Acting SEC Chair’s Steps to Centralize the Process of Issuing Formal Orders—Are Commentators Drawing the Right Lessons?

The Harvard Law School Forum on Corporate Governance and Financial Regulation 2017-03-14

Posted by Matthew C. Solomon and Elizabeth (Lisa) Vicens, Cleary Gottlieb Steen & Hamilton LLP, on Monday, March 13, 2017
Editor's Note: Matthew C. Solomon and Elizabeth (Lisa) Vicens are partners at Cleary Gottlieb Steen & Hamilton LLP. This post is based on a Cleary Gottlieb publication by Mr. Solomon, Ms. Vincens, Alexander Janghorbani, and Mark E. McDonald.

Several sources have reported that Acting SEC Chair Michael Piwowar recently issued a directive mandating that only the Acting Director of the Division of Enforcement can authorize the issuance of formal orders of investigation, the means by which the SEC authorizes its investigative staff to issue subpoenas. [1] The change—which reportedly strips approximately 20 Enforcement Division senior officers of the power to authorize formal orders—was not announced publicly and is not reflected in the SEC’s Enforcement Manual.