ICYMI (as I did), the WSJ last week reported that:
Michael Piwowar—named acting head of the agency in late January by the Trump administration—... revoke[d] subpoena authority from about 20 senior enforcement officials and limits it to the enforcement division director. ...
Now, only the SEC’s enforcement director can authorize subpoenas for records or oral testimony.
That reins in powers authorized in 2009 through then-SEC Chairman Mary Schapiro,who was appointed by former President Barack Obama, to give more investigative authority to senior enforcement attorneys following the financial crisis and the agency’s failure to catch frauds such as money manager Bernard Madoff, who confessed to a $65 billion Ponzi scheme.
In a speech in 2013 shortly after he became and SEC commissioner, Mr. Piwowar called for reviewing the staff’s powers granted under Ms. Schapiro. While the changes made it “easier” for the agency to launch probes, “I question whether the processes currently in place are sufficient for the commission to exercise the appropriate level of oversight,” he said at a legal conference in Los Angeles.
Hat tip to Broc Romanek, who also reports that:
Acting Chair Piwowar has long been a critic of both the delegation of this authority to the Staff & the manner by which the SEC accomplished it. Here’s an excerpt from his 2013 remarks to the LA County Bar:
Finally, the delegation of authority for approval of formal orders was deemed by the Commission to relate solely to agency organization, procedure, and practice, and therefore not subject to the notice and comment process under the Administrative Procedure Act. The mere fact that we can institute certain rules without obtaining comment from the public does not necessarily mean that we should. Given the significant ramifications for persons who are on the receiving end of a subpoena issued pursuant to a formal order, we should make sure that public comment is allowed on any review of the formal order process.
This action – which ironically occurred without a public announcement – is consistent with Piwowar’s longstanding concerns that the Staff has had too much power & too little oversight when it comes to investigations.
There's a difficult trade off here. OTOH, requiring that the Commission sign off on every subpoena probably did crimp investigations too much. It's especially problematic when, as now, the Commission itself is understaffed. OTOH, freely allowing enforcement attorneys to get subpoenas without any oversight created accountability issues and denied the Commission the ability to decide what investigations were worth expending resources on. The result of Piwowar's action is to leave the division director with power to issue subpoenas. Since he works directly under Commission supervision, that's probably a reasonable compromise between efficiency and accountability.
