SEC staff must obtain higher level approval before launching research under new leadership

The SEC now requires its lawyers to obtain higher level approval before formally launching an investigation, according Two sources familiar with the matter they talked to Reuters on anonymity.

The new requirement requires that compliance personnel must obtain permission from the commissioners named politically to issue citations, demand documents and force the testimony.

Previously, staff members had the authority to initiate formal investigations independently, although the SEC commissioners maintained the supervision of the process.

The change follows the leadership transitions in the SEC, including the departure of former President Gary Gensler and Democrat Jaime Lizárraga last month. President Donald Trump appointed Mark Uyeda as an interim president, with the commission that currently operates with three commissioners: Uyeda, Hester Peirce and Caroline Crenshaw.

According to Tyler Warner, a former bank consultant turned into a nft market analyst, the new system will avoid “dishonest attacks.” The SEC commissioners will be more demanding and less likely to approve research without solid evidence.

On the other hand, this change of procedure may come with the risk of losing or delaying legitimate cases of fraud. “Too soon to call it positive or negative, (although) I lean positive,” he <a target="_blank" target="_blank" href="https://x.com/Tyler_Did_It/status/1886446217783071064″ rel=”noopener nofollow noreferrer”>aggregate.

According to the previous administration, the SEC required the approval of its two application directors to formally launch probes. The sources did not specify whether the Commission formally voted to revoke the previous authority delegation.

Compliance staff can continue to conduct informal investigations without the approval of the commissioner, including sending information requests.

Under the leadership of Gensler, the SEC increased regulatory actions against the main cryptography exchanges, focusing on accusations of fraud violations and the Securities Law. This approach caused criticism of both the cryptographic sector and some legislators, including the Democrats who argued that Gensler's interpretations on the values ​​of values ​​were too broad and vague.

Gensler argued that the role of the SEC was crucial in the protection of investors of possible fraud and prevailing scams in the cryptographic space. However, his critics argued that this perspective led to a heavy approach that could be seen as a war against cryptography, which generated concerns about whether such actions were justified or excessively punitive.

Marc Fagel, a retired lawyer specialized in the application of the SEC and the litigation of values, said that the change was a step back, making the investigations slower and, ultimately, benefit those who commit fraud.

“Having been personally involved in the original effort to delegate the formal authority of order, I can say that this is a silly movement that will do nothing more to do that the investigations are already slowly delayed. Great news for anyone who commits fraud, ”he said.