SEC Staff seeking authority to issue subpoenas must now obtain Commission approval.
On March 10, 2025, in a vote that fell along party lines, the Securities and Exchange Commission (SEC or the Commission) issued a rule amendment to rescind the Commission’s 2009 delegation of authority to the Division of Enforcement for the issuances of formal orders of investigation.1 Formal orders of investigation provide the SEC Staff with the authority to issue subpoenas for documents and witness testimony, among certain other actions.
The repeal of this delegated authority is intended to “more closely [align] the Commission’s use of its investigative resources with Commission priorities.” The Commission bypassed the public comment period generally required for proposed rules because the amendment “relates solely to agency organization, procedure, or practice.” The amended rule will be effective 30 days from the date of its publication in the Federal Register.
“We are returning to how the Division operated for most of its existence, ensuring the Commission has the utmost insight into the cases we bring throughout the process,” an SEC spokesperson said in a written statement.
With this change, the Enforcement Division will need to seek Commission approval to institute a formal order, rather than the Enforcement Division issuing the order itself on its own authority.
Under the revised rule, the Enforcement Division will be required to prepare a memo recommending the issuance of a formal order, and the other interested SEC divisions and the Commissioners themselves will have an opportunity to provide feedback on the recommendation and assess whether it aligns with the Commission’s priorities.
As a result of the new process around formal orders, certain investigations proposed by the Enforcement Division may not be pursued or may take longer to initiate and complete.
