SEC Expands Subpoena Powers, Forms New Investigative Groups
Thursday, August 6, 2009
The Securities and Exchange Commission will allow its enforcement division to subpoena documents and compel testimony without the approval of the agency's five commissioners, a major grant of new powers that is likely to fuel faster and more frequent investigations.
Enforcement division director Robert Khuzami made the announcement in a speech on Wednesday to the New York City Bar Association. "[I]f defense counsel resist the voluntary production of documents or witnesses, or fail to be complete and timely in responses or engage in dilatory tactics, there will very likely be a subpoena on your desk the next morning," he said.
This and other measures announced Wednesday come as the agency is under intense pressure to pursue prominent cases linked to the financial crisis. Khuzami also said he is creating five specialized investigative groups focused on asset managers, such as hedge funds and mutual funds; market abuses by big traders; new and complex financial products, such as derivatives; foreign bribery by U.S. corporations; and municipal bonds and public pensions.
Khuzami said the division would streamline a series of processes, including allowing lower-level officials to make decisions about cases and shortening the length of memos and periods of review before investigators can bring a case to the commission to file an enforcement action.
Khuzami also announced the creation of an Office of Market Intelligence, which will be responsible for collecting, analyzing and monitoring the hundreds of thousands of tips the SEC receives each year. He said the system will allow the division to evaluate tips to discern patterns that could lead to possible investigations.