SEC Amends Rules Granting Additional Authority to the OGC in the Conduct of Investigations

The Securities and Exchange Commission (“SEC”) has amended its rules to delegate to the General Counsel its authority to designate officers in authorized investigations conducted by the Office of General Counsel (“OGC”).

By way of background, the OGC of the SEC has the authority to conduct authorized investigations under Section 21 of the Securities Exchange Act of 1934 (15 U.S.C. 78u, “Exchange Act”) of possible violations by attorneys of the Commission Rules of Practice. In connection with these investigations, it may be necessary from time to time to amend the formal orders to add or remove officers designated to conduct the inquiry.

Section 21 (a)(1) of the Exchange Act of authorizes the SEC to conduct investigations regarding violations of the Exchange Act or its related rules or regulations. As part of such investigations, under Section 21(b) of the Exchange Act, the SEC may designate officers to administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda or other records which the SEC deems relevant or material to the inquiry.

A delegation of authority to the General Counsel to designate officers would spare the Commissioners and their staffs from having to review matters in which the SEC has already issued an order and which implicate no policy issues. This would allow the General Counsel to designate additional officers to take testimony and conduct investigations in those matters or similarly remove officer designations as may be necessary. This authority is identical to that granted to the Director of the Division of Enforcement with respect to authorized investigations conducted by that Division. This new rule took effect on May 4, 2009.

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