The Ticker Tape: Issue 8
- Nicolas Morgan
- Jun 3
- 6 min read
Spring 2025
Behind the Headlines: Why the SEC's Retreat Isn't the Reform You Think It Is
Dear ICAN Partners,
With a new administration in Washington, and news of the SEC quietly dropping several high-profile enforcement cases, it would be easy to assume that a meaningful regulatory reset is underway. However, even the most well-intentioned commissioners face an immense task overseeing hundreds of staff attorneys, and it’s simply not possible for anyone to be everywhere, doing everything, all at once.
ICAN has boots on the ground—and we can tell you that for the small entrepreneurs and individual investors we serve, it’s a very different story.
The reality? For those without deep lobbying pockets or institutional clout, it’s still business as usual in court litigating against SEC staff, who typically don’t communicate with Commissioners regarding ongoing litigation that was approved years ago. Even with cases the Commission has dropped, the long-term situation is not necessarily better. The SEC’s retreat in areas like crypto and the dealer rule—while welcomed by those fortunate enough to have cases dismissed—leaves behind ambiguity for future administrations to exploit to revive expansive interpretations with renewed force.
It is another stark reminder of why ICAN’s work remains so important. While we remain optimistic about the potential for meaningful reform over the next four years, we are under no illusion that real reform will automatically follow from top-down administrative changes. Meaningful, lasting reform must come from the ground up and requires ongoing vigilance. Our strategy is to meet the SEC where it operates—through direct litigation, influential amicus briefs, and persistent policy advocacy. We engage on a case-by-case and issue-by-issue basis, building a bulwark that reins in regulatory overreach and secures lasting protections for market participants that will outlast election cycles.
In this edition, we spotlight two recent developments that will give you a firsthand look at just a couple of ways our strategy is playing out: our newly filed amicus brief in the pivotal Panuwat appeal and our ongoing advocacy challenging the SEC’s expansive and unresolved interpretation of the “dealer” definition. We also share exciting updates on ICAN’s growth, including the addition of a new staff member, recent appearances, and expanded platforms for our thought leadership content.
In gratitude, Nick Morgan
Founder and President of ICAN
Redefining Insider Trading? Why Panuwat Matters for Everyone
ICAN has been closely monitoring SEC v Panuwat for over two years, as it continues to be one of the most troubling examples of the SEC’s efforts to expand its jurisdiction through novel legal theories. This case centers on so-called "shadow insider trading," where the SEC pursued civil insider trading charges against an employee of Medivation who traded in a competitor’s stock based on information about Medivation’s pending acquisition.
ICAN filed an initial amicus brief at the district court level and recently submitted a second in the Ninth Circuit appeal, partnering with co-counsel Stephen Cazares of Foundation Law Group and Professor Kevin Douglas of MSU Law. Our brief challenges the district court’s radical departure from traditional insider trading jurisprudence.
At issue is the court’s conclusion that an internal company policy and confidentiality agreement were sufficient to unilaterally establish a fiduciary duty regarding other unnamed but "economically linked" companies. That ruling threatens to turn everyday employment documents into regulatory landmines.
In our brief, we warned:
"Opening this Pandora’s Box, the district court untethered insider trading liability from the already nuanced and jurisdiction-specific state law fiduciary principles and instead made it contingent on company-specific documents drafted without civil or criminal regulatory implications in mind. This approach transforms routine corporate confidentiality agreements and trading policies into potential sources of civil and criminal regulatory liability, requiring market participants to conduct exhaustive document-by-document analyses across different companies to determine when trading might be permissible. Such a framework not only generates profound uncertainty but also effectively delegates the definition of regulatory misconduct to private entities through their internal policies rather than through democratically enacted statutes or consistent judicial interpretation. The resulting legal landscape bears little resemblance to the state law fiduciary principles that originally anchored the misappropriation theory, creating instead a patchwork of civil and criminal liability determined by the particular language choices of corporate counsel rather than by clear statutory directives or established state law duties."
We believe this ruling doesn’t just risk chilling legitimate market activity—it sets a precedent for unchecked regulatory power. At a time when small investors are already operating in a climate of uncertainty, creating legal standards that depend on HR policy wording is reckless.
