Lawyers at the U.S. Securities Exchange Commission (SEC) are now required to seek permission from the commission’s politically appointed leadership before launching formal investigations, a change that could slow down investigations.
This change, made under new leadership at the SEC since President Donald Trump took office, is a marked departure from the previous procedure. Typically, five commissioners oversee the independent agency, but currently, there are only three members, including two Republicans and one Democrat.
As a result of the change, enforcement staff are now required to seek approval for all formal orders of investigation, which are needed to issue subpoenas for testimony or documents. This is a departure from the previous practice of delegating such authority to lower-level staff.
Proponents of the change argue that it will reduce harm to individuals subject to investigations, while others say it takes away staff autonomy. SEC enforcement staff can still conduct informal investigations without formal approval, including sending out requests for information.
The change is part of the first shift in enforcement at the SEC under new leadership, which is expected to be friendlier to industry. The move follows a change in administration, in which the new leadership has made clear its intent to take a more industry-friendly approach to regulation.