CFTC issued an advisory to provide guidance on the criteria for self-reporting violations to its Division of Enforcement. This focuses on material violations and cases that involve significant harm to clients or market integrity. I believe that issues of lower severity will be more likely to be handled internally, signaling a more risk-based, resource-efficient administration.
With the resignation of Gary Gensler and the appointment of Paul Atkins as chairman of the SEC, the new administration is likely to move towards a less confrontational and a more cooperative approach toward financial services. Gensler was synonymous with very aggressive enforcement during his time as Chair of the SEC, issuing large fines and targeting a wider range of firms for non-compliant activity. He was also a vocal and highly public critic of crypto, describing it as “rife with bad actors” – an approach that was greatly at odds with President Trump’s personal views.
While I don’t expect to see any existing financial regulation repealed, we will see the new administration’s priorities rise to the top. For example, the recent passing of the GENIUS Act has indicated the administration’s belief in the importance of crypto assets and establishing regulations around an asset class that is rapidly emerging as a mainstream financial instrument. The prioritization of pro-business regulation around stablecoin issuance puts the U.S. firmly one-step ahead of the EU when it comes to the issuance of asset-backed stablecoins.
Whatever emerges over the coming months and years, there is no doubt that the U.S. financial markets are entering a new era of regulatory enforcement. As the year unfolds, we will likely see more organizational changes and priority shifts that will shape the regulatory space for the years to come.
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Jonathan Dixon is a global financial regulatory and compliance expert with 15 years of experience in senior regulatory roles including director of regulatory affairs-EMEA and APAC at Eventus, head of trade surveillance at Kraken and a trade surveillance consultant at Accenture.
