SEC Commissioner Wants Review of Enforcement Powers to Initiate Investigations
SEC Commissioner Michael Piwowar believes that the SEC should review the decision made in 2009 to allow Enforcement staff to issue formal orders of investigation without approval by the Commissioners. A formal order of investigation allows SEC Enforcement to issue subpoenas, conduct “on-the-record” interviews, and require document production. Failure to comply could result in a civil lawsuit and prosecution for contempt. The SEC delegated the ability to issue formal orders to Enforcement staff in order to expedite investigations. Mr. Piwowar notes that the number of formal orders doubled between 2008 and 2012. Mr. Piwowar believes that the SEC should “evaluate the continued propriety of using delegated authority for formal orders with the benefit of two additional years of operating history.” Mr. Piwowar cites the SEC’s Canons of Ethics that recognize that the “mere existence of an investigation…carries with it the power to defame and destroy.”
OUR TAKE: We believe that the SEC should review (and rescind) delegated formal orders of investigation. The SEC already acts as police, prosecutor, judge, and jury. The SEC or Congress should implement some check on its prosecutorial powers.