Securities and Exchange Commission Chairman Paul Atkins on Tuesday criticized off-channel communications enforcement activity initiated before he took the helm at the SEC as "exactly how regulators should not act."
The current SEC chairman's message slamming the agency's previous focus on off-channel-related violations comes after an enforcement sweep that cost Wall Street firms – including some big municipal market players – a pretty penny in civil penalties.
In 2024, Raymond James & Associates agreed to pay a $50 million civil penalty while RBC Capital Markets agreed to pay $45 million to help settle SEC charges for recordkeeping failures related to the use of unapproved communication methods, known as off-channel communications. RBC rankedNo. 4 among the top-10 muni underwriters by par amount in the first quarter of 2026, while Raymond James came in at No. 8.
Atkins' May 12 comments came during a discussion with Financial Industry Regulatory Authority President and CEO Robert Cook, which was held as part of the 2026 FINRA Annual Conference in Washington, D.C. During his remarks relating to off-channel communications, Atkins added that "by the way, the SEC had the exact same problem, even [at] the top of the agency."
The SEC chairman, whose comment during the discussion that regulation via enforcement "is over" at the SEC ignited a burst of applause from audience members, said the SEC is now focusing on "quality of cases versus quantity." He stressed the need to focus on "the real issues" that result in investor harm, and said that 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," Atkins said. "We're not going to do that anymore."
Atkins was sworn in as the SEC's 34th chairman April 21, 2025. Just a week earlier, the SEC had issued an order denying motions by a group of respondents – including RBC Capital Markets and Raymond James – seeking to modify settled orders relating to off-channel communications. The SEC issued the 16 separate orders between September 2023 and September 2024 after accepting offers of settlement.
The respondents' main argument was that it would beunfairto require them to comply with undertakings contained in their settlements that were not contained in January 2025 settlements between the SEC and other parties, the order said. The respondents claimed that although the later settlements involved others in similar situations, the terms of those later orders were better.
"Even if that were so, however, it would not be a basis for modifying respondents' settled orders," the SEC's order said.
Though the SEC's order denied the respondents' motions, Commissioner Hester Peirce dissented.
"Under the unique circumstances here, the commission should take the unusual but warranted step of modifying the settled orders," Peirce said.
As the respondents noted, "the twelve settlements at the tail end of the commission's Off-Channel Communications sweep do not include the same undertakings as the earlier settlements," the commissioner said in her dissent.
"Indeed, the undertakings in the January settlements are demonstrably less draconian and costly," Peirce said.
Peirce posed questions in her dissent, including these: "Why must the broker-dealer firms that settled before January 2025 submit continuing membership applications to FINRA and be subject to costly heightened supervision plans while the broker-dealer firms that settled in January 2025 are not? And why is heightened supervision, which also imposes costs on FINRA, even necessary for the broker-dealer firms at all?
Since the SEC's Division of Enforcement had offered no answers to those questions, "we are left with respondents' uncontested argument that they are subject to costly and unnecessary additional supervision while other similarly situated firms are not," Peirce said.
Between 2021 and 2024, 77 FINRA member firms settled enforcement actions with the SEC relating to off-channel communications, according to a May 2025 blog post authored by Cook and Greg Ruppert, currently an executive vice president and chief regulatory operations officer at FINRA.
In their post, they referenced the SEC's April 14, 2025 order denying the motions by the group of respondents that sought to modify their settled orders.
"Although FINRA had no input into the terms of the OCC settlements between the firms and the SEC, the pre-2025 settlements ordered undertakings that triggered collateral consequences for the firms with respect to their membership in FINRA and other self-regulatory organizations," according to the post, which said that "following the SEC's decision, FINRA will consult with the SEC and other SROs to modify these collateral consequences, consistent with investor protection considerations."
