Nikolas Sargeant
The U.S. Securities and Exchange Commission (SEC) has implemented a significant change in its investigation procedures, now requiring staff to obtain Commission approval before formally launching probes. This policy shift comes under the leadership of Republicans Mark Uyeda and Hester Peirce, who lead the SEC since President Trump’s administration. Sources familiar with the matter say the move, which has not been publicly announced, represents a sharp departure from the agency’s prior practices, where lower-level enforcement staff had the autonomy to initiate investigations.
This change could potentially slow down investigations as staff will now need approval for formal orders of investigation, which are necessary to issue subpoenas and compel testimony or document production. Previously, this authority was delegated to senior enforcement staff, although the Commission had the right to refuse the issuance of such orders. The new structure means that investigations will be subject to more scrutiny at an earlier stage, with the Commissioners taking a more active role in oversight.
A New Direction for the SEC
While SEC enforcement staff can still carry out informal investigations—such as sending out requests for information—the formal investigation process is now under tighter control. Proponents of the change argue that it could reduce harm to individuals under investigation by preventing unnecessary probes, while critics say it limits the autonomy of SEC staff, potentially hampering enforcement efficiency.
The shift in SEC procedures comes as part of a broader change in leadership, with Mark Uyeda serving as acting chair after the departure of Democratic commissioners Gary Gensler and Jaime Lizárraga. Under the new leadership, the SEC is expected to adopt a more industry-friendly stance, potentially reshaping how capital markets are regulated. The implications of this procedural shift, combined with other changes expected under Uyeda’s leadership, signal a notable change in enforcement priorities at the SEC.
