After coming under fire for using the forum to secure an unfair home court advantage
After coming under fire for using the forum to secure an unfair home court advantage, the Securities and Exchange Commission (SEC) recently proposed amendments to its rules governing administrative proceedings. The proposal would extend certain deadlines, allow for depositions, and require electronic filing.
Why amend administrative proceedings?
As previously discussed on this blog, the Dodd-Frank Act gave the SEC greater authority to bring enforcement actions via administrative proceedings. The SEC readily capitalized on the expanded power to bring significant cases before its own hearing officers rather than federal judges or independent juries, prompting critics to argue that the agency is abusing its newfound authority.
The SEC is currently subject to several lawsuits that challenge its use of administrative proceedings. The plaintiffs allege that the proceedings violate the due process and equal protection guarantees under the U.S. Constitution by eliminating the right to a jury trial and imposing tight deadlines. They also contend that the proceedings violate the President’s removal powers under Article II of the Constitution because both SEC administrative hearing officers and commissioners can only be removed for good cause.
Proposed changes for administrative proceedings
The proposed changes do not respond to the constitutional challenges regarding the SEC’s administrative hearing officers or address the alleged inherent unfairness of the proceedings. However, they do demonstrate that the agency is willing to reform its enforcement proceedings, if only one small step at a time.
Under the SEC’s rule proposal, respondents in these proceedings would be allowed to file notices to take depositions. Under the current rules, parties may take depositions by oral examination only if a witness will be unable to attend or testify at a hearing.
Depositions, however, would still be limited, as compared to a federal court case. If a proceeding involves a single respondent, the proposed amendment would allow the respondent and the SEC to each file notices to depose three persons (i.e., a maximum of three depositions per side). If a proceeding involves multiple respondents, the proposed amendment would allow respondents to collectively file notices to depose five persons and the SEC to file notices to depose five persons (i.e., a maximum of five depositions per side).
The SEC proposal would also extend the abbreviated timeframe in which administrative cases must be decided. Under the current rules, even complex cases must be resolved within 300 days, with the hearing scheduled to begin just four months after the charges are initially fired. The rule proposal extends the hearing date by up to four moths and the deadline for the hearing officer to issue a decision by up to thirty days.
With regard to proposed e-filing requirements, the agency stated: “The Commission believes that electronic submissions will enhance the transparency of administrative proceedings by providing a quicker way for the Commission to make records available to the public.”
Does Your Homeowners Insurance Provide Adequate Coverage?
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Understanding the Importance of a Non-Contingent Offer
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Fred D. Zemel Appointed Chair of Strategic Planning at Scarinci & Hollenbeck, LLC
Business Transactional Attorney Zemel to Spearhead Strategic Initiatives for Continued Growth and Innovation Little Falls, NJ – February 21, 2025 – Scarinci & Hollenbeck, LLC is pleased to announce that Partner Fred D. Zemel has been named Chair of the firm’s Strategic Planning Committee. In this role, Mr. Zemel will lead the committee in identifying, […]
Novation Agreement Process: Step-by-Step Guide for Businesses
Big changes sometimes occur during the life cycle of a contract. Cancelling a contract outright can be bad for your reputation and your bottom line. Businesses need to know how to best address a change in circumstances, while also protecting their legal rights. One option is to transfer the “benefits and the burdens” of a […]
What Is a Trade Secret? Key Elements and Legal Protections Explained
What is a trade secret and why you you protect them? Technology has made trade secret theft even easier and more prevalent. In fact, businesses lose billions of dollars every year due to trade secret theft committed by employees, competitors, and even foreign governments. But what is a trade secret? And how do you protect […]
What Is Title Insurance? Safeguarding Against Title Defects
If you are considering the purchase of a property, you may wonder — what is title insurance, do I need it, and why do I need it? Even seasoned property owners may question if the added expense and extra paperwork is really necessary, especially considering that people and entities insured by title insurance make fewer […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
SEC Proposes Changes to Administrative Proceedings
Author: Dan Brecher
After coming under fire for using the forum to secure an unfair home court advantage
After coming under fire for using the forum to secure an unfair home court advantage, the Securities and Exchange Commission (SEC) recently proposed amendments to its rules governing administrative proceedings. The proposal would extend certain deadlines, allow for depositions, and require electronic filing.
Why amend administrative proceedings?
As previously discussed on this blog, the Dodd-Frank Act gave the SEC greater authority to bring enforcement actions via administrative proceedings. The SEC readily capitalized on the expanded power to bring significant cases before its own hearing officers rather than federal judges or independent juries, prompting critics to argue that the agency is abusing its newfound authority.
The SEC is currently subject to several lawsuits that challenge its use of administrative proceedings. The plaintiffs allege that the proceedings violate the due process and equal protection guarantees under the U.S. Constitution by eliminating the right to a jury trial and imposing tight deadlines. They also contend that the proceedings violate the President’s removal powers under Article II of the Constitution because both SEC administrative hearing officers and commissioners can only be removed for good cause.
Proposed changes for administrative proceedings
The proposed changes do not respond to the constitutional challenges regarding the SEC’s administrative hearing officers or address the alleged inherent unfairness of the proceedings. However, they do demonstrate that the agency is willing to reform its enforcement proceedings, if only one small step at a time.
Under the SEC’s rule proposal, respondents in these proceedings would be allowed to file notices to take depositions. Under the current rules, parties may take depositions by oral examination only if a witness will be unable to attend or testify at a hearing.
Depositions, however, would still be limited, as compared to a federal court case. If a proceeding involves a single respondent, the proposed amendment would allow the respondent and the SEC to each file notices to depose three persons (i.e., a maximum of three depositions per side). If a proceeding involves multiple respondents, the proposed amendment would allow respondents to collectively file notices to depose five persons and the SEC to file notices to depose five persons (i.e., a maximum of five depositions per side).
The SEC proposal would also extend the abbreviated timeframe in which administrative cases must be decided. Under the current rules, even complex cases must be resolved within 300 days, with the hearing scheduled to begin just four months after the charges are initially fired. The rule proposal extends the hearing date by up to four moths and the deadline for the hearing officer to issue a decision by up to thirty days.
With regard to proposed e-filing requirements, the agency stated: “The Commission believes that electronic submissions will enhance the transparency of administrative proceedings by providing a quicker way for the Commission to make records available to the public.”
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
