SEC Staff Cuts Deepen and are Likely to Continue
There are significant changes in process at the Securities and Exchange Commission (“SEC”) since the Trump administration took office in January 2025.
The SEC has seen significant staff reductions. Nearly 20% of the SEC’s staff has left the agency, with over 12% electing to take a buyout offered by the administration as part of its efforts at shrinking the size of the federal government. These employees received a monetary incentive to leave the SEC or retire early. Further, in an SEC town hall among employees and staff, SEC Chairman Atkins stated there will be further “targeted restructurings” and cuts to the SEC’s 1,000+ contract staff, which are generally IT and IT systems (both internal and public facing, such as the SEC’s online filing system Edgar), administrative and support staff, economists and accountants, and project-specific personnel.
Notably, the Trump administration has extended its federal worker hiring freeze, initially imposed in January 2025, until at least mid-October. Key SEC positions, even essential positions, can’t be filled with external candidates through the SEC’s normal hiring channels. During the freeze, the SEC cannot post jobs publicly or conduct any recruitment or interviewing activities, and there will be a long ramp-up time for any hiring when recruitment restarts from a full stop. In the town hall, Atkins noted that this will mean junior staffers will see opportunities for promotion, but this could top-load the SEC’s structure with less experienced staff and would leave gaps in the junior staffer workforce that is the agency’s day to day workhorse. Therefore, even if the SEC fills in gaps by promotion from within, fewer people are doing the agency’s work under strained conditions and green or absent supervision and leadership. This could lead to further voluntary attrition, creating a cycle of continuing staff losses and loss of institutional knowledge. A Damocles sword of job uncertainty in future staff cuts and a lack of information and chaotic, uncertain, or absent management could lead to demoralization and loss of efficacy.
Further, even after the freeze is lifted, the Administration imposed a policy providing that for every 4 federal workers that leave an agency’s service, only 1 can be hired. This applies to the SEC, so any eventual hiring will be lean. Given that the SEC’s budget approved by Congress represents a loss of funding, hiring for the foreseeable future may be difficult.
Moreover, two SEC offices have been slated for closure – the Philadelphia and Los Angeles field offices. These field offices represent the regional presence of the SEC outside of DC headquarters and serve as the base for inspection and enforcement activities in the relevant areas. The Trump administration is also looking at the Chicago office for closure; however, the office’s lease posed an issue in attempting early termination.
The SEC’s staffing and personnel issues will undoubtedly affect its efficacy, including its ability to investigate and bring enforcement cases and to inspect a growing number of advisers and broker dealers the agency oversees. The time between inspections of investment advisers was growing even in a period of increased staffing over the last ten years, so fewer staff and loss of institutional knowledge will undoubtedly have a cost in operational efficiency and effectiveness.
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