December 6, 2021

Volume XI, Number 340

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December 03, 2021

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SEC Enforcement Restores Subpoena Power

The U.S. Securities and Exchange Commission (SEC) has restored the authority of senior Division of Enforcement (Enforcement) officials to initiate investigations, which had been revoked during the Trump administration.

On Tuesday, acting SEC chair, Allison Herren Lee, announced that certain senior Enforcement officials may once again exercise delegated authority to approve formal orders of investigation that empower Enforcement staff to subpoena documents and sworn testimony.

Authority to open formal orders of investigation was originally limited to SEC commissioners. Under the Obama administration in 2009, the SEC adopted a temporary rule delegating that authority to the director of Enforcement. The rule was made permanent the following year and was intended to enhance Enforcement’s capabilities and quicken investigations in the aftermath of the financial crisis. The director of Enforcement, in turn, subdelegated that authority to various senior officials, including regional and associate directors and specialized unit chiefs. Under this expanded authority, the number of SEC formal orders of investigations increased significantly.

During the Trump administration in 2017, however, the SEC withdrew the authority that had been subdelegated to senior officials (about 20) and limited the power to authorize orders of investigation to only Enforcement directors. At the time, the agency said the move would result in more oversight and consistency on the formal order process.

In her statement on Tuesday, Lee said that the reinstated “delegation of authority will enable investigative staff to act more swiftly to detect and stop ongoing frauds, preserve assets, and protect vulnerable investors. Returning this authority to the division’s experienced senior officers, who have a proven track record of executing it prudently, helps to ensure that investigative staff can work effectively to protect investors.”

The effects of this change remain to be seen, but it may be an early sign of the SEC’s plans to be more assertive with Enforcement matters under the Biden administration.

 

© 2021 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.National Law Review, Volume XI, Number 46
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About this Author

Michael R. MacPhail Partner Denver Litigation White Collar Crime
Partner

Michael MacPhail defends clients against federal and state government agencies during civil and criminal investigations and litigation, primarily involving the securities industry. He represents public companies, registered investment advisers and broker-dealers.

Securities Litigation

Michael handles investigations and litigation by securities regulators including:

  • The U.S. Securities and Exchange Commission (SEC)

  • The FINRA

  • The Public Company Accounting Oversight Board (PCAOB)

  • The Colorado Division of...

303-607-3692
Natalie DeLave Litigation Attorney
Associate

Natalie K. DeLave assists clients with various aspects of litigation, including legal research and the drafting of motions and other memoranda.

While in law school, Natalie interned for the Honorable Manish S. Shah of the U.S. District Court for the Northern District of Illinois and for the Honorable Robert L. Miller, Jr. of the U.S. District Court for the Northern District of Indiana. She was a summer associate at Drinker Biddle in 2017.

Bar Admissions

  • Illinois

Education

  • University of Notre Dame Law...

312-569-1116
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