SEC regulations define the playing field for institutional investors—governing shareholder rights, securities litigation, and market transparency. Over the past four administrations—Obama, Trump (1), Biden, and now Trump (2)—we’ve witnessed firsthand how regulatory shifts directly impact asset protection, compliance obligations, and loss recovery strategies.

With Trump’s 2025 SEC now focusing on deregulation, institutional investors should adjust their strategies to protect their assets, engage in shareholder activism, and maximize recovery in class action settlements.

In this comprehensive guide, we’ll cover:

• Critical regulatory changes affecting institutional investors in 2025: developments and challenges under Trump’s SEC, adapting governance and compliance, and best strategies for asset protection and loss recovery
• The advantage of outsourcing loss recovery and comparative effectiveness of third-party provide types
• Historical context: main differences in SEC regulatory priorities across administrations

Key Takeaways for Institutional Investors in 2025

 What’s Changing Under Trump’s 2025 SEC?

• Rollback of ESG Disclosure Mandates – The SEC disbanded the ESG Task Force within the Division of Enforcement in September 2024, signaling a move away from environmental and governance-related enforcement —a shift that has since been reinforced by extended compliance deadlines and other rollbacks on ESG-labelled fund requirements.
• Names-Rule Compliance Extended – On March 14, 2025, the Commission deferred the compliance clock for the “Names Rule”, giving ESG-labelled funds until mid-2026 (large) or year-end 2026 (small) to meet the 80 % asset-alignment mandate and related disclosure updates.
• Leadership change cements policy shift – Paul S. Atkins, confirmed 9 Apr 2025 and sworn in 21 Apr, prioritizes  “technology-focused, cost-benefit” regulation and capital-formation.
• Proxy Voting Restrictions – The Commission reinstated the 2020 restrictions on proxy advisory firms, limiting the influence of firms like ISS and Glass Lewis.
• Heightened Shareholder Proposal Requirements – New Corp-Fin guidance narrows Rule 14a-8 “ordinary business” exceptions and stresses financial materiality, raising resubmission risk

How Should Institutional Investors Adjust Governance Strategies?

• Adjust proxy voting strategies by directly engaging with portfolio companies, rather than relying solely on advisory firms that now face stricter regulations. 
• Focus on financially material proposals – New SEC guidance curtails "broad societal impact" shareholder proposals by reinstating stricter exclusion criteria. Concentrate engagement efforts on governance issues directly tied to corporate financial performance and strategic execution.
• Leverage private ordering – Investor-initiated bylaws and negotiated governance pacts can substitute for formal proposals blocked under higher thresholds

What are the New Compliance Risks to Consider?

• Lower enforcement action frequency means institutional investors must strengthen internal risk monitoring and rely less on regulatory oversight.
• Rule-making Uncertainty – Timelines can change overnight; map contingency plans for stalled or revived rules.
• Expected increase in market volatility – Broader SEC deregulation—such as weakened disclosure rules, frozen regulations, and reduced enforcement—can contribute to market instability. With less oversight, companies may take on more risk, and investors could face more frequent pricing swings, governance surprises, and litigation triggers. This reinforces the need for institutional investors to proactively monitor portfolios, reassess compliance frameworks, and stay prepared to respond to emerging risks.

Effective Strategies for Asset Protection & Loss Recovery

1. Active monitoring of regulatory and litigation developments

With the SEC stepping back on aggressive enforcement, institutional investors must maintain comprehensive monitoring of both regulatory trends and private litigation opportunities. It’s not just about tracking claims anymore; there’s a real opportunity—and perhaps a need—for investors to consider whether a less-watchful SEC means more room to bring class or private actions.

2. Outsourcing to third-party providers

Outsourcing loss recovery to experienced providers helps institutions stay focused on their core fiduciary responsibilities—like managing portfolio strategy—especially during periods of regulatory change. With contingency fee structures eliminating upfront costs, specialized support aligns recovery efforts with investor success. There are two distinct types of providers investors can consider partnering with:

• Traditional claims filing providers – these services automate claims tracking, settlement monitoring, and streamlined administration of recovery processes
• Specialized law firms – these providers offer higher level of support as the traditional claims filing providers, with the added advantage brought on by their specialized legal expertise to secure maximum recoveries and ability to guide investors through different litigation options when necessary, domestic or not (more on this below).

The Strategic Advantage of Specialized Legal Expertise

With the SEC pulling back on enforcement, institutional investors have more responsibility than ever when it comes to protecting their assets and recovering losses. While traditional claims filing providers are efficient, they lack the legal firepower needed in today’s shifting regulatory landscape. That’s where specialized law firms come in—they don’t just process claims; they actively strategize and guide investors to maximize recoveries.

• Strategic Guidance on Private Actions & Opt-Outs: With fewer regulatory safeguards, investors must be more proactive. Legal experts help determine whether staying a passive member in a class action is enough or if opting out for a direct lawsuit could lead to better recoveries. These decisions often involve complex risk assessments and jurisdictional considerations that only experienced securities litigation counsel can provide.
• Lead Plaintiff Representation: Being a lead plaintiff isn’t just about recovering losses—it’s about having a say in the litigation process. Legal firms assess whether stepping into this role could be a strategic advantage, helping investors drive settlement negotiations.
• Active Legal Oversight: Law firms don’t just file claims; they monitor legal trends, track evolving regulations, and position investors to act fast when opportunities arise.
• Customized Recovery Strategies: Every portfolio is different. Legal teams tailor recovery strategies to fit specific exposure levels, whether it’s pursuing cross-border litigation, negotiating settlements, or identifying hidden opportunities for recovery.
• End-to-End Support for Maximum Recovery: From initial loss analysis to disbursement, specialized legal teams handle the entire process, ensuring no opportunity for recovery is missed.
• Strategic Focus Enhancement: Freeing internal resources allows institutions prioritize core fiduciary duties like portfolio strategies (especially in a changing regulatory landscape)

Comparing SEC Regulatory Priorities Across Administrations