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On May 8, the U.S. Securities and Exchange Commission (SEC) quietly sent a final rule titled “Rescission of Policy Regarding Denials in Settlements of Enforcement Actions” to the Office of Management and Budget (OMB) for review under Executive Order 12866. Although the text of the rule has not yet been released, the title strongly suggests that the SEC is preparing to roll back or significantly revise its decades‑old “no‑deny” settlement policy. That development arrives just as a major challenge to the policy is pending before the U.S. Supreme Court.

On January 9, the U.S. Supreme Court granted certiorari in Ongkaruck Sripetch v. U.S. Securities and Exchange Commission (SEC). The case arises out of an SEC civil enforcement action in the Ninth Circuit and squarely presents an important remedial question that the Court left open in Liu v. SEC, i.e., what counts as a “victim” for purposes of SEC disgorgement, and does the SEC have to show that investors actually lost money before it can obtain that relief?

Tim McHugh, a partner in Troutman Pepper Locke’s Richmond, VA office, was featured and quoted in the article “Representing One to Help Millions,” the cover story of the October 2025 issue of Virginia Lawyer magazine. The article highlights Tim’s pro bono work alongside David J. DePippo, managing counsel at Dominion Energy. Both men recently received the Military and Veterans Law Pro Bono Award from the Virginia State Bar Military and Veterans Law Section after successfully arguing before the United States Supreme Court in the case of Rudisill v. McDonough.

Summary

  • The False Claims Act (FCA) qui tam provision allows private citizens (relators) to sue on the government’s behalf for FCA violations and receive a portion of any settlement or award.
  • The FCA qui tam provision has evolved since its inception, and recent U.S. Supreme Court cases signal a move to rein in the power of relators.
  • Funding sources, claim truthfulness, and companies’ subjective understanding will be critical issues in FCA enforcement efforts against diversity, equity, and inclusion (DEI) programs.
  • The current Court hasn’t ruled on the constitutionality of the FCA qui tam provision because no case before it directly raised the issue, but it may soon have the chance.

At the end of a blockbuster term, the Supreme Court sharply limited the power of federal courts to issue so-called universal injunctions against government actors. The decision in Trump v. CASA (and related cases) did not foreclose federal courts’ power to enjoin federal policies that are likely unconstitutional but curtailed the reach of those injunctions to the parties (or potentially the plaintiff class) in a suit. The result will require affected parties to litigate rather than wait on potential widespread relief from courts in distant corners of the U.S.

2025 is already shaping up to be an active year for False Claims Act (FCA) litigation. With the recent announcements of executive orders that may expand the FCA as an enforcement tool, as discussed in a recent Troutman Pepper Locke client alert, everyone is keeping a close eye on what is next. In the past few weeks, the U.S. Supreme Court has gotten in on the FCA action.

The U.S. Supreme Court closed out 2024 by confirming states’ authority to regulate internet service providers. On December 16, 2024, the Court denied certiorari in New York State Telecommunications Association, Inc., et al. v. Attorney General Letitia James, Case No. 21-1975, allowing New York’s Affordable Broadband Act (ABA) to stand.

Earlier this month, 20 Democratic state attorneys general (AG) filed an amicus brief supporting the U.S. Food and Drug Administration’s (FDA) marketing denial orders (MDOs) of premarket tobacco applications (PMTAs) for flavored electronic nicotine delivery systems (ENDS or e-cigarettes) currently under review by the U.S. Supreme Court. The brief not only demonstrates which side these states support, but also identifies specific enforcement priorities for these states.