The seal of the U.S. Securities and Exchange Commission (SEC) is displayed at their headquarters in Washington, D.C. Andrew Kelly | Reuters
Recent changes at the U.S. Securities and Exchange Commission (SEC) indicate that lawyers now need to obtain approval from politically appointed leaders before initiating formal investigations, according to two sources familiar with the situation. This shift represents a significant procedural alteration that may impede the pace of investigations.
Sources, who requested anonymity due to the confidential nature of the information, noted that this change has occurred under the new leadership following President Donald Trump’s administration. Traditionally, the SEC operates under the oversight of five commissioners, including a chair, but currently comprises three members: two Republicans and one Democrat, all appointed by the president.
Recently, some enforcement staff have been informed that they must seek the Commission’s authorization for any formal investigation orders—necessary for issuing subpoenas for documents or testimony. Previously, lower-level staff had been granted this authority, with the Commission retaining the right to refuse, although it did not always do so.
It remains unclear whether the Commission officially voted to withdraw this delegated authority or who instigated the change. An SEC spokesperson did not provide comments on the matter, and the White House has not responded to inquiries.
Supporters of the new requirement argue that it may protect individuals involved in investigations, while critics contend that it undermines the autonomy of the staff. Since Trump’s inauguration, Republican Mark Uyeda has been leading the agency, alongside Republican Hester Peirce and Democrat Caroline Crenshaw. The former chair, Gary Gensler, and fellow Democrat Jaime Lizárraga departed from the Commission last month. Uyeda is currently serving as acting chair until former SEC Commissioner Paul Atkins, appointed by Trump, receives confirmation. Atkins is anticipated to shift the SEC’s approach to capital market regulation compared to the Biden administration.
Despite the new requirement, SEC enforcement staff can still conduct informal investigations without prior approval, such as by issuing information requests. Historically, the SEC had delegated investigatory authority to enforcement directors and other senior personnel. Under the previous administration, lower-level attorneys could initiate investigations, while during Trump’s earlier term, the SEC mandated approval from its two enforcement directors to commence formal probes.
This adjustment marks one of the first enforcement changes under the current leadership, which is expected to adopt a more industry-friendly stance. Steven Peikin, who co-directed enforcement under Republican Jay Clayton, expressed on a panel at an industry conference that such a change could be anticipated with the new administration, emphasizing the inefficiency of focusing on formal order authority.
While this shift does not inherently suggest a decrease in the number of investigations, it indicates that the Commissioners are taking a more direct role in enforcement decisions at an earlier stage in the process. On his first day in office, the President signed an executive order pledging to end the “weaponization” of the federal government, including actions at the SEC, although the order’s implications for the agency remain uncertain.
