Departing Gurbir Grewal took the SEC "into new territory"

The head of the SEC’ enforcement division who led an offensive on illegal practices in the crypto industry, Gurbir Grewal, is leaving the agency next week.

Grewal, who has helmed the division of enforcement as its director since 2021, is departing Oct. 11, the Securities and Exchange Commission announced Wednesday. Replacing him in an acting capacity is the division’s deputy director Sanjay Wadhwa, whose position in turn will be filled by chief counsel for the division of enforcement Sam Waldon.

Under Grewal, 51, the SEC brought more than 2,400 enforcement actions that resulted in over $20 billion in penalties, disgorgement and interest, the agency noted. Stemming from that, 340 people were barred from the securities industry, and there were over $1 billion in whistleblower awards. The agency has also charged more than 100 broker dealers and others over record keeping failures related to off-channel communications.

“Every day, he has thought about how to best protect investors and help ensure market participants comply with our time-tested securities laws,” SEC Chair Gary Gensler said in the announcement. “He has led a division that has acted without fear or favor, following the facts and the law wherever they may lead. I greatly enjoyed working with him and wish him well.”

A prominent direction in the SEC’s enforcement over the past few years has been toward the cryptocurrency industry – there have been more than 100 actions the SEC filed there, including ones against Coinbase, Binance, Kraken, and Gemini, with many of those concerning a failure to register initial coin offerings. Of course, the SEC also brought a case against disgraced FTX cofounder and former CEO Sam Bankman-Fried, who separately was indicted and in March sentenced to 25 years in prison and ordered to pay $11 billion in forfeitures.

“The SEC has also alleged in a number of our actions that certain unregistered crypto offerings are nothing but straight rips, Ponzi schemes, affinity frauds, or other types of scams,” Grewal said in a speech in July.

With his direction, the division of enforcement was very active, said Jessica Magee, partner at Holland & Knight, in an email.

“Though the SEC pursued and filed a number of standard-fare Ponzi scheme, offering fraud, and insider trading cases under Grewal’s leadership, he also oversaw the program expand into new territory of increased enforcement involving cybersecurity, whistleblower rights issues, regulated entities’ record-keeping practices including billions recovered for so-called ‘off-channel’ communications violations, greenwashing and more-recently AI-washing, and closely followed litigated cases including the much-discussed [Matthew] Panuwat ‘shadow trading’ case the SEC won at trial,” Magee said. “Director Grewal also increased focus on corporate compliance and the importance the SEC places on self-reporting and cooperation, and though the agency has not changed its longstanding Seaboard Factors for crediting cooperation, in recent years it has improved how it communicates about cooperation credit and actions that have earned cooperation credit through, for instance, lower penalties or the agreement to forego penalties altogether in certain cases.”

The SEC declined to comment on Grewal’s plans after leaving the post. An unnamed source cited by Bloomberg Businessweek told the publication that he is taking a role in private practice.

“While we have faced and overcome many challenges over the last three plus years, there has been one constant throughout: the public servants of the enforcement division stand ready to do everything they can to protect investors and market integrity. Their expertise, professionalism, and dedication are, indeed, unparalleled, and it has been the privilege of a lifetime to have been able to call them colleagues,” Grewal said in the announcement. “From recalibrating penalties and remedies to confronting emerging risks to holding issuers, insiders, and gatekeepers accountable, I am incredibly proud of all that we’ve accomplished as a division during my tenure.”

Prior to his time at the SEC, Grewal was New Jersey’s attorney general.

Soon-to-be acting director Wadhwa has been the division’s deputy director since August 2021. Prior to that he was at the SEC’s New York Regional Office, where he held several titles, including senior associate director of the division of enforcement.