
Listen To Story Above
Lawyers at the Securities and Exchange Commission (SEC) must now obtain approval from politically appointed leadership before initiating formal investigations, according to two sources familiar with the situation who spoke anonymously due to the private nature of the policy shift.
This previously undisclosed procedural modification was implemented under the SEC’s new leadership following President Donald Trump’s administration. The agency, which typically operates with five commissioners including the chair, currently functions with three members – two Republicans and one Democrat, all presidential appointees.
Enforcement staff have recently been instructed to seek Commission approval for all formal investigation orders, which are essential for subpoenaing testimony or documents. This represents a significant departure from previous protocols, where such authority was delegated to junior-level staff, with the Commission maintaining veto power.
"Lawyers at the U.S. Securities Exchange Commission (SEC) have been told they need to seek permission from the politically appointed leadership before formally launching probes, two sources briefed on the matter said, in a marked change in procedure that could slow down… pic.twitter.com/irVMlDbSBD
— kristen shaughnessy (@kshaughnessy2) February 2, 2025
The exact nature of how this change was implemented – whether through a formal Commission vote or executive directive – remains unclear. Both the SEC spokesperson and White House declined to comment on the matter.
The agency is currently led by Republican Mark Uyeda, who serves alongside Republican Hester Peirce and Democrat Caroline Crenshaw. This follows the recent departures of former chair Gary Gensler and Democrat Jaime Lizárraga. Uyeda serves as acting chair pending the confirmation of Paul Atkins, Trump’s nominee for SEC chairman, who is expected to significantly alter the Biden administration’s market oversight approach.
BREAKING NEWS – The SEC will now need a permission before doing an investigation of any wrongdoings.https://t.co/tCaBRtQGTN pic.twitter.com/wN2yaJRZhC
— JaguarAnalytics (@JaguarAnalytics) February 2, 2025
While SEC staff can continue informal investigations without approval, including information requests, this change marks a departure from recent practices. Previous administrations had varying approaches – under Biden, supervising attorneys below the enforcement director could issue such orders, while Trump’s earlier administration required approval from two enforcement directors.
At an industry conference panel on Tuesday, Steven Peikin, former SEC co-enforcement director under Republican Jay Clayton, stated, “I think it’s a huge waste of commission resources to be focused on formal order authority.”
The policy shift reflects the Commission’s desire for greater control over enforcement processes, though it doesn’t necessarily indicate a reduction in investigations. This change aligns with the President’s day-one executive order aimed at ending federal government “weaponization,” including at the SEC, though the order’s specific implications remain uncertain.