The SEC’s Shutdown Shenanigans: A Tale of Bureaucratic Overreach and the Urgent Need for Trump-Era Reform
Guest post
In the waning days of a government shutdown that gripped Washington this fall, a rogue band of SEC bureaucrats decided the rules didn’t apply to them. This group included a recently promoted Kamala Harris supporter, Sam Waldon. He donated to Harris just prior to the election and was the driving force behind the prior chair, Gary Gensler’s, assault on the crypto industry through high-profile cases against Coinbase and Binance.
On November 7, 2025 — just days before funding was restored — the Securities and Exchange Commission filed a lawsuit against Srinivas Koneru, a 65-year-old retired entrepreneur and founder of the innovative fintech firm Triterras. The charges? Alleged securities violations tied to events from five years ago that occurred before the company went private. This came long after any investors were made whole through a class-action settlement.
But here’s the rub: The SEC’s actions violated the Anti-Deficiency Act. That’s a century-old law that bars federal agencies from spending money or performing non-emergency work during a funding lapse. Koneru, represented by the powerhouse litigator Brad Bondi, has now sued the SEC in D.C. federal court and seeks to declare their complaint null and void. Bondi, who was reportedly on President Trump’s short list for SEC Chairman, has a successful track record fighting government overreach.
This isn’t just a legal spat; it’s a glaring example of deep-state defiance against the Trump administration’s mandate against pursuing non-intentional violations of law — technical violations of complicated securities laws. And it demands swift accountability.
Let’s unpack the facts, because they reveal a pattern of abuse that’s all too familiar in the swamp. The SEC’s probe into Koneru began in early 2021, under the Biden era’s aggressive enforcement regime. For nearly five years, investigators chased rabbit trails — accounting treatments, vendor relationships, past business associations — without uncovering a shred of wrongdoing, playing a bureaucratic game of whack-a-mole with shifting theories that never stuck.
Koneru cooperated fully: voluntary interviews, document productions totaling 40 batches, even subpoenaed testimony in Dubai. His lawyers submitted white papers rebutting every theory, but the staff stonewalled, refusing no fewer than five requests for meetings to discuss concerns.
Then, in September 2025, with a shutdown looming large in the headlines, the SEC pivoted to a Wells notice on entirely new allegations about “trade finance” transactions—issues they’d never raised in interviews or testimony, despite having the documents for years. The timing reeks of desperation. As Koneru’s counsel pointed out in correspondence, this was no emergency.
Triterras, which pioneered a blockchain-based platform to streamline commodities trading for small businesses, reported $55 million in revenue in 2021 before going private in March 2025. Koneru is retired, living abroad, and poses zero threat to markets, let alone “human life or property”—the strict standard under the Anti-Deficiency Act for exempted work. Past investors? They settled claims in a Southern District of New York class action, with the judge deeming it “fair, reasonable, and adequate.” No fraud, no asset dissipation, no public harm.
Yet during the 43-day shutdown starting October 1, furloughed and non-furloughed staff alike used government computers to download documents, review submissions, hold internal discussions, and pitch the case to commissioners. They even demanded a backdated tolling agreement to revive time-barred claims, conditioning meetings on it — a blatant due-process foul.
This flouts not just the law but the SEC’s own contingency plan, which limits shutdown activities to true emergencies like protecting property from imminent threats. As Koneru’s complaint details, the staff’s moves were “knowing and intentional,” ignoring explicit warnings from his lawyers about Anti-Deficiency violations.
Why the rush? Most claims already hit the five-year statute of limitations for a penalty back in October. The shutdown was foreseeable; media buzzed about it by July. If the SEC had a case, they could have filed months earlier. Instead, they dawdled, then acted under cover of fiscal chaos, filing in New York on November 7 without settlement talks or a proper Wells process.
Even a generous reading of the SEC’s convoluted allegations against Koneru leaves a reader asking, where is the violation of law? The SEC alleges that Koneru’s company didn’t make certain disclosures — a so-called Omissions case. But in these circumstances, it’s hardly fair to pin a lack of disclosure on one person when there are scores of lawyers, bankers, accountants, and others scouring over the filings.
This saga embodies the resistance Trump faces from entrenched bureaucrats. Recall Executive Order 14294, “Fighting Overcriminalization in Federal Regulations,” which prioritizes enforcement against those with clear intent to break the law — not technical gotchas without scienter, as alleged here. Or EO 14192, “Unleashing Prosperity Through Deregulation,” which embraces innovations like blockchain, the very tech powering Triterras’s Kratos platform.
Koneru’s firm helped small enterprises access trade finance on par with big players, fostering free-market growth. Pursuing him now smacks of vindictiveness: After his lawyers flagged the probe’s wastefulness in a May 2025 letter to commissioners, charges followed suspiciously soon. Biden holdovers at the SEC — mid-level enforcers yet to be swept out — are running amok, weaponizing regulations against entrepreneurs while ignoring the administration’s directives.
Historically, this echoes past abuses. Think of the IRS targeting conservatives under Obama, or the FBI’s Crossfire Hurricane fiasco — bureaucrats bending rules to pursue political foes. The Anti-Deficiency Act, born from 19th-century fiscal reforms, exists precisely to prevent such unchecked power during lapses.
As the Office of Management and Budget guidance stresses, exceptions require an “imminent threat” that’s “near at hand and demanding immediate response.” Koneru’s case? A yawn-inducing review of 2020 disclosures, with no urgency beyond the staff’s self-inflicted deadline pressure.
The broader stakes are high. If agencies can flout shutdown laws for pet projects, what’s to stop more overreach? Trump’s return promised to drain the swamp, firing Schedule F-protected bureaucrats and slashing red tape. Cases like this highlight why: Endless investigations drain resources, chill innovation, and erode trust. Koneru, a U.S. citizen who built a real business aiding global trade, deserves better than this lawless hounding. His lawsuit isn’t just self-defense; it’s a stand for rule of law against arbitrary power.
The public — and the White House — would be right to wonder why the SEC has been filing these sorts of lawsuits even when the opposing party wants to reach a settlement. Is it to beef up statistics so that SEC Chair Paul Atkins can brag about filed actions increasing under his tenure? For those of you who remember the options backdating scandal, the SEC’s demand for a backdated tolling agreement raises the question of whether the SEC is subject to its own rules.
Atkins is new to the job and he has championed scrutiny on Ponzi schemes and other cases where investors were actually harmed. But it’s unclear why he would allow this nonsense, broken-windows era case to proceed, particularly against a 65-year-old retiree, during the shutdown, involving events from more than five years ago. Has the SEC run out of real fraud to pursue? If SEC is wasting scarce resources on this sort of case, the Bernie Madoffs and Ken Lays of the world can breathe easy.
Congress should investigate the SEC’s violations — self-reported Anti-Deficiency breaches hit double digits yearly, but rarely with such brazenness. Fire the culprits, reform the SEC’s enforcement manual to mandate due process, and realign priorities toward genuine fraud, not harassing retirees. As John Adams taught us in conceding the 1800 election, accepting limits on power is a virtue. These SEC officials? They need a lesson in humility — and a pink slip.