Criminal Defense and Investigations: SEC Enforcement Division Granted Permanent Authority to Issue Formal Orders of Investigation

Sullivan & Cromwell LLP - August 13, 2010

On August 11, 2010, the Securities and Exchange Commission (the “Commission”) amended its rules to remove a sunset provision from the extension of authority to the Director of the Enforcement Division to issue formal orders of investigation.  Formal orders of investigation enable the Enforcement Division to, among other things, subpoena documents and compel testimony.
On August 5, 2009, the Commission issued a rule authorizing the Enforcement Division to issue such orders for a one-year period.  This delegation of authority will become permanent on August 16, 2010.  Previously, the Enforcement Division was required to request authorization from the Commission to issue formal orders. 

The Commission determined to extend permanent authority to the Director of the Enforcement Division in light of increased efficiency in the conduct of investigations demonstrated during the past year.  Although the Enforcement Division routinely receives information through informal investigations in which companies cooperate voluntarily without subpoenas, vesting it with the authority to issue formal orders has increased the number of cases in which subpoenas have been issued.