They Broke the SEC

We’ll be living with the consequences long after Trump and Project 2025 are gone.

From John’s Desk …

“Do what you can, with what you have, where you are.”

— Theodore Roosevelt, Theodore Roosevelt: An Autobiography (1913)

With the solstice behind us and the days finally stretching out again here in the northern hemisphere, I’ve been taking stock of the year we just lived through — and the one we’re about to enter. On December 14th, I alerted you to a 50% decline in undisclosed SEC investigations and noted that the number would continue to fall. The data is clear now: a deeper structural shift is underway inside the agency.

Today I want to expand on that earlier note and give you a clear, unvarnished view of what I’m seeing — and how I plan to get you ready for the new year.

There’s no sugarcoating: It’s bad.

After 25 years of watching the SEC up close, it’s clear the agency has been weakened in ways that are structural, deliberate, and increasingly visible in the records and data we’ve obtained under the Freedom of Information Act (FOIA).

The rules are still on the books — in some cases stronger than ever — but rules only matter when they’re enforced. And when enforcement credibility erodes, the deterrent effect erodes with it. That’s when fraud risk rises, not because people suddenly become more dishonest, but because the perceived probability of getting caught drops. That’s the dynamic I’m seeing now.

We’re going to put the administrative state back in its box.

- Stephen Miller, White House Deputy Chief of Staff for Policy. Source: Rolling Stone, Inside Stephen Miller’s Reign of Terror, September 15, 2025

Whatever the motivations behind those changes, the practical reality for investors is the same: key enforcement functions have been reduced in priority, if not hollowed out, and the consequences are now working their way into the market.

And this isn’t something that snaps back with a change in administration. The weakening of the SEC was targeted, carried out by people who understood the system’s pressure points, and the damage is structural. You don’t rebuild this overnight. Investors, boards, law firms, auditors, and insurance carriers should not assume a quick return to prior norms.

We want the bureaucrats to be traumatically affected … When they wake up in the morning, we want them to not want to go to work because they are increasingly viewed as the villains … We want to put them in trauma.

- Russell Vought, Acting Director of the Office of Management and Budget (OMB). Source: Government Executive, ‘Put them in trauma’: Inside a key MAGA leader’s plans for a new Trump agenda, October 28, 2024

Regardless of your politics, you need to know what changed at the SEC

However you may feel about a weakened SEC, the shifts underway have direct implications for valuation, disclosure quality, enforcement probability, and ultimately your investment decision‑making.

As your long‑time and trusted guide through the SEC’s inner workings, I’m putting together a series of short, focused posts you’ll start seeing early in the new year. My goal is simple: give you a clear understanding of what has changed inside the agency and what those changes mean for your risk assessment and investment process.

A note on integrity of FOIA data

In the current environment, some SEC FOIA responses are now using language that makes it harder to understand what’s actually happening. This could lead you to think there is investigative activity where I would not reach that conclusion. The government playing games with FOIA responses isn’t new to me — I sued the SEC for doing this in the past.

What matters now is there are far fewer undisclosed investigations than before, which means the ones that remain likely carry higher risk. That makes accurate interpretation more important than ever. Even with all the changes, you can feel confident the DI Watch List stays clean, because I know how to read evolving FOIA replies correctly.

We could be attacked for this note and its follow-up

As I lay out what I’ve learned, it’s entirely possible that Disclosure Insight – and I personally – will face pressure, come under attack, or see attempts to limit access to FOIA‑based information. We’ve discussed this internally, and the conclusion was straightforward: you expect me to call things as I see them without fear, without favor, and without partisanship. That’s the standard I’ve operated under for 25 years, and I’m not changing it now.

Publishing over the next few weeks:

This week: SEC Investigation Updates. Several newly closed investigations, along with new ones and updates to ongoing probes.

Early January: DI Watch List update, covering all companies we’re tracking with confirmed, undisclosed SEC investigations.

January 5 – 18: The weeks leading into earnings season. A series of short pieces outlining the structural changes I’m seeing inside the SEC and how those shifts will impact your risk assessment going forward.

Outline for the SEC series:

• The SEC’s quiet retreat from the Foreign Corrupt Practices Act.

• Accounting and internal controls issues.

• Whistleblower concerns.

• Troubling SEC comment letter patterns.

• Selective case closures.

A North Woods Moment

Blizzard conditions in Minnesota today … but the days are getting longer. This year I spread seeds in my flower beds just as the first snow fell – a dormant‑seeding experiment with native flowers that thrive after exposure to winter cold. I bought a pound of seeds and went wild with them. Can’t wait to see what comes up!

Take good care. - John

Service Note: Access to DI research will become more structured in the new year, with a dedicated tier for readers who want content only and a very limited number of new All‑Access institutional engagements for those who need direct analyst access. If you rely on this work, this is a good moment to stay close.

This report does not constitute investment advice or an offering to buy, sell or recommend any securities. The information herein is distributed purely as a newsworthy event. All information contained herein is derived from publicly-available disclosures as made by the companies cited in this report, and/or documents obtained from the U.S. Securities and Exchange Commission.

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