October 30, 2025
Whistleblowers Encouraged to Step Forward to Help Enforcement Efforts
During the summer of 2025, both the Securities Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) announced a refocus on retail investor harm, insider trading, accounting fraud, and in particular, investor harm involving foreign actors.
2025 Summer Enforcement Actions
Between June and August 2025, the SEC commenced 52 enforcement actions, with 85 defendants or respondents, broken down by fraud type:
The CFTC, by contrast, did not file any new actions in that period.
Highlighted SEC Actions
Here’s a look at a few of the actions that comprise some of the numbers in the chart, above.
Investment Adviser Matters
- TZP Management Associates: On Aug 15, the SEC settled an action involving the calculation of fee offsets. The firm allegedly failed to include interest earned on deferred transaction fees in the offset calculation, thereby charging excess management fees. It also allegedly used a pro rata basis rather than full transaction fees, reducing the offset. The investment adviser agreed to disgorgement, interest, and a civil penalty.
- Retail adviser firms: Two firms faced enforcement actions for failing to disclose conflicts arising from incentive compensation. In one matter, advisers had performance goals tied to assets under a discretionary program; the SEC said that conflicts were not disclosed. Both investment advisers settled, paying significant penalties and disgorgement. In the Matter of Empower Advisory Group, LLC and Empower Financial Services, Inc. settled Aug. 29 and In the Matter of Vanguard Advisers, Inc. settled Aug. 29.
- Cherry‑picking scheme: In North East Asset Management Group, Inc. the SEC alleged that profitable trades were allocated disproportionately to preferred accounts (e.g. of the principal or family), while less favorable trades went to others. The June 3 settlements included disgorgement, interest, and penalties.
- American Portfolios Advisors, Inc. and former executives: The SEC alleged breach of fiduciary duties, nondisclosures of conflicts, overbilling, and the creation of backdated documents during an examination. Only July 11, the Investment Adviser and two executives agreed to penalties and other relief.
- Record‑modification by compliance officer: In Suzanne Ballek’s case, the SEC alleged she modified and even manufactured pre‑clearance trading forms during an investment adviser’s SEC exam. On July 15, Ballek consented to a cease‑and‑desist order and paid a penalty.
- Custody Rule violations: Munakata Associates LLC was charged with failing to satisfy the independent verification requirement under the Custody Rule. The investment adviser’s president had control or access over client accounts but failed to carry out independent verifications. The Aug. 1 settlement included a penalty.
Offering Fraud and Securities‑Based Swap Matters
- The3rdBevco Inc. and CEO Peter Scalise III: On June 17, the SEC settled claims that the company and CEO misled investors about a supposed celebrity brand collaboration (which never existed), misappropriated funds, and sold unregistered securities. Disgorgement, interest, and penalties were part of the settlement.
- MUFG Securities EMEA (a foreign security‑based swap dealer, or SBSD): The SEC alleged failures in recordkeeping, internal supervision, reporting, and false statements in its registration. The SEC claimed it did not adequately maintain required U.S. records and misrepresented that it would adopt required policies. On Aug. 6, the firm agreed to pay a $9.8 million penalty.
Whistleblowers play a critical role in ensuring the integrity of the U.S. and global financial markets. Both the SEC and CFTC rely on whistleblowers to help them enforce violations of the federal securities laws and the Commodity Exchange Act. If you have witnessed fraud, consider blowing the whistle.
What to Do if You Have Witnessed Fraud:
- Speak with an Experienced Whistleblower Attorney: Contact an experienced whistleblower attorney who understands the SEC and CFTC whistleblower programs. These consultations at Cohen Milstein are confidential and free of charge. Counsel can guide you through the process and assist in preparing and submitting your Tip, Complaint, and Referral (Form TCR) to the SEC or CFTC.
- Gather Your Information: Along with your personal observations and a completed Form TCR, the SEC and CFTC requires supporting information that is original and not in the public sphere.
- Understand the Potential for a Whistleblower Award: If your information leads to a successful SEC or CFTC enforcement action resulting in more than $1 million in monetary sanctions, you may receive an award ranging from 10-30% of any amount collected.
The SEC’s Whistleblower Program and the CFTC’s Whistleblower Program provide comprehensive guidelines on reporting fraud and the whistleblower process. Access the Tip, Complaint or Referral (TCR) forms: SEC Form TCR and the CFTC Form TCR.
About the Author
Christina McGlosson, special counsel in Cohen Milstein’s Whistleblower practice, focuses exclusively on Dodd-Frank Whistleblower representation She is the former acting director of the Whistleblower Office in the Division of Enforcement at the U.S. Commodity Futures Trading Commission. She was a senior attorney in the SEC’s Division of Enforcement, where she assisted in drafting the SEC rules to implement the whistleblower provisions of Dodd-Frank and served as Senior Counsel to the Director of the SEC’s Division of Enforcement and to its Chief Economist.
Christina represents whistleblowers in the presentation and prosecution of fraud claims before the SEC, CFTC, FinCEN, as part of the U.S. Treasury, the Department of Justice, and other government agencies.
Christina McGlosson, Special Counsel: Dodd-Frank Whistleblower Practice
Cohen Milstein Sellers & Toll PLLC
Suite 800
1100 New York Avenue, NW
Washington, DC 20005
E: cmcglosson@cohenmilstein.com
T. 202-988-3970
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