GOP-Led SEC Tightens Control Over Enforcement Investigations, Lawyers Say

Jerry Hodgkins’ commentary was included in a Law.com article on the Securities and Exchange Commission’s (SEC) decision to remove delegated authority from the Division of Enforcement for initiating formal investigations. Jerry notes that since 2009, SEC investigators had only needed approval from leaders in the SEC's division of enforcement, who are less senior than the appointed commissioners.

Before 2009, SEC commissioners issued formal orders of investigation giving an investigative team the authority to issue subpoenas for testimony and documents, said Jerry, who worked at the commission from 1997 to 2017. Having the commission approve investigations “naturally brings more attention and visibility to the commission on these investigations in the early stages, so that the commission can evaluate if this a good use of ... resources,” Jerry said.

Jerry added that in light of concerns that obtaining commissioner approval could make the process less efficient since it would be more time consuming, he notes that in the bigger picture of preventing fraud or other malfeasance, “I’m not sure those inefficiencies are terrible.”