Wednesday, May 27, 2015

SEC Wins Big When Bringing Cases In Front of its Own Judges

Seal of the U.S. Securities and Exchange Commi...
This story is not going away, and the SEC needs to pull its collective heads out of the sand and stop denying what everyone knows. Using an administrative law judge, which you appoint, to decide charges that you decided to bring, by a prosecutor that you pay, is not, and cannot, result in a fair hearing.

Mary Jo White, the head of the SEC, has been quoted as saying that its in-house adjudication system is  “very fair.” Enforcement chief Andrew Ceresney said the SEC’s “excellent record in administrative proceedings reflects the strength of the evidence presented in each case, and not our choice of venue.” So why the dramatic shift out of court and into their own system? Undoubtedly because the SEC wins more cases when it pays and appoints the Judge, and when it gets to decide the appeals of its own case.

There is simply no disputing the facts. According to the WSJ, the SEC won against 90% of defendants before its own judges in contested cases from October 2010 through March of this year. That was markedly higher than the 69% success the agency obtained against defendants in federal court over the same period, based on SEC data.

Going back to October 2004, the SEC has won against at least four of five defendants in front of its own judges every fiscal year.

The situation is worse when a defendant appeals. In an SEC administrative proceeding, the first appeal is to the Commission itself. Remember, it is the Commission itself who decided to file the charges, the Commission appoints the judge and the prosecutor who handle the case. Is there any real surprise that the Commissioners decided in their own agency’s favor concerning 53 out of 56 defendants in appeals—or 95%—from January 2010 through this past March?

In the 5 other instances, the cases were sent back to in-house SEC judges to reconsider. No defendant was cleared on appeal. None.
“In an administrative law proceeding” at the SEC, said Bradley Bondi, a former counsel to two former SEC commissioners, “the commission is akin to the prosecutor and then, in an appeal, the judge in the same case.”
For more information - SEC Wins With In-House Judges - WSJ

---
The attorneys at Sallah Astarita & Cox include veteran securities litigators and former SEC Enforcement Attorneys. We have decades of experience in securities litigation matters, including the defense of enforcement actions and representation of investors, financial professionals and investment firms, nationwide. For more information call 212-509-6544 or send an email.
Post a Comment