SEC’s acting chair scales back enforcement unit’s subpoena powers

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By Sarah N. Lynch | WASHINGTON

WASHINGTON Acting U.S. Securities and Exchange
Commission Chairman Michael Piwowar has taken steps to limit the
agency’s enforcement division’s powers to initiate
investigations and issue subpoenas, according to people familiar
with the matter.

Under the new policy, the enforcement division’s associate
directors will no longer have authority to issue subpoenas or
formally launch probes.

Instead, all such requests will be routed through the SEC’s
Acting Enforcement Division Director Stephanie Avakian,
according to the sources, who spoke anonymously because the
change has not been publicly announced.

The new policy of routing subpoena requests through the
enforcement director as opposed to associate directors is not
expected to have a major impact on the division, and it is still
less cumbersome than routing it through the commission itself,
the sources said. Anything put for consideration before the full
commission must also be reviewed by all of the SEC’s divisions,
a time consuming process.

The change marks a departure from the policy unveiled by
former SEC Chair Mary Schapiro in 2009 as a response to the
agency’s failures to detect Bernard Madoff’s massive Ponzi

Schapiro’s policy, which was met with applause from SEC
staff and defense attorneys at the time, delegated subpoena
authority to a broader number of enforcement division managers
to make the division more nimble and streamline the opening of

Prior to that, the full five-member commission had to sign
off first.

The SEC has the power to delegate various duties to senior
staffers in its different divisions, whether it involves issuing
subpoenas, approving corporate requests for regulatory waivers
or granting regulatory relief.

The internal changes that Piwowar made in how these powers
are delegated is not limited to the enforcement division, and
apply to all other SEC divisions including Corporation Finance.

Piwowar, who joined the SEC as a commissioner in 2013, has
been critical of that approach amid concerns it could lead to a
lack of uniformity and undercut commissioners’ oversight.

“I question whether the processes currently in place are
sufficient for the Commission to exercise the appropriate level
of oversight of the formal order process,” Piwowar said in a
2013 speech.

SEC Commissioner Kara Stein, a Democrat, at times has also
previously steered some decisions away from career staffers so
they could be vetted by the full commission. She has focused
questions about whether the SEC should be approving regulatory
waivers to companies that break the law.

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