SEC tightens oversight of probes under Republican-led commission leadership
SEC tightens oversight of probes under Republican-led commission leadership
The U.S. Securities and Exchange Commission (SEC) has instituted a significant procedural shift that requires its enforcement staff to seek approval from the Commission before formally launching investigations.
This change, which has not been made public, is a departure from the agency's previous norms and comes under the leadership of politically appointed commissioners, following President Donald Trump's tenure in office, reports Reuters.
Under the new guidelines, SEC staff members now must request permission from the Commission, which currently has a Republican-majority leadership, before issuing formal orders of investigation. These orders are necessary to subpoena documents or testimony. Previously, such authority had been delegated to senior staff, though the Commission had the right to refuse any requests. The new procedure represents a move toward more direct control by the SEC’s leadership in overseeing investigations.
Potential Impact on SEC Enforcement
The change is expected to slow down the pace of investigations, although it is not yet clear whether the new procedure will result in fewer probes being initiated. Proponents argue that it will reduce harm to individuals under investigation by providing an additional layer of oversight. On the other hand, critics suggest that the move diminishes the autonomy of SEC staff, potentially hampering their ability to pursue cases efficiently.
The SEC’s enforcement procedures have undergone several shifts under new leadership. Mark Uyeda, a Republican, is currently acting chair of the SEC, following the departure of former chair Gary Gensler and fellow Democrat Jaime Lizárraga. This shift in leadership is expected to lead to a more industry-friendly regulatory approach, with greater emphasis on oversight at the commission level rather than at the staff level.
This procedural change is part of a broader push by the Trump administration's appointees to reshape the SEC's approach to capital market regulations. The change is in line with the President's first-day order aimed at ending the "weaponization" of federal agencies, which is expected to impact how the SEC handles its enforcement duties.
