Top 5 SEC Enforcement Developments for August 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:

• A securities fraud case against the former CEO of a medical technology company;
• 38 separate SEC actions alleging entities used false Forms ADV so they appear to be legitimate U.S. investment advisers;
• An action against former subprime auto-lender executives involving asset-backed securities fraud;
• A settled action for failure to remediate previously identified anti-money laundering deficiencies and a challenge to the SEC’s enforcement authority; and
• A Fifth Circuit opinion upholding the SEC’s refusal to modify a prior settlement.

The SEC also created a new Financial Reporting and Accounting Unit within its Enforcement Division. The unit will focus on financial-reporting fraud and misconduct involving accounting and auditing. Its creation signals that the SEC intends to concentrate resources and technical expertise on complex financial-reporting and disclosure matters.

1. Court Rules for SEC in “Pull Forward” Securities Fraud Case

On August 5, 2026, the U.S. District Court for the District of Columbia largely granted the SEC’s motion for summary judgment against Brian Hutchison, the former CEO of RTI Surgical Holdings, in an enforcement action arising from RTI’s alleged practice of accelerating or “pulling forward” customer orders to meet quarterly revenue targets. The court found that the undisputed evidence established that RTI shipped customer orders early, that Hutchison knew about the practice and the risks it posed to future revenues and customer relationships, and that those facts were not adequately disclosed to investors.  The court granted the SEC summary judgment on most of its securities fraud and related claims, as well as its claim under Section 304 of the Sarbanes-Oxley Act, leaving for trial certain issues relating to a separate $7.2 million transaction.

RTI, now known as Surgalign, and its former CFO settled with the SEC in 2022, but Hutchison continued to litigate.

Hutchison contended that pulling forward orders was not inherently improper, and that he had warned investors about the division’s future revenue outlook, stating that there would be “declines” due to the “timing of orders.” The court rejected those arguments, finding that these “vague statements…did not disclose RTI’s decision to pull forward orders.” 

Hutchison further pointed out that the six early shipments that lacked customer approval accounted for only 1% to 3% of total revenue for the quarters at issue.  The court nonetheless found the statements material, noting that (i) the SEC’s theory was that “the practice of using pulled-forward shipments—with or without customer approval—should have been disclosed as material”; and (ii) the early shipments “affected the extent to which RTI met or exceeded its revenue guidance.”

Finally, the court found the evidence sufficient to establish scienter as a matter of law, concluding that “no reasonable jury could conclude that Hutchison was not—at least—extremely reckless.”

Notably, the court’s analysis was not limited to shipments improperly recognized under GAAP; it focused more broadly on RTI’s reliance on pull-forwards to meet guidance and the undisclosed nature of that practice. The decision highlights that disclosure issues may still arise even when the company’s practice is proper under GAAP. 

2. 38 Entities Charged With Making Material Misrepresentations on Forms ADV

On August 27, 2026, the SEC filed 38 complaints in the District of Colorado against entities that allegedly used false Forms ADV to portray themselves as legitimate U.S. investment advisory firms. The complaints charge violations of Sections 204(a) and 207 of the Investment Advisers Act of 1940 and represent a coordinated enforcement effort targeting what the SEC characterized as “large-scale abuse” of its adviser filing system.

According to the SEC, the entities filed Forms ADV in 2025 and 2026 containing numerous false or unsubstantiated representations.  Among other things, the defendants allegedly listed Colorado business addresses where they had no actual presence; provided disconnected telephone numbers or numbers belonging to unrelated businesses; and claimed that private-fund financial statements had been audited by accounting firms that could not be found in federal or state public registries. The SEC also alleged that a number of defendants appeared to operate from overseas despite listing Colorado addresses on their Forms ADV. Certain defendants also marketed themselves on websites by displaying fake certificates suggesting SEC registration.

The SEC simultaneously removed the 38 entities’ Form ADV filings from its website and issued an investor alert warning that the filing of a Form ADV as an exempt reporting adviser does not mean that an entity is registered with, approved by, or endorsed by the SEC.

The SEC seeks civil penalties and permanent injunctions prohibiting the entities from filing Forms ADV as exempt reporting advisers. 

For advisers and private-fund managers, the sweep is a reminder that information included on Forms ADV concerning offices, contact information, auditors, and registration or reporting status should be accurate, supportable, and consistent with other public-facing materials.

3. Former Subprime Auto Lender Tricolor Executives Charged with Fraud

On August 18, 2026, the SEC charged three former Tricolor executives, Daniel Chu, Jerome Kollar, and Ameryn Seibold, for their alleged roles in a multi-year fraud at the subprime auto lender and used-car dealer. The complaint charges all three defendants with violations of the antifraud provisions of the Securities Act and Exchange Act.

