Change is coming to the SEC Division of Enforcement ("Enforcement Division"). With three open Commission seats to fill and looming legislative proposals by the Republican-majority Congress, the Enforcement Division is likely to become more centralized and focus on a different set of priorities under the Trump Administration.

In a memorandum, Cadwalader attorneys preview forthcoming changes at the Enforcement Division. For example, the power of Enforcement Division attorneys in the field to issue subpoenas and open new investigations was scaled back recently by Acting Chair Michael Piwowar. The new procedure will require a personal sign-off by the Director of Enforcement in Washington, D.C. This move indicates that after years of allowing wide latitude to Enforcement Division attorneys to open and pursue cases, the SEC is reverting to a more centralized decision-making model. Such a shift will make it easier for the SEC and the next Director of Enforcement to focus on their chosen enforcement priorities and scrutinize potential investigations more closely.

The memorandum was authored by Jodi Avergun, Scott Cammarn, Bret Campbell, Robert Duncan, Douglas Fischer, Joseph Moreno, Nihal Patel and Anne Tompkins.

Commentary / Joseph V. Moreno

In the next few months, additional SEC appointments, implementation of Executive Orders, and the trajectory of Republican legislation such as the Financial CHOICE Act will clarify how the Enforcement Division will operate under President Trump. While its new priorities still remain unknown, those priorities will be carried out by an Enforcement Division that is more centralized in Washington, D.C. and with less autonomy by individual attorneys. This more focused approach may result in a more company-friendly SEC whose resources are spent on significant issues rather than minor violations. It also could lead to a Commission with an overly narrow mandate and whose attorneys have their hands tied.

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