Top 5 SEC Enforcement Developments for January 2026

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:

• The Supreme Court’s review of the SEC’s disgorgement authority;
• Insider trading in the biopharma sector;
• SPAC fraud;
• Crypto enforcement updates and recent regulatory guidance; and
• An accounting and disclosure fraud case against a public company and its executives.

Additionally, there were several notable leadership changes at the SEC in January. On January 2, Commissioner Caroline Crenshaw’s term concluded, leaving the agency with just three commissioners and no Democratic appointees. The SEC’s Divisions of Enforcement and Examinations also filled key leadership positions in January. The SEC announced on January 12, 2026, that Paul H. Tzur and David M. Morrell have been appointed as Deputy Directors of the Division of Enforcement. Both joined from private practice and have previous public sector experience, with Tzur having served as an AUSA in the Northern District of Illinois and Morrell having served as Deputy Assistant Attorney General in the DOJ’s civil section, among other roles. Tzur will oversee enforcement programs in the Chicago, Atlanta, and Miami regional offices with Morrell overseeing the New York, Boston, and Philadelphia regional offices. Finally, on January 20, Keith Cassidy was named Director of the Division of Examinations, having served as Acting Director since May 2024.

1. Supreme Court Set to Clarify Whether SEC Must Prove Actual Financial Harm to Obtain Disgorgement

On January 9, 2026, the Supreme Court granted certiorari in Sripetch v. SEC to resolve a circuit split on whether the SEC may obtain equitable disgorgement under 15 U.S.C. §§ 78u(d)(5) and (d)(7) without proving that investors suffered actual financial harm, or whether showing that a defendant received ill-gotten gains is sufficient. In 2020, the Supreme Court held in Liu v. SEC that disgorgement qualifies as equitable relief under Section 21(d)(5) of the Exchange Act only if it “does not exceed a wrongdoer’s net profits” and is “awarded for victims.” 591 U.S. 71, 74 (2020). The Second Circuit held in SEC v. Govil that disgorgement requires proof of investor pecuniary loss as a prerequisite to being “awarded for victims,” while the Ninth Circuit in Sripetch joined the First Circuit in Navellier & Associates, Inc. v. SEC in holding that such a showing is not required, focusing instead on stripping wrongdoers of their unlawful profits. 

Disgorgement is a key remedy in SEC enforcement, and the Supreme Court’s resolution of the split would potentially eliminate forum-based uncertainty and materially affect SEC enforcement strategy. If the Supreme Court were to require proof of investor harm, the SEC’s ability to obtain disgorgement in cases where investor losses are easier to identify, such as market manipulation and fraud matters, will be impacted significantly. Indeed, in cases where significant statutory penalties are unavailable, eliminating disgorgement absent investor loss may further reduce the deterrence value of SEC actions and even lead to “profitable” violations.

2. SEC Cracks Down on Biopharma Insider Trading with the NYAG Joining in

On January 15, 2026, the SEC charged New Jersey resident Hong (a/k/a John) Wang and his company, Precision Clinical Consulting LLC (“Precision”) with insider trading, alleging that while providing biostatistical consulting services to C4 Therapeutics, Inc. (“C4”), Wang obtained material non-public information (“MNPI”) regarding positive clinical trial results for C4’s new multiple myeloma and non-Hodgkin lymphoma drug. Wang allegedly used four brokerage accounts, including one controlled by Precision, between November 20 and December 12, 2023,  to purchase over 160,000 shares of C4 stock, netting close to half a million dollars in realized and unrealized gains after C4 publicly announced the positive results on December 12, 2023. The SEC’s complaint charged Wang and Precision with violating Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5, seeking a permanent injunction, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against Wang. The DOJ charged Wang with three counts of criminal securities fraud. For more information, including key takeaways, see our January 2026 client alert.

On January 26, 2026, the SEC charged Brian J. Suthoff with insider trading, alleging that he misappropriated MNPI from a former senior employee of Sage Therapeutics, Inc. (“Sage”) relating to Sage’s drug application Zuranolone for the treatment of major depressive disorder. According to the SEC, Suthoff liquidated his long-held shares two months before Sage announced in August 2023 that the Food and Drug Administration denied approval for its drug application, a move that allowed him to avoid nearly $20,000 in losses. Without admitting or denying the findings, Suthoff agreed to disgorgement of his avoided net losses plus prejudgment interest, a civil penalty for the same amount, a permanent injunction against future violations of Section 10(b) of the Exchange Act and Rule 10b-5, and a five-year bar from serving as an officer or director of a public company. 

