Musk’s DOGE Hunts for SEC Cuts but Savings Will Prove Elusive

Making drastic cuts to the Securities and Exchange Commission won’t save taxpayers a dime. But the Wall Street regulator still finds itself in the crosshairs of Elon Musk’s Department of Government Efficiency as scores of employees head for the exits.

A DOGE team arrived at the SEC late last month and is being led by Eliezer Mishory, the former chief regulatory officer of derivatives exchange Kalshi Inc., Bloomberg News reported. SEC personnel were directed to treat Musk’s emissaries as internal employees “for purposes of network, system, and data access.”

The SEC has pushed back on DOGE’s request for access to some agency data, Bloomberg News reported, citing people familiar with the matter. Mishory’s request reportedly included staff emails, personnel data, contracts, and payments systems.

But the Musk-run outfit will be particularly hard-pressed to point to any savings from its efforts to downsize the SEC, which has its spending levels set by lawmakers—around $2.2 billion for this year—and recoups the money through fees on the securities industry.

“They’re going to want to look for some kind of receipt, but I don’t think they’re really going to find it there because the taxpayers are not directly funding the SEC’s budget; it’s really coming out of the fees they collect from the industry,” said Jim Toes, the president and CEO of the Security Traders Association. “I just don’t think there’s a ton of fat.”

For Musk, the money may be beside the point. The multibillionaire has had an ax to grind with the SEC since his 2018 agreement to install an in-house lawyer to preapprove his social media posts about Tesla Inc. (“The Shortseller Enrichment Commission is doing incredible work,” Musk said in a post at the time.)

One of the SEC attorneys who led a subsequent case against Musk, Robin Andrews, is among the hundreds of employees who have now left the agency. The SEC shed more than 10% of its roughly 5,000 employees through $50,000 buyout and deferred-resignation offers in recent months.

While slashing the SEC’s workforce won’t generate savings, it may jeopardize the agency’s ability to keep pace with the industries it oversees, including the $26 trillion private funds market and the “Wild West” of crypto, according to its most recent budget request, submitted during the Biden administration.

“Capital markets regulation is incredibly complex,” said Jill E. Fisch, a professor at University of Pennsylvania’s Carey Law School who teaches corporate and securities law. “A lot of the senior staff at the SEC have been there a long time and developed a tremendous amount of knowledge, and the agency will not run as effectively without them.”

‘Streamlining,’ Not a ‘Chainsaw’

The SEC’s enforcement unit is line for more cuts as incoming chairman Paul Atkins, confirmed by the Senate on April 9, is expected to steer the agency away from the aggressive enforcement favored by predecessor Gary Gensler.

But any major overhaul led by Atkins or DOGE comes at a risky time, as securities markets undergo a tumultuous stretch alongside news of President Donald Trump’s tariffs.

“Acting too precipitously with the regulators of the financial markets could have an adverse impact on the markets, so my expectation would be that they would take a lighter touch,” said Frank Zarb, a partner at Proskauer Rose LLP and SEC alum who concentrates on federal securities regulatory matters. “I would use the word ‘streamlining'; the words ‘chainsaw’ and ‘dismantling’ are not what I would use in this context.”

Atkins is likely to bring his own ideas to the table for making the agency more efficient, given his own background at the SEC as a former commissioner, Zarb added.

“One of his goals will be to avoid enforcement cases in grey areas, what some have called ‘regulation through enforcement,’” he said. “If you do that, by definition, you may be paring back on the scope of what the enforcement division is doing in some areas.”

That may mean more cuts to enforcement staffing, after the agency already took steps to scale back its local footprint by eliminating regional director roles and canceling office leases in Los Angeles and Philadelphia.

‘Disruptive’ Changes

DOGE’s arrival at the agency also carries special significance for Musk, who is still the subject of a Biden-era SEC suit over disclosures surrounding his acquisition of Twitter in 2022.

Republican Commissioner Mark Uyeda, who still serves as acting SEC chairman until Atkins is sworn in, asked enforcement staff members in January to declare that the case wasn’t politically motivated, Bloomberg News reported at the time, citing people familiar with the matter.

The SEC ultimately sued Musk after the enforcement team declined to comply with Uyeda’s request. The agency alleged the multibillionaire waited too long to disclose his growing stake in the social media company while preparing his takeover bid, cheating shareholders out of more than $150 million.

Andrews, one of the enforcement attorneys who handled the case, decided to leave this month “after weeks of excruciating deliberation,” he said in a LinkedIn post.

Those who remain at the SEC might find themselves subject to DOGE-led cuts or reassigned as part of a streamlining agenda under Atkins.

“The amount of people that are going to be leaving is going to be more than what we’ve seen in the past decade or so,” Toes said. “It’s going to be a little more disruptive.”

If the SEC is spared the same extreme cuts that other agencies have endured under the Trump administration, its track record for spending effectively and breaking even by offsetting its budget may be part of the reason.

“It has a reputation as an agency that is pretty efficient and nimble already,” Zarb said.