Paul Atkins Takes Helm of a Very Different SEC

Atkins also reenters the agency with members of Elon Musk's Department of Government Efficiency on site and a significantly slimmed-down SEC staff.

When asked during his nomination hearing before the Senate Banking Committee how he'd work with DOGE employees, Atkins responded: "As far as if there are people who can help with creating efficiencies in the agency or otherwise, I would definitely work with them as we’ll be looking at things going on at the commission right now to make sure that taxpayer funds are being used properly and that the work of the commission is being done effectively and efficiently."

DOGE "is going through the same process at the SEC as it has at other agencies and cleaning house," said Amy Lynch, founder and president of FrontLine Compliance. "Musk is no fan of the SEC and any enforcement actions currently against him will most likely be ordered halted. The enforcement department will be scaled back, and current cases reviewed for worthiness."

Some SEC divisions such as Trading and Markets and maybe Corporation Finance "could feel a lighter touch as they are responsible for market plumbing and corporate disclosures and filings," Lynch opined. However, offices handling ethics, equal opportunity and the agency's controversial in-house judge program "may fare worse under DOGE scrutiny."

Atkins "may work to protect the agency from the effects of DOGE since he should have his own ideas for how to change direction at the SEC," Lynch continued. "The SEC is a crucial agency to ensure market integrity, protect investors, and promote capital formation. DOGE needs to be aware of the long-term effects of any radical changes and what those changes could mean for our market integrity."

Investors can expect Atkins to "take orders from the White House," said Dennis Kelleher, head of Better Markets, a group that supports increased financial regulation.

“As the U.S. financial markets experience extreme stress and volatility due to erratic policy announcements by the President, the American people need an independent SEC Chair who will be vigilant in supervising and policing those markets to protect investors and prevent crashes," Kelleher said in a statement. "Unfortunately, the newly confirmed SEC Chair Paul Atkins will likely do the opposite and at the worst possible time."

Atkins will likely "politicize the SEC, mindlessly cut key staff, deregulate the industry, gut the enforcement professionals, side with management over investors, and generally undermine the mission and mandate of the SEC," Kelleher said. "As happened when he was an SEC Commissioner from 2002-2008, Wall Street’s megafirms and politically favored companies will be protected while investors will be left to protect themselves."

Regional Offices, Staff Departures

As of Wednesday, the agency reorganized its 10 regional offices under broader geographic areas and decreased the number of people reporting directly to the agency’s enforcement director. “The current management structure simply cannot be sustained,” former acting SEC chairman Mark Uyeda wrote in an email reviewed by Bloomberg.

Enforcement staff will report to deputy directors for geographical areas and an enforcement director for the specialized units, according to the email.
The new western region will cover Denver, Fort Worth, Los Angeles, and San Francisco, while the southeast region will include Atlanta, Miami and the SEC’s home office in Washington. The northeast geographic region will include the staff of the Boston, Chicago, New York and Philadelphia offices.

Uyeda said Tuesday that the agency is considering raising the $100 million threshold at which midsize advisors must register with the SEC as the number of large advisory firms continues to grow. Industry watchers anticipate Atkins to follow through with this.

The SEC is also grappling with the departures of about 10% of its staff. About 500 staffers took the recent buyout offered by the Trump administration, Bloomberg reported.

Pivot From Deregulation Unlikely

In light of the staff exodus and "a noticeable pivot in regulatory focus, most people assumed that a new era of deregulation was on the horizon," said Igor Rozenblit, managing partner at Iron Road Partners, a risk consultancy. "This shift signaled, to some, a loosening of the Commission’s traditionally rigorous oversight."

However, Rozenblit continued, "recent market volatility has changed the equation. Turbulence in financial markets often acts as a stress test for the system —and in some cases, exposes hidden vulnerabilities or even outright fraud. In this context, the SEC may find itself compelled to swiftly pivot from a deregulatory stance back to a focus on law enforcement, Wall Street, and investor protection."

Tom Giachetti, chair of the Investment Management & Securities Practice Group at Stark & Stark, believes Atkins will not stray from his "long-term goal of deregulation."

The SEC, Giachetti said, "needs to realign their resources and their objectives — the SEC has never figured out that you can’t regulate criminals. You never hear or see: 'SEC gets fraudsters before they steal the money.'"

The agency, Giachetti said, "should be concerned about where the clients’ money is supposed to be and to protect the integrity of the clients’ information."

Which Rules Will Stay?

House Financial Services Committee Chairman French Hill, R-Ark., told the agency on March 31 to withdraw a long list of final and proposed rules, including controversial ones like the outsourcing rule for advisors and the Predictive Data Analytics rule.

The SEC, Lynch added, "will have to find ways to do more with less regardless of the current economic climate. The agency has been ordered to find ways to deregulate and it will do that by modifying existing regulations. No one can predict what direction the economy will go in this highly volatile environment. I suspect Chair Atkins will continue on the path the SEC is on currently and not deviate based on market turmoil unless there is a true crisis with lasting damage that requires regulatory intervention."