State Attorneys General are also enforcing alleged insider trading in the biopharmaceutical sector, including where the SEC has not (at least not yet) pursued an action. On January 15, 2026, New York Attorney General Letitia James sued Robert G. Kramer, the former CEO of Emergent BioSolutions (“Emergent”) for alleged insider trading under New York’s Martin Act by selling more than $10 million in Emergent’s stock while possessing MNPI about unresolved contamination issues in the company’s COVID-19 vaccine manufacturing operations. As part of a settlement, Emergent agreed to pay $900,000 in penalties and to enhance its executive trading policies (which had allowed Kramer’s trading plan to be approved). The NYAG seeks damages, disgorgement, and costs from Kramer.

3. SPAC Fraud Remains a Priority

On January 22, 2026, the SEC charged Lottery.com, Inc. (“Lottery”), several of its former senior executives, and the CEO of Trident Acquisitions Corp. (“Trident”), a SPAC, for allegedly conducting a fraudulent scheme and making false statements relating to the merger of Lottery into Trident. The complaint alleged that between November 2020 through May 2022, the defendants planned and executed a coordinated scheme in advance of the SPAC merger to mislead investors by manufacturing sham “sales” of $9 million of valueless customer data that was returned via overpayment for two Mexican businesses and a $30 million sale of advertising credits. Once Lottery went public, the Lottery executives allegedly executed two additional sham sales of advertising credits totaling over $35 million, which caused Lottery to overstate its revenues by over 300% in 2021 and 800% in Q1 2022.

The SEC’s complaint, filed in the Southern District of New York, charged all defendants with violations of Section 17(a) of the Securities Act of 1933 (the “Securities Act”), Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Exchange Act, and Rules 10b-5, 13a-14, and 14a-9, with Lottery also being charged with recordkeeping and internal controls failures under Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act. The complaint also seeks injunctive relief, disgorgement, civil penalties, and officer and director bars for each former senior executive.

4. SEC Dismisses Another Key Crypto Litigation and Provides Guidance on Tokenization

On January 23, 2026, the SEC voluntarily dismissed its claims against Gemini Trust Company, LLC (“Gemini”) after having charged Gemini with the unregistered offer and sale of securities to retail investors through the Gemini Earn crypto asset lending program. According to the joint stipulation, the “100 percent in-kind return of Gemini Earn investors’ crypto assets through the Genesis Bankruptcy” was a key consideration for the dismissal. Five days later on January 28, 2026, the SEC’s Divisions of Corporation Finance, Investment Management, and Trading and Markets issued a joint statement “as part of an effort to provide greater clarity on the application of the federal securities laws to crypto assets.” In their statement, the Division Staff explicitly defined a tokenized security as “a financial instrument…under the federal securities laws…where the record of ownership is maintained in whole or in part on or through one or more crypto networks,” and emphasized that federal securities laws apply equally to securities that are tokenized, regardless of how the security is issued or the mechanism used to record ownership (i.e., onchain or offchain). For more information, please see our January 2026 client alert.

5. Financial Reporting Fraud Charges Against a Public Company and Certain Former Executives

On January 27, 2026, the SEC filed a settled order against Archer-Daniels-Midland Company (“ADM”) and two former senior executives. The SEC charged the former CFO of ADM’s “Nutrition” business segment with accounting and disclosure fraud by allegedly materially inflating Nutrition’s reported performance. According to the order, when Nutrition did not meet internal operating profit targets, ADM’s CFO and Nutrition’s former president allegedly directed improper adjustments with other segments of ADM’s business such as retroactive rebates and price changes not typically available to third-party customers. These adjustments, that the SEC alleged ADM’s former CFO negligently approved, reportedly made it appear as though Nutrition was meeting its publicly disclosed 15 to 20% annual growth goals, which the SEC alleged rendered ADM’s financial disclosures materially false and misleading. Per the settled order, ADM received cooperation credit and agreed to pay a $40 million civil penalty, while the two settling defendants (ADM’s former CFO and Nutrition’s former president) agreed to pay a combined $979,953 in disgorgement and prejudgment interest and a combined $200,000 in civil penalties. Additionally, Nutrition’s former president accepted a three-year officer and director bar. The SEC’s complaint against Nutrition’s former CFO, filed in the Northern District of Illinois, Eastern Division, charges him with violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, Rule 10b-5, and Exchange Act Rule 13a-14, and seeks injunctive relief, disgorgement with prejudgment interest, civil penalties, an officer and director bar, and reimbursement of executive compensation under Section 304 of the Sarbanes-Oxley Act.