Unchecked Enforcement. Misguided Legislation. ICAN Responds.
- Nicolas Morgan
- Jul 1
- 7 min read
SEC Staff Gone Rogue, Why H.R. 3394 Will Lock Investors Out, Not Let Them In
July 1st, 2025
Dear ICAN Partners,
After three major Supreme Court rebukes—Lucia, Cochran, and Jarkesy—and a new reform-friendly Administration, one might expect the SEC’s Enforcement Division to tread more carefully. But the reality on the ground tells a different story, and offers a valuable reminder of why ICAN’s work remains so important.
The Supreme Court decision in SEC v. Jarkesy last year limited the agency’s ability to use in-house courts. ICAN was proud to help lead that charge. Our nationally covered amicus brief—co-signed by Elon Musk and Mark Cuban—helped bring critical attention to the case, and I was honored to be one of only two outside experts quoted in The Wall Street Journal’s coverage of the decision. Together with Lucia and Cochran, Jarkesy marked a turning point—providing important limits on the SEC’s extrajudicial powers — but, as you’ll see below, entrenched staff culture at the SEC is resisting the message.
This is where ICAN’s strategy meets the moment. We’re not here to wait for Washington to course-correct; we're here to act. We’re driving reform from the ground up, case by case, client by client. By standing with people the system hopes will fold, like small entrepreneurs, retirees, and everyday investors, we’re exposing systemic overreach and forcing accountability. These aren’t symbolic fights—they’re strategic interventions designed to create legal guardrails that protect everyone.
Your generous support makes this work possible, and as regulatory power continues to demand oversight, ICAN’s mission is more vital than ever. We’re pleased to bring you the latest updates in this issue, including new developments in our ongoing construction of a legal bulwark against SEC overreach—and a critical look at H.R. 3394, a bill that threatens to take a major step backward in expanding access to America’s capital markets.
In gratitude,
Nick Morgan
Founder and President of ICAN
SEC Roundup: SEC Staff Gone Rogue—Federal Action Without Commission Approval
In this new episode, we unpack a troubling instance where SEC Enforcement staff bypassed Commission approval to pursue federal court action, raising urgent questions about transparency and oversight at the agency.
Russ Ryan of the New Civil Liberties Alliance (NCLA) joins ICAN President Nick Morgan and Advisory Board member Sarah Heaton Concannon of the law firm Quinn Emanuel to break down exactly what happened—and why it matters. Their conversation goes beyond the unauthorized court filing to examine how, despite recent Supreme Court decisions meant to rein in administrative overreach, SEC staff continue to test the boundaries, pushing forward with actions that sidestep accountability and attempt to expand agency power.
As Nick observes, during the episode:
“I think there's a popular misconception that you have an election, there's a change in the makeup of the [SEC] commissioners, and then everything changes. And certainly there's some evidence of change in other cases- such as in crypto or hedge fund issues- but for most of the cases, the staff kind of just continues doing what it was doing before, and maybe even worse.”
This episode makes clear that while the agency’s leadership may change, entrenched staff practices often remain unchanged- that is, unless someone brings these issues to light.
You can tune into the episode here to get the firsthand details, such as:
• How SEC staff bypassed the Commission to file an unauthorized federal action
• Why the case was quietly dismissed once challenged—but with no internal accountability
• The disturbing lack of transparency and oversight that allowed it to happen
• Allegations of improper internal communications between Enforcement and the Chairman’s office
• Why this raises new red flags for litigants, defense counsel, and anyone watching SEC power dynamics
We appreciate Russ and his colleagues at NCLA for sharing their sharp legal insight into this troubling episode and its broader implications. While our missions differ slightly—NCLA challenges administrative overreach across agencies, while ICAN is laser-focused on empowering investors and entrepreneurs to access capital markets by restoring boundaries around SEC power—we’re united by a shared commitment to transparency, accountability, and constitutional principles in enforcement. Collaborations like this SEC Roundup episode ensure that critical developments don’t go unnoticed and that abuses of process are met with a swift and informed response.
That is why ICAN exists. SEC reform isn’t just a Wall Street concern—it’s a Main Street issue with real consequences for ordinary investors and entrepreneurs. When regulatory staff act without accountability, it’s the public that bears the cost. Explore more of our work to restore due process and defend economic opportunity at icanlaw.org/restoring-due-process.
