The Securities and Exchange Commission has voluntarily dismissed with prejudice its enforcement action accusing Auctus Fund Management – a Boston-based hedge fund adviser – of operating as an unregistered securities dealer, according to a report by Bloomberg.
The decision, signed off on Wednesday, represents the latest Trump-era regulatory pull-back under SEC Chair Paul Atkins.
Originally filed in 2023 by the SEC’s leadership under Gary Gensler, the case hinged on the allegation that Auctus generated over $100m by converting debt to equity and selling those discounted shares – activities the agency claimed triggered dealer-registration requirements under Depression-era law. In July 2024, Judge Angel Kelley of the US District Court for Massachusetts refused to dismiss the suit, warning that the SEC’s broad interpretation could force all US hedge funds into dealer registration.
Despite that earlier ruling, the SEC and Auctus agreed to drop the matter without any admission of fault or penalties for either side. The stipulation explicitly states that the dismissal “does not reflect any position of the Commission with respect to other cases.”
Industry groups and many hedge fund managers have applauded the move as a reprieve from onerous compliance burdens. Had the SEC prevailed, large swaths of the alternative investment community could have faced new registration requirements, subjecting trading strategies to heightened regulatory scrutiny and operational constraints.
This case follows a string of recent SEC reversals, including the abrupt abandonment of actions against convertible debt lenders and several crypto-related dealer enforcement efforts.
