Adrienne Gurley spoke with the FT’s Financial Advisor IQ about the SEC's new rule change concerning the Enforcement Division’s investigative powers. The following is an excerpt:
The Securities and Exchange Commission by split decision has rescinded a 15-year-old rule that gave its Division of Enforcement authority to open investigations and issue subpoenas without requiring approval from the commission.
In a rule published Monday, the commission said the Director of the Division of Enforcement no longer has authority to issue formal orders of investigation, meaning that commission approval is required once an investigation advances to the stage of issuing subpoenas or compelling testimony. The extra step of approval is a measure "to more closely align the Commission's use of its investigative resources with Commission priorities," the rule states.
A rollback to pre-2009 protocol will slow down the SEC's investigative process, but it won't hinder the investigators from conducting preliminary probes to "kick the tires on ... potential security violations," according to Los Angeles–based attorney Adrienne Gurley of Venable.
Gurley served as an SEC attorney from 2016 to 2021, overlapping periods in which sub-delegation of investigative authority was and was not in place. She told FA-IQ that, even with delegation of authority fully rescinded, the SEC's investigators can largely go about their business. She said oftentimes the early stage of an investigation is performed stealthily so as not to alert the rm or individual in the crosshairs and that the ability to issue subpoenas at that stage doesn't alter the investigative environment much.
"It really will just require them to do a little bit more digging up front and make sure that it's in line with what the commissioners want the agency to focus on," Gurley said.
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