Congressman Byron Donalds (R-FL) took aim at the U.S. Securities and Exchange Commission (SEC) today, pressing Acting Chairman Mark Uyeda to abandon what he calls “regulation by enforcement” actions that have wreaked havoc on investors and markets under Biden-era leadership.
In a letter to Uyeda and Commissioner Hester Peirce, Donalds slammed the SEC’s use of novel legal theories to punish market players, arguing it’s time to dismantle the politicized legacy of former Chairman Gary Gensler.
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Donalds contends these enforcement moves—lacking clear precedent—unfairly blindside investors, spike capital costs, and erode trust in the SEC. He zeroed in on cases targeting small-cap and micro-cap investors, accused since 2017 of being unregistered “dealers” for trading convertible securities—a practice the SEC long tolerated.
This shift, he says, defies decades of agency guidance and has gutted financing for small public companies, with OTC Markets financings dropping over 50% in number and 25% in value since the crackdown began.
The congressman hailed Uyeda’s recent dismissal of crypto-related cases as a step toward reform, urging him to extend that logic to the “dealer” actions. “The harm from this regulation is tangible,” Donalds wrote, noting firms are shunning small companies or failing to register with FINRA amid the uncertainty.
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He argues ending these cases would jolt life back into struggling micro-cap markets, vital for innovation and growth, while signaling the SEC prioritizes fairness over litigation gambits.
Under Gensler, Donalds claims, the SEC veered into “unprecedented levels of political weaponization.” Now, with Uyeda steering the ship in the Trump era, he sees a chance to refocus on the agency’s core mission: protecting investors without choking capital formation.
The letter’s a shot across the bow—and a test of whether the SEC will pivot from courtroom battles to market clarity.
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