It’s not even a law, it’s the SEC own agency opinion that has been successfully challenged and failed multiple times. However they can easily extract fines for

It’s not even a law, it’s the SEC own agency opinion that has been successfully challenged and failed multiple times. However they can easily extract fines for SEC profits by threatening expensive and time consuming court battles which they would ultimately lose. But for most people, paying the fine is cheaper than winning in court. There needs to be a law that if the SEC loses a case, they must pay the defendant a fine equal to what they wanted the defendant to pay the SEC.