Russell Ryan comes out swinging again, and highlighting a problem that those of us who defend investors and financial professionals face nearly every day - the over-the-top SEC press release.
FINRA engages in the same sort of gamesmanship. Both regulators announce their allegations against a defendant, often using inflammatory language, and word their press releases as if the defendant had already been tried and convicted.
Some of these releases run afoul of guidelines send down by the courts, as referenced by Mr. Ryan, but many more are simply abusive, and appear to be designed to prejudice the public against the named defendants, before the defendant has even seen the complaint!
Further, the SEC and FINRA rarely, if ever, issues a press release when it loses a case, and leaves its original press release at the website, for every search engine to find, and to continue to return in response to a search for the exonerated defendant's name.
Mr.Ryan points out not only the biased and inflammatory nature of the press releases, but the fact that there is an inherent conflict in the press releases. The releases trumpet a filing, not a finding by a court or judge, written by the SEC Staff who is prosecuting the case, and authorized by the Commission itself, for a case that will be prosecuted by that same attorney, before an administrative law judge who was appointed by the Commission - and whose decision will be appealed to the Commission!
We have discussed the SEC's abuse of its administrative proceedings before, in Judge Rakoff Questions the SEC's Overuse of Administrative Proceedings, SEC's Use of Administrative Proceedings Under Fire, as have others, including Peter J. Henning, a professor at Wayne State University Law School in The S.E.C.’s Use of the ‘Rocket Docket’ Is Challenged, Professor Stephen Bainbridge in Should the SEC be Prosecutor, Judge, Jury, and Executioner? and Gretchen Morganstern in her New York Times article titled At the S.E.C., a Question of Home-Court Edge, and it is getting out of control.
This is not simply an issue of securities defense attorneys crying foul, this is a serious constitutional issue, with important ramifications for everyone who invests. While some may believe that this does not affect them, the SEC does not limit its use of administrative proceedings to prosecute securities professionals - they use this kangaroo-like proceeding against investors as well.
The original article - Get the SEC Out of the PR Business - WSJ
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--- 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.
