Burr & Forman

02.10.2021   |   Blog Articles, SEC, Securities Litigation

SEC Enforcement Staff Regains Subpoena Power

On February 9, Acting SEC Chair Lee announced she was restoring the delegated authority of Enforcement Division senior officials to issue subpoenas to compel document production and sworn testimony without the need of a Formal Order of Investigation by the full Commission.

Until 2009, the SEC could only issue compulsory process (for document production and testimony) under a Formal Order of Investigation issued by the Commission.  In 2009, however, then-Chair Mary Shapiro delegated that authority to the Director of Enforcement for trial period of one year.  The Final Order, No. 34-60448 (Aug. 11, 2009) is hereSee also 17 C.F.R. § 202.5(a).  The Commission’s enabling statute also gives the Commission authority to delegate some authority, so thereafter, sub-delegation of the Formal-Order authority to other senior Enforcement Division officers became the norm.

In 2017, and as part of then-President Trump’s regulatory rollback, Acting Commission Chair Piwowar, revoked that delegated authority, once again requiring full Commission approval of Formal Orders of Investigation.  Elizabeth Warren and three other Democratic Senators complained, but the SEC’s Office of Inspector General concluded the move was not inappropriate.  That Report is here.

So following President Biden’s inauguration, the shoe is on the other foot.

Acting Chair Lee’s Statement is here.

Thomas K. Potter, III (tpotter@burr.com) is a partner in the Securities Litigation Practice Group at Burr & Forman, LLP. Tom is licensed in Tennessee, Texas, and Louisiana. He has over 34 years of experience representing financial institutions in litigation, regulatory, and compliance matters. See attorney profile.

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