Each month, we publish a roundup of the most important SEC enforcement developments for busy in-house lawyers and compliance professionals. This month, we examine:
On March 5, 2026, as part of a global resolution, the SEC filed a proposed final judgment with respect to its claims against Rainberry, Inc., Justin Sun, Tron Foundation Limited, and BitTorrent Foundation Ltd. (the “Tron Defendants”) and dismissed all remaining claims. The SEC had charged the Tron Defendants with, among other things, violating Section 10(b) of the Exchange Act and aiding and abetting violations of Section 17(a)(1) of the Securities Act (both scienter-based violations), but the settlement included only violations of Section 17(a)(3) of the Securities Act, which requires only negligence in engaging in any transaction, practice, or course of business in the offer or sale of securities that operates as a fraud or deceit upon investors. The SEC alleged that the Tron Defendants engaged in manipulative wash trading of crypto asset securities to create the false appearance of active trading and investor interest. Without admitting or denying the allegations, the Tron Defendants consented to the entry of a final judgment, subject to court approval, that would permanently enjoin Rainberry from violating Section 17(a)(3) and require Rainberry to pay a $10 million civil penalty. The settlement did not include any disgorgement figure, despite the SEC seeking disgorgement in its Amended Complaint.
On March 27, 2026, the SEC announced that it had dismissed its civil enforcement action against restaurant group FAT Brands, Inc., its Chairman and former CEO, and its two former CFOs. The action, originally filed on May 10, 2024, charged the defendants with defrauding investors. In a joint stipulation, the SEC stated that it exercised its discretion to seek dismissal of the litigation “based on the facts and circumstances of this case and in light of the evidence developed in discovery,” and emphasized that the decision “does not reflect the SEC’s position on any other case.”
On March 31, 2026, the SEC voluntarily dismissed five cases against crypto companies accused of manipulating crypto markets through wash trading, including actions against CLS Global FZC LLC, Gotbit Consulting LLC, Vy Pham, and ZM Quant Investment Ltd. These dismissals follow the SEC’s broader trend of dropping crypto enforcement actions initiated under the Biden administration, including in cases against major industry participants such as Coinbase and Binance.
On March 26, 2026, the SEC filed settled charges against Oklahoma resident Krish Kumar for allegedly making materially false and misleading representations to investors. According to the SEC’s complaint, Kumar raised approximately $7.8 million through two investment funds that he established and solely managed—Future Fractal Investments LLC and Arcane Resonance Fund, LLC—and, as investment adviser, misappropriated nearly $7 million of the funds’ assets by transferring them to personal accounts. The complaint charges Kumar with violating Section 17(a) of the Securities Act of 1933, which prohibits fraudulent conduct in the offer or sale of securities; Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, which prohibits the use of manipulative or deceptive devices in connection with the purchase or sale of securities; and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder, which prohibit fraudulent, deceptive, or manipulative conduct by investment advisers. Without admitting or denying the allegations, Kumar consented to the entry of a judgment, subject to court approval, providing for permanent and conduct-based injunctions, with monetary remedies to be determined by the Court upon a future motion by the SEC. The SEC seeks disgorgement, pre-judgment interest, and civil monetary penalties.
On March 17, 2026, the SEC issued an interpretation clarifying how the federal securities laws apply to certain crypto assets and transactions involving crypto assets. As explained in greater detail in our recent client alert, the interpretation provides a token taxonomy categorizing digital assets and addresses when a “non-security crypto asset”—a crypto asset that is not itself a security—may become subject to, or cease to be subject to, an investment contract. It also clarifies the application of federal securities laws to common crypto-related activities such as airdrops, protocol mining, protocol staking, and the wrapping of non-security crypto assets. SEC Chairman Paul S. Atkins emphasized that the interpretation is intended to provide long-awaited clarity to market participants regarding the treatment of crypto assets under the federal securities laws. The Commodity Futures Trading Commission (CFTC) joined the interpretation and indicated that it will administer the Commodity Exchange Act consistent with the SEC’s approach. The CFTC’s announcement follows the March 11, 2026, announcement that the two agencies have entered into a “historic” Memorandum of Understanding and a Joint Harmonization Initiative to “support coordination across the policymaking, examination and enforcement functions of each agency[.]”
U.S. District Judge Steven Merryday, a Middle District of Florida federal judge presiding over American Securities Association v. SEC, ordered the SEC to produce information regarding penalties imposed on financial institutions whose employees used personal devices to conduct business communications. The American Securities Association brought this action under the Freedom of Information Act (FOIA) after the SEC refused to provide records about how penalties were assessed in the off-channel communications enforcement initiative that the current SEC has discontinued and been quick to criticize. Judge Merryday criticized the SEC’s litigation conduct in the FOIA action, noting in a footnote that “[a]ccepting the SEC’s pivot on the theory of the case appears to countenance duplicity, gamesmanship, neglect, insouciance, or worse from an agency of the United States,” and deprives affected parties of “orderly, disciplined, accountable, and forthcoming participation” by the government.
The SEC’s Enforcement Division has undergone key personnel and structural changes. On March 16, 2026, the SEC announced that Judge Margaret A. Ryan resigned from her role as director of the Division of Enforcement, and that Principal Deputy Director Sam Waldon would serve as acting director, pending the appointment of her successor. The SEC has since appointed David Woodcock, an SEC veteran currently in private practice, as the new director of the Enforcement Division.
The SEC also announced that it is standing up a new enforcement team, the “SOX Group,” which will focus on identifying and pursuing “bad actors” in the auditing profession by investigating and litigating potential violations of Sarbanes-Oxley (“SOX”) auditing standards and related provisions. The new team was established following a reduction in the budget of the Public Company Accounting Oversight Board (PCAOB), the independent body that traditionally oversees auditors. A spokesperson for the SEC emphasized that auditors serve as “critical gatekeepers” in the capital markets and stated that additional hires within the Enforcement Division will support the Commission’s efforts to strengthen financial reporting integrity and protect investors.
For more details on each enforcement action, or to discuss how these developments may affect your compliance program, please reach out to our team. Stay tuned for next month’s roundup, where we’ll continue to bring you the latest SEC enforcement news and insights.