Yesterday, we joked that former SEC Chair Mary Jo White had gotten herself a pretty sweet new gig, returning to law firm Debevoise & Plimpton to “advise clients facing government investigations.” Given the decidedly lasseiz-faire cast of the Trump administration, it seemed there might not be all that many such investigations upon which to advise once the president’s pick as her successor, Jay Clayton, took the reins.
Mr. Piwowar revoked authority that had given a broader group of enforcement division staff the power to issue subpoenas, according to these people. Now, only the SEC’s enforcement director can authorize subpoenas for records or oral testimony….
Mr. Piwowar’s decision this year on enforcement could be a first step toward a more fundamental change—going back to a system that required SEC commissioners, who are presidential appointees and confirmed by the Senate, approve all formal investigations.
The move takes subpoena power away from about 20 top SEC enforcement officials, who have enjoyed it since White’s predecessor as SEC chair, Mary Schapiro, gave it to them, in part since the old system had let little things like Bernie Madoff slip through the cracks. Following that change in 2009, the number of formal orders of investigation more than doubled, hitting a record last year. All of which does make one a bit skeptical of Piwowar’s alleged thinking on the matter, especially given that “commission oversight” is currently in the hands of himself and Democratic Commissioner Kara Stein, the only two members of the SEC left.
Mr. Piwowar’s goal wasn't necessarily to reduce the number of enforcement cases pursued by the SEC, these people said, but was aimed at bringing consistency to a process he felt could be driven by differing standards and wasn’t subject to ample commission oversight.
We’re sure once Clayton is confirmed and Trump gets around to filling out its ranks—and we gather Mitch McConnell won’t offer the kind of resistance to his doing that as Chuck Schumer and Elizabeth Warren offered Obama’s last SEC nominees—they’ll get right to amply overseeing things.