Why SEC Policy Should Be Made Through Rulemaking, Not Enforcement
In this episode of The SPAC Podcast, Nick Morgan, Partner at Paul Hastings LLP and co-founder of ICAN (Investor Choice Advocates Network), critiques the SEC’s practice of regulating by enforcement.
Nick cites the Momentus Stable Road case (2021) as a prime example, echoing Commissioner Hester Peirce’s concerns that enforcement actions have been used to make policy in the SPAC space.
Instead of case-by-case precedents, Nick argues that the Administrative Procedure Act (APA) provides the right framework:
- Publish proposed rules
- Invite public comment and critique
- Finalize rules transparently, with the possibility of judicial review
By contrast, regulation by enforcement forces defendants to shoulder policy shifts alone without transparency or accountability.
For sponsors, boards, and investors, Nick’s perspective highlights why predictability in the rules of the game matters as much as the capital markets themselves.
Connect with the Guest:
Nick Morgan – Partner, Paul Hastings LLP | Co-Founder, ICAN
LinkedIn: https://www.linkedin.com/in/nick-morgan-9182744/
View all of their episodes here:
https://www.thespacpodcast.com/guests/nick-morgan/
Connect with the Hosts & The SPAC Podcast:
Michael Blankenship LinkedIn:
https://www.linkedin.com/in/mikeblankenship/
Joshua Wilson LinkedIn:
https://www.linkedin.com/in/joshuabrucewilson/
YouTube Channel:
https://www.youtube.com/@Thespacpodcast
Contact The SPAC Podcast:
https://www.thespacpodcast.com/contact/
#SPACs #CapitalMarkets #SPACPodcast #SEC #RegulationByEnforcement #Transparency #ICAN
Disclaimers:
The views, opinions, and statements expressed by the guest are solely their own and do not necessarily reflect the views of The SPAC Podcast, its hosts, or affiliated organizations. This content is for informational purposes only and should not be construed as investment, legal, tax, or accounting advice.
Michael J. Blankenship is a licensed attorney and is a partner at Winston & Strawn LLP. Joshua Wilson is a licensed Florida real estate broker and holds FINRA Series 79 and Series 63 licensure. The content of this podcast is intended for informational and educational purposes only and should not be interpreted as legal, financial, or compliance advice. The views and opinions expressed by the hosts and guests are their own and do not necessarily reflect the official policies or positions of any regulatory agency, law firm, employer, or organization.
Listeners are encouraged to consult their own legal counsel, compliance professionals, or financial advisors to ensure adherence to applicable laws and regulations, including those enforced by the SEC, FINRA, and other regulatory bodies. This podcast does not constitute a solicitation, offer, or recommendation of any financial products, securities transactions, or legal services.
Let’s Connect on LinkedIn:
👉 Michael J. Blankenship - https://www.linkedin.com/in/mikeblankenship/
👉 ...
Michael Blankenship:
Nick, what are your views on regulating by enforcement? When the SEC does that, how do you react, and what do you tell your clients?
Nick Morgan:
We’re not big fans of regulation by enforcement. We’ve seen it across many SEC areas, including SPACs.
The Momentus Stable Road case in 2021 was a perfect example, as Commissioner Peirce noted.
If the SEC wants to change direction, the APA lays out the process: publish a proposed rule, allow public comment, finalize it transparently, and then let courts review it if challenged.
None of that applies when policy is made by enforcement. Instead, it’s case by case, with defendants forced to defend against shifting standards.
We believe policy should be made in the light of day, not through enforcement actions.
Nick Morgan
President
Nick Morgan is a pro bono trial counsel who focuses on SEC investigations and litigation. He is the President and Founder of the Investor Choice Advocates Network (ICAN). Before founding ICAN, Morgan was a partner and office litigation chair at the law firm Paul Hastings and previously served as a Senior Trial Counsel at the SEC.