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    Oct. 29, 2026

SEC Enforcement FY2026 in Review: Comprehensive Statistical Analysis Highlights Trends and Focus Areas

Although the SEC’s Division of Enforcement has not officially released its official enforcement figures for fiscal year (FY) 2026, preliminary statistical analysis is possible using the Commission’s published litigation releases and administrative proceedings. By that unofficial review, the SEC closed FY2026 with approximately 317 enforcement actions, which is its lowest total in at least two decades and is about 30 percent below the 456 actions it reported for FY2025. Despite the SEC’s reduced enforcement activity in FY2026, it would be a mistake for fund managers to misconstrue that as a sign of things to come. The pace under Chairman Paul S. Atkins has been steady at about 21 enforcement actions per month, and the fiscal year ended with the busiest quarter of his tenure. Further, the leadership’s stated priorities and the year’s significant actions point to three areas to watch in FY2027: investment advisers and private asset valuations; accounting and financial reporting; and insider trading. In a guest article, StoneTurn partner Daniel Brinks analyzes the evolution of the SEC’s leadership and philosophy during Chairman Atkins’ tenure; the FY2026 enforcement statistics measured against prior administrations; process reforms under Chairman Atkins; the three primary focus areas of the Commission’s FY 2026 enforcement efforts as well as other relevant enforcement themes; and what fund managers can expect in FY2027. For more insights from Brinks, see “Return of the Scienter Standard: Rule 206(4)‑8 and the SEC’s Renewed Focus on Individual Accountability” (Sep. 17, 2026).

SEC Penalizes Adviser for Fiduciary Breach When Flawed Investment Diligence Process Leads to Significant Losses

On September 18, 2026, the SEC issued a cease-and-desist order (Order) against an investment adviser and its principal for breaching their fiduciary duty during a plan to liquidate registered funds. To alleviate a liquidity crunch, the firm negotiated a transaction to sell its registered funds’ illiquid assets for preferred shares in another firm in advance of an anticipated IPO. The firm failed to perform proper diligence on the counterparty, however, resulting in investors incurring approximately $300 million in losses. The Order is notable as an instance where the SEC applied Rule 206(2) under the Investment Advisers Act of 1940 in the context of investment due diligence to find that fraud occurs when a poor diligence process fails to produce a reasonable basis to believe in the likelihood of an investment succeeding. Although the matter involves registered funds, the lessons therein apply equally to private fund managers. This article summarizes the Order and offers practical takeaways for fund managers, with expert legal commentary. See “SEC’s Approaches to Exams, Enforcement and Retailization Under Atkins” (Jun. 11, 2026); and “SEC’s Latest Enforcement Results and Budget Request Affirm Focus on Fraud” (Jun. 11, 2026).

Understanding the Pending Overhaul of the U.K. AIFMD

On July 14, 2026, the U.K. Financial Conduct Authority (FCA) and His Majesty’s Treasury published four consultation papers proposing fundamental changes to the U.K.’s regulatory regime for alternative investment fund managers. Their goal is to make the U.K. version of the Alternative Investment Fund Managers Directive (AIFMD) clearer; more proportionate; and better aligned to firm size, activities and business models. If adopted as proposed, the new U.K. AIFMD regime would mark a stark enough departure from the E.U.’s version of the rules to prevent managers from being able to monitor both under a single compliance program. In a program on the proposed changes, Simmons & Simmons partners Nicholas Colston, Tair Hussain, Devarshi Saksena and Louise Tudor‑Edwards provided an overview of the proposed changes, focusing on the firms to which they will apply; the proposed rules on valuation, leverage, risk management, liquidity risk management, delegation, investor disclosures and FCA reporting; and how those proposed rules differ from the current AIFMD regime. This article synthesizes their insights. See “U.K. Regulators Propose Changes to AIFM Rules to Ease Compliance Burden on Fund Managers” (May 29, 2025).

Commercial and Legal Considerations Involved in Seed Investments

In a challenging fundraising environment, a seed investor can provide an emerging manager with capital and expertise – and a potential seal of approval – that makes the manager more attractive to other potential investors. Seed investments come with substantial strings attached, however, as seeders want protections from potential misconduct by sponsors, along with economic concessions that come with backing comparatively unproven sponsors. A K&L Gates program examined the current seeding landscape, including the challenges facing emerging managers; common seed deal economics; the key protective rights that seeders seek, including consent rights, GP removal and key person terms; and associated negotiating concerns. The program featured K&L Gates parter Edward Dartley and Chrissie Chen Pariso, managing partner at MPowered Capital. This article distills their insights. See “Seed Deal Study Finds Maturing Market” (Oct. 15, 2026); and “Trends and Key Drivers in PE and Private Credit Seeding Transactions” (Jul. 11, 2024).

Survey Finds AI Is Top Compliance Concern

The overwhelming majority of respondents in the 2026 Investment Management Compliance Testing Report (Report) identified artificial intelligence (AI) as the hottest compliance topic, with firms making significant progress on AI governance. In addition to examining how firms are negotiating the compliance challenges posed by AI, the Report also gauges the state of compliance programs and resources; business continuity plans; preparedness for amended Regulation S‑P; third-party risk management; prediction markets; and social media. As in prior years, the study was co-sponsored by ACA Group (ACA), the Investment Adviser Association and Yuter Compliance Consulting. This article discusses the key findings in the Report, with additional commentary from Aaron Pinnick, senior manager of thought leadership at ACA. See “2024 Survey Reveals Top Compliance Concerns and Common Industry Practices” (Sep. 19, 2024).

Jones Day Welcomes Ariele Cohen in New York

Ariele L. Cohen has joined Jones Day as a partner in its New York office. She focuses on the structuring, formation and marketing of private investment funds. For insights from Jones Day, see our two-part series on co‑investment equity commitment letters: “Rising Prominence and Role in the Co‑Investment Process” (May 29, 2025); and “Key Terms and Negotiating Positions” (Jun. 12, 2025).

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