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WASHINGTON (Reuters) - Acting U.S. Securities and Exchange Commission Chairman Michael Piwowar has taken steps to limit the agency's enforcement division's powers to initiate investigations and issue subpoenas, according to people familiar with the matter.
Under the new policy, the enforcement division's associate directors will no longer have authority to issue subpoenas or formally launch probes.
Instead, all such requests will be routed through the SEC's Acting Enforcement Division Director Stephanie Avakian, according to the sources, who spoke anonymously because the change has not been publicly announced.
The new policy of routing subpoena requests through the enforcement director as opposed to associate directors is not expected to have a major impact on the division, and it is still less cumbersome than routing it through the commission itself, the sources said. Anything put for consideration before the full commission must also be reviewed by all of the SEC's divisions, a time consuming process.
The change marks a departure from the policy unveiled by former SEC Chair Mary Schapiro in 2009 as a response to the agency's failures to detect Bernard Madoff's massive Ponzi scheme.
Schapiro's policy, which was met with applause from SEC staff and defense attorneys at the time, delegated subpoena authority to a broader number of enforcement division managers to make the division more nimble and streamline the opening of cases.
Prior to that, the full five-member commission had to sign off first.
The SEC has the power to delegate various duties to senior staffers in its different divisions, whether it involves issuing subpoenas, approving corporate requests for regulatory waivers or granting regulatory relief.
The internal changes that Piwowar made in how these powers are delegated is not limited to the enforcement division, and apply to all other SEC divisions including Corporation Finance.
Piwowar, who joined the SEC as a commissioner in 2013, has been critical of that approach amid concerns it could lead to a lack of uniformity and undercut commissioners' oversight.
"I question whether the processes currently in place are sufficient for the Commission to exercise the appropriate level of oversight of the formal order process," Piwowar said in a 2013 speech.
SEC Commissioner Kara Stein, a Democrat, at times has also previously steered some decisions away from career staffers so they could be vetted by the full commission. She has focused questions about whether the SEC should be approving regulatory waivers to companies that break the law.
Reporting by Sarah N. Lynch; editing by Linda Stern and Chizu Nomiyama