Good afternoon and thank you to the Association of Securities and Exchange Commission Alumni (ASECA) for organizing today’s event in tribute to Judge Stanley Sporkin, the Commission’s first Director of Enforcement. It is an honor to kick off this event featuring a panel of former SEC Directors of Enforcement who have followed in his footsteps. My remarks today reflect my views as Acting Chairman and I am not speaking on behalf of the Commission or my fellow Commissioners.
I also thank John Hartigan for the invitation to provide opening remarks. I have known John since the late 1990s from my days in private practice as a corporate and securities lawyer in Los Angeles. Both of us were members of the Los Angeles County Bar Association and helped organize their annual securities regulation seminar. A highlight of each seminar was the panel featuring Judge Sporkin, who participated nearly every year. It was always entertaining, thought-provoking, and informative. It was a privilege to personally listen to his wisdom and observations.
Judge Sporkin served as the Director of Enforcement from 1974 to 1981. He saw enormous changes in technology and the financial markets during his time at the SEC, and later as a federal judge.
In the late 1980s, Judge Sporkin said, “I cannot recall any period in the past where change has been so dramatic and rapid. What we are seeing is literally happening before our eyes.”[1] He held up the typewriter as one example of the demise of entire products and industries, before observing that the changes “so permeate our society that they will have a substantial impact on the future structure and performance of our financial markets.”[2]
Sitting here today, it might be hard to imagine how the demise of the typewriter could have an impact on financial markets. But back then, it was just one of many changes happening all at once. If you look at all the changes happening now, it’s not so hard to imagine.
If Judge Sporkin wrote his remarks today, he might point to the invention of artificial intelligence or to cryptocurrencies and digital assets, instead of “a gizmo called the word processor”[3] as emblematic of the “technological revolution”[4] taking place. But the “overall goal”,[5] he articulated back then—that “we should regulate only to assure that our markets are honest, fully competitive, and accessible to all”[6]—still holds today.
An important objective of any financial regulator in protecting investors is to ferret out bad actors and foster the provision of information necessary to make informed investment decisions. Capital formation—a core SEC mission and one that is vital to our economy—cannot flourish in an environment rife with fraud and deceit. At the same time, any investment involves risk and we must avoid paternalistic regulation that presumes the government knows best. Or, as Judge Sporkin put it, “We must permit access to the market place for new and budding enterprises with the minimum restraints. Whatever new forms of regulation are considered, they must be examined in the context of an evolving society designed to be driven by the innovation of the private sector and not an impediment to it. We must make sure that the creativity of our brilliant scientists and entrepreneurs is not stifled by suffocating regulation.”[6]
Since its creation in 1972, the Division of Enforcement has played a vital role in the Commission’s ability to advance its three-part mission: to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation. That mission plays a key role in promoting innovation, jobs creation, and the American Dream. The work of the Division is key to ensuring that markets are honest, that market forces—not manipulative ones—determine the price of securities, and that we protect investors from fraud and deceit.
I have been a securities regulator for more than twenty years – first at the state level and then at the SEC. Like many of you, I have seen firsthand about the harm that fraud can have on investors, who may lose their entire life savings from deceitful schemes. Time and time again, bad actors have leveraged the prospect of technological innovation to defraud others.
Take innovation involving artificial intelligence (AI). More market participants are using AI in their businesses. More sophisticated investors are using AI tools to help them make investment decisions. More retail investors are seeking out investment opportunities to capitalize on the growth of AI. And—as with other technological innovations—we’ve seen how bad actors can capitalize on that increased use and interest by offering investment opportunities with false statements or exaggerations about AI capabilities. Thanks to the hard work of the Division, the Commission has brought several enforcement actions to protect investors from such bad actors.[7]
Judge Sporkin understood that SEC enforcement efforts must support broader policymaking and regulatory efforts of the Commission. In the crypto asset space, last month, I announced the formation of a new crypto task force dedicated to developing a comprehensive and clear regulatory framework for crypto assets.[8] One focus of this task force will be to ensure that we deploy enforcement resources judiciously.[9] The SEC is fully engaged in enforcement efforts against fraud and schemes in all areas, including crypto.
To keep pace with innovation, we have formed a new unit within the Division of Enforcement: the Cyber and Emerging Technologies Unit. This new unit will ensure that the Division remains nimble and stays on the cutting edge of technological developments to better fulfill our investor protection mission and hold accountable bad actors who use innovation to defraud others.
