[Photo: StarTraks]

Michael Piwowar, the Republican SEC Commissioner who’s serving as its acting chairman, has quietly initiated a review into “delegated authority,” which gives senior attorneys at the SEC powers to start probes, inspect firms and sign-off on some financial products without seeking approval from Piwowar and the other politically-appointed commissioners who oversee the regulator. The examination Piwowar has asked for is wide-ranging and not limited to the enforcement unit.

While President Donald Trump has nominated Wall Street lawyer Jay Clayton to lead the SEC, the Senate hasn’t scheduled a confirmation hearing. Meanwhile, the SEC is currently down to 2 commissioners: Piwowar and Kara Stein.

Pinowar asked heads of various SEC divisions and offices to identify their delegated authorities and suggest powers that should be added or taken away. Piwowar, 48, stressed the effort, which will be overseen by the SEC’s general counsel, could go both ways. The move by Piwowar, less than a month since he became interim chief, comes after he repeatedly asked former SEC Chair Mary Jo White to take similar action.

Any rollback of authorities could be felt particularly hard in the SEC Enforcement Division. Delegated authority is a common practice for officials to issue subpoenas and negotiate settlements without SEC commissioners weighing in, except in the biggest and most sensitive cases. Staff attorneys argue the process allows them to move quickly and avoid getting bogged down in wrangling among commissioners.

When commissioners get involved, investigations become “a more drawn out process.” “It goes from hours or days to weeks potentially.” - - Alec Koch, former SEC Enforcement Attorney now at King & Spalding law.

Some of Enforcement’s delegated authorities came after the financial crisis, when the SEC faced widespread criticism for failing to spot abuses. In 2009, then-SEC Chairman Mary Schapiro tried to streamline investigations by granting subpoena authority to her enforcement chief, who in turn gave the power to about a dozen or so senior officials.