Atkins Criticizes Off-Channel Enforcement, Vows Quality Focus

SEC Chair Paul Atkins on May 12 at the FINRA Annual Conference in Washington criticized earlier enforcement actions targeting off‑channel communications and said the agency will prioritize higher‑quality cases. He noted the prior enforcement sweep produced large civil penalties totaling about $95 million against several firms.

Atkins referenced 16 enforcement orders issued between September 2023 and September 2024. Among the settlements he mentioned were a $50 million penalty by Raymond James & Associates and a $45 million penalty by RBC Capital Markets, both tied to recordkeeping failures involving unapproved communication methods. RBC ranked fourth and Raymond James eighth among top municipal underwriters by par amount in the first quarter of 2026.

Speaking in conversation with FINRA President and CEO Robert Cook, Atkins said there was no SEC finding of investor harm in the off‑channel matters: “of all the off‑channel communications cases, there wasn’t one case of investor harm that was brought by the SEC. So that tells you something.” He also told the audience that “regulation via enforcement is over” and added, “We’re not going to do that anymore.” He further noted internally the SEC had faced similar recordkeeping issues.

The comments followed an April 14, 2025 SEC order, issued about a week before the conference, that denied motions by a group of respondents seeking to modify their settled orders. The respondents, including RBC and Raymond James, had argued that later settlements reached in January 2025 contained less burdensome undertakings and that their earlier orders should be reopened and adjusted. The SEC rejected those motions, saying differences in later settlements did not provide a legal basis to reopen final orders.

Commissioner Hester Peirce dissented from the denial. In her dissenting statement she asked why firms that settled before January 2025 must submit continuing membership applications to FINRA and accept heightened supervision while firms that settled later are not subject to the same requirements. She wrote that the January undertakings are “demonstrably less draconian and costly” and said the SEC Division of Enforcement had not answered those questions.

FINRA has said the pre‑2025 undertakings created collateral consequences for firms’ membership and supervisory obligations. In a May 2025 blog post, FINRA leadership noted that 77 FINRA member firms settled off‑channel enforcement matters with the SEC between 2021 and 2024. After the SEC decision on the modification motions, FINRA said it will consult with the SEC and other self‑regulatory organizations to address collateral consequences where appropriate while considering investor protection.

Atkins was sworn in as the SEC’s 34th chairman on April 21, 2025.