We remain dedicated to our more traditional investor protection efforts. Take elder fraud, for example. The prospect or reality of losing one’s life savings is devastating. This is especially in the case of a retiree or a worker in the twilight of their career. Too many bad actors have targeted senior citizens and the retirement savings they have amassed over a lifetime of hard work. Thanks to the Division’s efforts, the Commission has brought numerous enforcement cases alleging fraud and other wrongdoing involving elder investors.[10] The Division and Commission will continue to vigorously pursue bad actors who target senior citizens.
Make no mistake—the Division and Commission will continue to hold wrongdoers accountable, just as they did fifty years ago when Judge Sporkin stepped into the Director’s role.
His legacy and leadership continue to inspire the Division and the Commission. It is an honor to celebrate his legacy with you. Thank you.
[1] The Honorable Stanley Sporkin, Remarks before the 22nd Annual Los Angeles Securities Regulation Seminar (Nov. 2, 1989), available at https://www.sechistorical.org/collection/papers/1980/1989_1102_RegulationSporkin.pdf.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] See, e.g., Litigation Release, SEC, Start-Up AI and Robotics Company and CEO Settle SEC Charges (Oct. 15, 2024), available at https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26157 (announcing settled litigated charges alleging false and misleading statements, including about a robot that would be manufactured and sold as a home companion); Press Release, SEC, SEC Charges China-based QZ Asset Management Ltd. and its CEO in Pre-IPO Fraud Scheme (Aug. 27, 2024), available at https://www.sec.gov/newsroom/press-releases/2024-109 (announcing litigated action alleging false claims regarding use of AI-based technology to help generate extraordinary returns while promising “100%” protection for client funds); In the Matter of Delphia (USA) Inc., Advisers Act Release No. 6573 (Mar. 18, 2024) (settled action), available at https://www.sec.gov/files/litigation/admin/2024/ia-6573.pdf (alleging false and misleading statements by former registered investment adviser in regulatory filings, advertisements, and social media relating to its purported use of artificial intelligence and machine learning); In the Matter of Global Predictions, Inc., Advisers Act Release No. 6574 (Mar. 18, 2024) (settled action), available at https://www.sec.gov/files/litigation/admin/2024/ia-6574.pdf (alleging false and misleading claims by internet investment adviser about use of artificial intelligence); Press Release, SEC, SEC Charges Founder of American Bitcoin Academy Online Crypto Course with Fraud Targeting Students (Feb. 2, 2024), available at https://www.sec.gov/newsroom/press-releases/2024-13 (announcing settled litigated charges alleging fund that would use cutting-edge technologies like artificial intelligence but that never launched).
[8] Mark T. Uyeda, SEC Crypto 2.0: Acting Chairman Uyeda Announces Formation of New Crypto Task Force (Jan. 21, 2025), available at https://www.sec.gov/newsroom/press-releases/2025-30.
[9] Id.
[10] See, e.g., Litigation Release, SEC, SEC Charges Multiple Individuals and Entities for Fraudulent Schemes That Victimized Elderly Investors (Aug. 8, 2024), available at https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26069 (announcing litigated action alleging two fraudulent schemes that victimized elderly investors); Litigation Release, SEC, SEC Charges Investment Adviser Michael E. Lewitt with Stealing $4.7 Million from Fund Investors (Sept. 29, 2023), available at https://www.sec.gov/enforcement-litigation/litigation-releases/lr-25869 (announcing litigated action alleging, among other things, failure to disclose change in investment strategy and value of investments to investors, many of whom were elderly); Litigation Release, SEC, SEC Charges Florida Resident with Operating $35 Million Ponzi Scheme that Targeted Church Members (July 28, 2023), available at https://www.sec.gov/enforcement-litigation/litigation-releases/lr-25791 (announcing litigated action alleging fraudulent, unregistered securities offering that raised approximately $35 million from at least 60 investors, many of whom were elderly and retired); Litigation Release, SEC, SEC Charges Former Florida Brokerage Representative with Defrauding Senior and Disabled Customers (July 13, 2023), available at https://www.sec.gov/enforcement-litigation/litigation-releases/lr-25777 (announcing partially settled litigated action alleging fraud involving at least 20 brokerage customers, many of whom were seniors); Litigation Release, SEC, SEC Charges Former Chicago-Area Investment Professional with Defrauding Elderly Client of $1.2 Million (Sept. 29, 2022), available at https://www.sec.gov/enforcement-litigation/litigation-releases/lr-25536 (announcing litigated action alleging misappropriation from elderly client).
