
Dan Brecher
Counsel
212-286-0747 dbrecher@sh-law.comFirm Insights
Author: Dan Brecher
Date: May 27, 2015
Counsel
212-286-0747 dbrecher@sh-law.comAs previously discussed on the Scarinci Hollenbeck Business Law Blog, the Dodd-Frank Wall Street Reform and Consumer Protection Act expands the SEC’s authority to bring enforcement actions via administrative proceedings and allows the agency to impose a range of civil penalties against any entity.
The SEC’s election to bring its more significant cases as administrative proceedings has spurred criticism and lawsuits, which all suggest that the agency is using administrative proceedings to secure an unfair home-court advantage. The benefits are significant; cases are decided by judges appointed by the SEC rather than by juries, discovery is limited, the Federal Rules of Evidence do not apply, cases proceed quickly, and all appeals go before the Commission.
In February, SEC Commissioner Michael Piwowar called on the agency to draft the guidelines during his remarks at the annual SEC Speaks conference in Washington, D.C. He stated:
To avoid the perception that the Commission is taking its tougher cases to its in-house judges, and to ensure that all are treated fairly and equally, the Commission should set out and implement guidelines for determining which cases are brought in administrative proceedings and which in federal courts.
This month, the SEC published “Division of Enforcement Approach to Forum Selection in Contested Actions,” While the guidelines emphasize that “the Division recommends the forum that will best utilize the Commission’s limited resources to carry out its mission,” it also explains that the Division “may in its discretion consider any or all” of the following factors:
The SEC’s guidelines are unlikely to end the debate over its expanded use of administrative proceedings. However, they do signal that the agency is aware of the criticism and is willing to take steps to improve transparency.
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