We’re grateful to our partners in this effort and will continue monitoring this appeal closely.
New SEC Roundup with AIMA: The Dealer Definition Zombie Lurking
Even as the SEC has withdrawn its formal dealer rule and dropped related litigation, troubling precedents remain. Two Eleventh Circuit decisions—Keener and Almagarby—still support an expansive definition that could classify virtually any entity engaged in regular securities transactions as a "dealer."
The reach of this is incredibly broad, with impacts on a wide range of market participants. ICAN recently discussed these concerns in a new SEC Roundup episode featuring Daniel Austin and Suzan Rose of the Alternative Investment Management Association (AIMA). Daniel notes in the episode:
“The interpretation that the SEC had in these enforcement actions was that any person in the business of buying and selling securities is a securities dealer. So you take that to its logical conclusion, that's any hedge fund manager. It's any pension, it's an insurance, day trader, you go down the list, so there's really no limiting principle in there.”
The conversation highlights how, despite recent retreats, the legal groundwork remains intact for future administrations to resume these expansive interpretations. Suzan Rose captures the risk perfectly:
"The problem with unfinished business is that someone else can finish it down the line, using all of the groundwork that’s been done, however flawed."
Our conversation explores:
The SEC’s enforcement theory that any frequent buyer/seller of securities could be deemed a dealer
How these interpretations ensnare hedge funds, pensions, and even individual traders
The ongoing Carebourn Capital case, where AIMA filed an amicus brief opposing this broad theory
This issue is a reminder that true reform is still urgently needed to protect and support our markets. These interpretations create lasting legal uncertainty even in the absence of formal rules—a dangerous condition for market confidence and growth.
Welcoming Our 2025 Summer Associate
Please join us in welcoming Catherine Schertzing, our 2025 Summer Associate from Michigan State University College of Law. Catherine joins us as a rising 3L.
"I am excited to join ICAN this summer as a law clerk and to support ICAN's mission of improving market access for investors and entrepreneurs to create fairer capital markets. I look forward to learning from the excellent team at ICAN."— Catherine Schertzing
We’re immensely grateful to one of our generous donors for sponsoring this position and for their continued commitment to developing the next generation of public interest legal advocates.
Connecting, Expanding, and Advocating
New Platforms for Our Shows: We’re excited to announce that both our SEC Roundup and Capital Ideas series are now available on Apple Podcasts and Spotify in addition to YouTube. If you haven’t subscribed yet, now is a great time to catch up through the links below.
New Cases Coming Soon: We’re preparing to announce a new round of direct representation cases in the coming weeks. Stay tuned to learn more about these critical cases, which tackle the accredited investor rule and the SEC’s administrative “forever bars” that keep professionals sidelined due to institutional inertia.
Securities Enforcement Forum West
ICAN was proud to host an SEC Alumni Happy Hour ahead of the Securities Enforcement Forum West, which brings together securities law professionals —from past and present SEC officials, to enforcement and white-collar attorneys, compliance professionals, and in-house counsel. It was a great opportunity to highlight ICAN’s work for this key audience. We are grateful to our event co-sponsors, Lateral Link.
ICAN’s president, Nick Morgan, moderated a spirited debate at the conference on the limits of SEC jurisdiction in digital assets, featuring Teresa Goody Guillén and John Reed Stark.
Did the group finally identify the limits of SEC jurisdiction in the digital assets space? You’ll have to watch the video to find out. (Spoiler alert—they agreed on nothing. But it was a spirited discussion appropriate during the SEC’s reset on the topic.)
Thanks to Your Support
None of ICAN’s growing portfolio of work would be possible without the continued generosity and engagement of our network of valued partners. As we look ahead, ICAN remains committed to confronting regulatory overreach with bold, strategic litigation that defends the rights of entrepreneurs and investors.
If you'd like to support our efforts, please consider:
Making a tax-deductible donation to help us take on more cases
Sharing this newsletter with others interested in SEC reform
Connecting us with potential clients facing SEC overreach
Together, we can build a financial system that works for everyone and advances the American economy. Thank you for your partnership in this vital work.
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