Ray of Hope Emerges for ‘Forever Bars’: SEC Roundup
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Welcome to SEC Roundup, a bimonthly video series by former Securities and Exchange Commission senior trial counsels Nick Morgan and Tom Zaccaro, founders of the nonprofit advocacy group Investor Choice Advocates Network.
The recent SEC directive to respond to Thomas Powell’s petition for reinstatement could signal a shift in how the agency handles its controversial administrative bars. Powell shared his struggle with what industry professionals call “forever bars” — SEC-imposed restrictions that often extend far beyond their stated duration.
Powell settled with the SEC in September 2021 for a $75,000 fine and accepted a two-year bar with the right to reapply afterward. He filed for reinstatement in January 2024 but was met with silence until this week when the Commission finally directed staff to respond to his petition.
Mark Hiraide, ICAN’s senior legal director, explained that unlike monetary penalties, industry bars have devastating consequences. These restrictions extend beyond employment to include trading limitations and may trigger “bad boy” disqualifications under Regulation D.
Powell described unexpected consequences: “My trading companies fired me — all of them. They closed my 401(k), my IRA, all accounts were summarily closed.” American Express even canceled his corporate cards, stranding employees traveling for business.
This recent development may be part of a broader shift. In four separate cases over the past few weeks, the SEC has granted applications filed by barred professionals seeking to resume working in their former capacities.
Former SEC Commissioner Mike Piwowar once described the reinstatement process following a bar as potentially “illusory,” noting it “can take years to complete after the requisite time period has expired.”
For investment advisors facing risk of career-ending SEC enforcement actions, this potential shift offers hope that proportionality and fairness might finally be entering the equation.