Top 5 SEC Enforcement Developments for March 2025

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:

• An SEC action alleging an insider trading scheme and parallel criminal charges against German and Singaporean nationals;
• Breach of fiduciary duty charges against an investment adviser and two officers;
• A final rule eliminating the delegation of authority to the Director of the Division of Enforcement;
• Ponzi-like fraud charges against a cemetery operator; and
• The SEC voting to end defense of Biden-era climate disclosure rules.

1. The SEC Files Insider Trading Scheme Charges Against German and Singaporean Nationals

On March 4, 2025, the SEC charged German national Eamma Safi and Singaporean national Zhi Ge (a/k/a Josh Ge), with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder for their alleged involvement in an international insider trading scheme (hatched over lunch at a Parisian restaurant) that generated over $17.5 million in illegal profits. The complaint alleged that from 2017 to 2024, Safi obtained material nonpublic information from corporate insiders and investment bankers regarding planned corporate transactions, acquisition offers, and earnings announcements for U.S. public companies and foreign public companies trading on foreign exchanges with American depositary receipts (ADRs).

According to the SEC, Safi tipped Ge and another individual referred to as “Trader A” using coded and disappearing messages on Telegram, and all three purchased stock, call options, ADRs, and/or contracts for difference, with Safi also receiving kickbacks from Trader A. The SEC’s complaint also alleged that Safi leaked material nonpublic information to journalists and news outlets to allow the participants to trade on the market’s reaction rather than waiting for corporate press releases. The complaint seeks injunctions, disgorgement, prejudgment interest, and civil penalties. Additionally, the U.S. Attorney’s Office for the District of Massachusetts unsealed criminal indictments in a parallel action against Safi and Ge on March 4, 2025.

2. The SEC Files Settled Charges Against Investment Adviser and Two Officers for Breaches of Fiduciary Duty

On March 7, 2025, the SEC filed settled charges against Momentum Advisors LLC, its former managing partner Allan J. Boomer, and its former chief operating officer Tiffany L. Hawkins for breach of fiduciary duty arising out of their alleged misuse of fund and portfolio company assets. According to the SEC’s order against Hawkins, from August 2021 to February 2024, Hawkins misappropriated approximately $223,000 from a private fund advised by Momentum Advisors that she managed with Boomer by using company debit cards to pay for vacations, clothing, and personal expenses in over 100 transactions. Hawkins also allegedly caused herself to receive unauthorized compensation beyond her normal salary.

The SEC’s order against Momentum Advisors and Boomer alleged that Boomer, as Hawkins’ direct supervisor, failed to reasonably supervise Hawkins and allegedly caused the fund in 2020 to improperly pay a business debt benefiting an entity that he and Hawkins controlled, resulting in an unearned benefit of $346,904. The SEC also claimed that Momentum Advisors violated Section 206(4) of the Advisers Act by failing to adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act as required by Rule 206(4)-7, and to have the fund audited as required by Rule 206(4)-2. 

The order noted that the Commission considered Momentum Advisors and Boomer’s remedial actions and cooperation, explaining that Momentum Advisors voluntarily reported Hawkins’ misappropriation and that Boomer disclosed the fund’s overpayment on loans. Momentum Advisors and Boomer then took steps to reimburse investors, and Momentum Advisors replaced Boomer as managing partner and hired a new chief financial officer and compliance consultant. Without admitting or denying the findings, Hawkins agreed to a $200,000 civil penalty and associational bar, Boomer to an $80,000 civil penalty and a 12-month supervisory suspension, and Momentum Advisors to a censure and a $235,000 civil penalty.

3. The SEC Eliminates Delegation of Authority to Director of the Division of Enforcement

On March 10, 2025, the SEC issued a final rule to eliminate the long-standing delegation of authority to issue formal orders of investigation previously granted in 2009 to the Director of the Division of Enforcement. According to the SEC, the amendment “is intended to increase effectiveness by more closely aligning the Commission’s use of its investigative resources with Commission priorities.” 

By way of context, to issue a subpoena for documents or testimony, enforcement staff must first obtain a formal order. In 2009, the Commission delegated authority to issue formal orders to the Director of Enforcement and over the years, this authority was sub-delegated to other supervisors within the division. Now enforcement staff will be required to submit a memorandum explaining to the Commission the necessity and appropriateness of the investigation prior to issuing subpoenas, which request the Commission will either approve or reject. The enforcement staff retain, however, the authority to seek the voluntary production of documents and information and to require SEC registrants to provide certain information upon request. Companies and individuals receiving voluntary requests from the staff should consider the risks and benefits of responding. For more details on this issue, please read our client alert.

4. SEC Charges Cemetery Operator with “Ponzi-like” Fraud

On March 13, 2025, the SEC charged Jonathan Webb with defrauding investors in a securities offering. According to the SEC, from January 2021 to August 2023, Webb allegedly solicited approximately $1.7 million from at least 34 investors, several of whom were Webb’s employees at a Massachusetts cemetery. The complaint claims that Webb converted investor funds into crypto assets and transferred them to overseas brokerage firms to invest in the foreign currency exchange market at up to 500:1 leverage and used an algorithmic trading program he purchased online. Despite hundreds of thousands of dollars in losses, Webb allegedly continued to solicit funds from investors to repay earlier investors in a Ponzi-like fashion while also misappropriating investor funds for personal expenses. The complaint charges Webb with violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934. Without admitting or denying the allegations in the complaint, Webb consented to injunctive relief, disgorgement, and prejudgment interest totaling $280,144, and a civil penalty of $118,225.  

The case against Webb serves as a pertinent example of the enforcement priorities outlined by acting SEC Enforcement Director Sam Waldon during a March 24, 2025 panel on financial regulatory enforcement at the Securities Industry and Financial Markets Association’s annual Compliance & Legal Seminar where he stated that cases involving individual liability would be “priority cases for this Commission” and “received better” under the current administration.

5. The SEC Votes to End Defense of Biden-Era Climate Disclosure Rules

On March 27, 2025, the SEC voted to end its defense of regulations requiring corporations to publicly disclose climate-related risks and greenhouse gas emissions. These rules, developed during President Biden’s administration, aimed to require companies to include information in their financial statements about the potential impact of climate change on their business strategy, financial wellbeing, or operations. On the day of the vote, SEC Acting Chairman Mark T. Uyeda emphasized that “The goal of today’s Commission action and notification to the court is to cease the Commission’s involvement in the defense of the costly and unnecessarily intrusive climate change disclosure rules.”

The rules had been challenged by states and private entities, leading to the consolidation of the litigation in the Eighth Circuit under the case State of Iowa, et al. v. SEC, No. 24-1522 (8th Cir. 2024), and the Commission stayed the implementation of the rules until the litigation was resolved. Following the Commission’s vote, SEC staff submitted a letter to the Eighth Circuit indicating that the Commission was withdrawing its defense of the regulations and that Commission attorneys were no longer authorized to present the arguments outlined in its brief. 

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.