On Monday June 13, 2011, the SEC announced that it was amending its rules to delegate authority to the Director of the Division of Enforcement to issue witness immunity orders to compel individuals to give testimony or provide other information. This rule will go into effect for an 18-month period once it is published in the Federal Register.
Previously, when a witness in an SEC Investigation exercised his or her right not to testify under the Fifth Amendment, the Enforcement Staff would typically advise the witness that they did not have the authority to compel his or her testimony by granting him or her immunity from prosecution. In January 2010, the SEC amended its rules to grant the Enforcement Director authority to submit witness immunity requests to the Department of Justice, in connection with judicial proceedings, to compel testimony or the production of other information by witnesses who have provided or have the potential to provide substantial assistance in the Commission’s investigations and related enforcement actions.
The Amendment announced on Monday provides grants the Director of Enforcement new authority to:
submit witness immunity requests to the U.S. Attorney General pursuant to 18 U.S.C. §§ 6002 – 6004, and, upon approval by the U.S. Attorney General, to seek or, … to issue orders compelling an individual to give testimony or provide other information pursuant to subpoenas that may be necessary to the public interest in connection with investigations and related enforcement actions … .
The new language, identified in bold above, shall be in effect for 18 months once the language is published in the Federal Register. At the end of that 18-month period, the Commission will evaluate whether it wants to extend the delegation of that authority for the Director to issue orders.
The Director, Robert Khuzami, formerly with the U.S. Attorney’s Office in the Southern District of New York, has, in the past, taken steps to organize his investigative teams along the lines of a prosecutor’s office. The latest announcement appears to continue that trend.