Why H.R. 3394 Will Lock Investors Out, Not Let Them In
The House recently passed H.R. 3394, a bill marketed as expanding access to private investment, but which, unfortunately, would restrict it even further. ICAN’s detailed analysis, published on our new Substack Unchained Markets, pulls no punches:
“H.R. 3394 masquerades as progress, but in reality, it locks investors into a rigid, outdated framework. Real reform means trusting people to make informed choices—not locking opportunity behind arbitrary wealth and income thresholds.”
— Mark Hiraide, Senior Legal Director & Policy Counsel, ICAN | Partner, Mitchell Silberberg & Knupp LLP
What the bill does:
It Codifies—and Constrains—the SEC’s Rulemaking Authority
By locking into law the 40-year-old income and net worth thresholds, the bill would handcuff the current (and future) SEC’s ability to modernize who qualifies as an accredited investor by eliminating wealth and income barriers.
It Adds Bureaucratic Layers Without Improving Investor Protection
The bill’s requirement for verification through a self-regulatory organization (SRO), such as FINRA, adds red tape and delays without providing meaningful new safeguards for investors.
It Shrinks—Rather Than Expands—Accredited Investor Eligibility
Despite claiming to broaden access, the bill excludes several key categories of currently eligible investors, effectively rolling back important progress.
At a time when private companies are staying private longer—and wealth generation is shifting accordingly—this bill moves in the exact wrong direction. We urge Congress to reject paternalism disguised as investor protection and pass legislation to break down wealth and income barriers to capital markets.
ICAN Forces Action—But SEC Doubles Down on Injustice
On June 23, 2025—after more than two and a half years of silence—the SEC finally issued an order denying 75-year-old investment adviser Paul Spitzer’s motion to vacate a supervisory limitation imposed in 2021. While ICAN did not represent Mr. Spitzer in the original motion, we stepped in last fall, after the SEC had failed to act on the motion. We filed a writ of mandamus last November to compel the SEC to act, and that legal pressure worked: the Ninth Circuit gave the SEC a 6-month deadline, which expired on June 20.
Just three days later, the SEC finally responded, declining to end the supervisory limitation.
Though the decision is not the one we, or Mr. Spitzer, had hoped for, at least the regulatory limbo created by the SEC’s dilatory foot-dragging is finally over, thanks to ICAN’s action, and now he can plan accordingly.
Mr. Spitzer’s story is one we see far too often: an everyday American forced to settle with the SEC to avoid a protracted (and expensive) legal battle, only to find the consequences far exceed what was intended or understood. Although Mr. Spitzer was never accused of fraud and caused no harm to investors, the unresolved supervisory bar has effectively ended his career. It’s the regulatory equivalent of having your driver’s license permanently revoked over a parking ticket—an extreme, disproportionate penalty for a technical violation.
What’s worse, the individuals actually charged with the underlying misconduct chose to litigate and have faced no administrative bars, leaving them free to operate in the securities industry since the SEC’s action commenced in 2021. Mr. Spitzer, who cooperated in good faith, is the only one still bearing the cost. That’s not justice. It penalizes those who settle in good faith while rewarding those who prolong litigation, undermining the principles of fairness and due process.
At ICAN, we believe in accountability and fairness. We’re proud that our intervention forced long-overdue action in this case. But the SEC’s decision illustrates exactly why our work matters. We’re continuing to explore ways to support Mr. Spitzer and others like him.
When the system penalizes people for settling, it risks no longer being a justice system and instead becoming a trap. See more about our work to end excessive punishments here: https://www.icanlaw.org/ending-excessive-punishments
ICAN Named Finalist for the Peterson Prize
We are thrilled to be nominated for the Gregor Peterson Prize in venture philanthropy, awarded annually to a trailblazing start-up in the non-profit sector.
The prize was launched by Mr. Peterson's family to honor him as a pioneer in the field of venture capital, having launched Sutter Hill Co. in 1961 as one of the first venture capital firms on the West Coast. Thank you to Thomas J. Powell, LPD, who nominated ICAN, and to Hoplin Jackson Charitable Advisors, who manage the Prize application process.
Celebrating Economic Liberty This Independence Day
As we reflect on our nation’s Founding ideals this week, we’re reminded that freedom takes many forms—and must be protected in all of them. At ICAN, we care deeply about the right to economic self-determination.
The ability to invest in your neighbor’s startup, to challenge unchecked regulatory power, to access opportunity without elite credentials—these, too, are forms of freedom. They don’t stand alone, but they matter deeply in a country that believes in upward mobility and individual agency.
That’s the spirit that drives American small businesses and entrepreneurs—and it’s the freedom we work every day to protect.
Together, we can build a financial system that works for everyone and advances the American economy.