According to the SEC, Tricolor raised more than $1.9 billion through asset-backed securities (ABS) offerings while the defendants allegedly misrepresented the quality and ownership of the underlying auto-loan collateral. The complaint alleges that Chu and Kollar stated that the loans included in the ABS collateral pools were free and clear of other liens, when many had instead been double pledged to other lenders and delinquent or uncollectible loans were reported as current.

The SEC also alleges that Chu and Kollar falsely represented that Tricolor’s financial condition was sound despite knowing that the company faced a growing liquidity crisis and was struggling to fund its operations. The alleged scheme created an approximately $800 million shortfall in Tricolor’s collateral base, and Tricolor filed for bankruptcy in September 2025.

The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against all three defendants, as well as permanent officer-and-director bars against Chu and Kollar. The SEC action follows parallel criminal proceedings brought by the U.S. Attorney’s Office for the Southern District of New York in which Kollar and Seibold pleaded guilty and Chu continues to contest the charges.

4. Anti-Money Laundering (and Questions Regarding the SEC’s Authority) Remain in Focus

In an August 3, 2026 settled action, the SEC imposed a $20 million penalty on UBS Financial Services for anti-money laundering (AML) monitoring deficiencies, while FinCEN separately imposed a $125 million penalty. According to the SEC, UBS failed to adequately monitor tens of thousands of foreign-currency wire transactions and, as a result, failed to timely file certain suspicious activity reports (SARs) in violation of the broker-dealer books and records provisions of Section 17(a) of the Exchange Act and Rule 17a-8 thereunder. The SEC also alleged certain deficiencies in UBS’s customer diligence program. 

UBS had previously faced enforcement regarding its AML program in 2018. In resolving the prior SEC action, UBS represented that it was implementing a new automated transaction monitoring system.  According to the SEC, the implementation was substantially delayed and deficiencies persisted even after the system went live.

In the settled order, the SEC credited UBS’s remedial acts and cooperation. UBS also agreed to undertakings to review and, if necessary, remediate its monitoring system and policies. 

Meanwhile, the Tenth Circuit upheld the dismissal of a challenge by Scottsdale Capital Advisors to the SEC’s enforcement of AML reporting requirements.  Scottsdale shares common ownership with Alpine Securities, which the SEC previously sued for thousands of alleged SARs violations and against which it obtained a $12 million civil penalty later affirmed by the Second Circuit.

While that Alpine litigation was pending, Scottsdale sued the SEC in Utah, arguing that the SEC lacked authority to enforce Bank Secrecy Act requirements through Rule 17a-8 and that the rule violated the Administrative Procedure Act (APA). The Tenth Circuit did not reach the merits of the challenge, instead holding that Scottsdale failed to identify a “final agency action” subject to review under the APA. Thus, although the decision did not resolve the merits of Scottsdale’s challenge to the SEC’s AML authority, it leaves the SEC’s existing enforcement framework in place.

5. Fifth Circuit Rejects Challenge to SEC’s Refusal to Modify Prior Settlement

On August 25, 2026, the Fifth Circuit rejected Apex Clearing Corporation’s challenge to the SEC’s refusal to modify its 2024 settlement after the Commission subsequently offered more favorable terms to other firms charged with similar off-channel communication violations.  

In 2021, the Commission began an enforcement sweep targeting failures of regulated entities to preserve off-channel communications.  This sweep led to the SEC obtaining more than $2 billion in penalties against over 100 firms. As part of that sweep, in August 2024, Apex, a registered broker-dealer, settled SEC charges that it failed to preserve employees’ off-channel electronic communications. Apex agreed to pay a $6 million penalty and undertake several remedial measures, including retaining an independent compliance consultant to review its electronic communications policies and procedures, implementing the consultant’s recommendations, and undergoing a follow-up review one year later.

Five months later, however, the SEC settled similar off-channel communication cases against another group of firms on terms that were less burdensome. Unlike Apex, the broker-dealers in the January 2025 settlements were not required to complete the same mandatory undertakings. Apex asked the SEC to modify its settlement to provide comparable treatment, arguing that it was inequitable to impose materially different consequences on similarly situated firms.  The SEC denied the request, reasoning that receiving a worse deal than later-settling firms did not constitute the “compelling or extraordinary circumstances” necessary to reopen a final settlement.

The Fifth Circuit upheld that decision.  Although the court acknowledged the disparity—and observed that the later firms were “lucky to be caught in a later wave” of the enforcement sweep—it held that the SEC was not required to retroactively extend more favorable settlement terms to firms that had already settled.  Apex had voluntarily agreed to its undertakings, and the SEC reasonably concluded that subsequent settlements on better terms did not justify reopening the agreement.

The decision is an important reminder that SEC settlements generally remain final even when the Commission later changes its enforcement approach or offers more favorable terms to similarly situated respondents.  Firms negotiating settlements should therefore consider not only the immediate terms but also the risk that the SEC’s enforcement or remedial posture may subsequently change.