We have addressed the bizarre, and unconstitutional situation in SEC administrative proceedings, where the Commission files a complaint, appoints the "prosecutor" and the judge, and creates the rules under which the trial will be held. It is a process that is unfair on its face. The situation creates real-life kangeroo courts, where the rules of evidence are tossed out the window, the SEC staff can put in any "evidence" it wants, including double and triple hearsay - witnesses testifying that someone told them that someone else said that the broker said something. Bizarre, unconstitutional, and terrifying if you are the defendant.
The situation is made worse by the fact that the SEC appointed some of its in-house judges in violation of the United States Consitution, causing further constitutional issues, and causing many respondents to challenge the process, and seek to overturn the decisions of these judges.
The United States Supreme Court has agreed to address the appointment issue in Lucia v. SEC. If the court should find in favor of Lucia, the decision could affect more than 100 pending cases to appear before administrative law judges and those which have already been decided.
The SEC is clearly concerned about the case, and has attempted to "reappoint" its judges, and to order them to accept new evidence in the cases which have been started, or which are on appeal.
The fact that the Supreme Court sees an issue with how administrative law judges have been hired means the methods might not be constitutional and their rulings might not be valid.
In the interim, hundreds of cases are being reconsidered, and may be dismissed.
See, Supreme Court review will bolster fairness of SEC's in-house judges
Mark J. Astarita, Esq. represents a financial professional in one of these administrative proceedings, which is now on appeal, and being reconsidered. He is a partner in the national securities law firm of Sallah Astarita & Cox, LLC and can be reached by email at mja@sallahlaw.com or by phone at 212-509-6544.
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Showing posts with label Administrative law judge. Show all posts
Showing posts with label Administrative law judge. Show all posts
Monday, January 29, 2018
Monday, February 22, 2016
Congress to Address SEC Administrative Hearing Abuses
According to InvestmentNews, Rep. Luke Messer, R-Ind., a member of the House Financial Services Committee, plans to introduce legislation in coming weeks that would give people appearing in administrative proceedings the same rights to counsel, evidence discovery and avoiding self-incrimination that they would have in federal court.
Having the ability to ask for documents and ask questions before a hearing is a basic right in our adversary system. It is about time someone addressed the abuses in the SEC system.
Lawmaker wants to give SEC defendants greater rights
The Securities Law Blog: SEC's Use of Administrative Hearings Under Fire
How the SEC Avoids Judicial Oversight and the Constitution
Judge Rakoff Questions the SEC's Overuse of Administrative ...
SEC Faces Challenges Over the Constitutionality of Some of its Court Proceedings.
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Mark Astarita and the attorneys at Sallah Astarita & Cox regularly represent investors and financial professionals in SEC and FINRA investigations and enforcement proceedings. To discuss a case, call 212-509-6544 or send an email to mja@sallahlaw.com
Having the ability to ask for documents and ask questions before a hearing is a basic right in our adversary system. It is about time someone addressed the abuses in the SEC system.
Lawmaker wants to give SEC defendants greater rights
Related Articles:
The Securities Law Blog: SEC's Use of Administrative Hearings Under Fire
How the SEC Avoids Judicial Oversight and the Constitution
Judge Rakoff Questions the SEC's Overuse of Administrative ...
SEC Faces Challenges Over the Constitutionality of Some of its Court Proceedings.
------
Mark Astarita and the attorneys at Sallah Astarita & Cox regularly represent investors and financial professionals in SEC and FINRA investigations and enforcement proceedings. To discuss a case, call 212-509-6544 or send an email to mja@sallahlaw.com
Wednesday, August 12, 2015
Court Stops SEC From Pursuing Hearing Before its Own ALJ
We have been beating this drum for a while now. The SEC's abuse of its administrative law procedures has become legend, and a success rate of 90-100% demonstrates the unfairness of the process. After all, it is going to be tough to lose a trial if you get to write the complaint, pay the prosecutor, try it before a judge that you appointed and pay, and then you get to decide the appeal. Hardly the model of fairness.
There are other technical objections to the process, including the fact that the SEC's appointment process for these judges is unconstitutional. In June we reported on a federal court decision which found that the process was "likely unconstitional." Now a second federal judge had ruled that the SEC's method for appointing in-house judges was probably illegal and today entered a preliminary injunction against the SEC, preventing it from moving forward with the administrative proceeding.
The original decision by U.S. District Judge Richard Berman in Manhattan rejected the agency’s method of selecting administrative law judges to whom it directs hundreds of cases a year. In the decision on August 3, 2015 the court reserved judgment on the request for an injunction for 7 days to allow the SEC time to decide if it was going to cure the violation of the constitution.
The SEC then advised the court that there is another case before the Commission, where the SEC is considering whether its process is unconstitutional, but that no decision has been made. The SEC Staff then took the curious position that it was going to move forward with the case, despite the court's decision, since the Commission itself had not made a decision.
In response, today the court entered a preliminary injunction preventing the SEC from pursuing the case. The preliminary injunction decision is also available at our site.
While this is only addresses one of many problems with the mis-use of the ALJs, it is one that the Commission can probably fix with relative ease - either reappoint their ALJs in accordance with the constitution, or hold the trials themselves.
My guess? They do neither and continue to abuse the process while they pursue appeals.
Duka v SEC Decision and Order Re Preliminary Injunction
Duka vs. SEC Preliminary Injunction
Court Rules SEC In-House Judges "Likely Unconstitutional"
SEC Sued For Unconstitutional Use of Its Own Judges
SEC's Use of Administrative Hearings Under Fire
Former SEC ALJ Claims Bias in Administrative Proceedings
Judge Rakoff Questions the SEC's Overuse of Administrative Proceeding
How the SEC Avoids Judicial Oversight and the Constitution
There are other technical objections to the process, including the fact that the SEC's appointment process for these judges is unconstitutional. In June we reported on a federal court decision which found that the process was "likely unconstitional." Now a second federal judge had ruled that the SEC's method for appointing in-house judges was probably illegal and today entered a preliminary injunction against the SEC, preventing it from moving forward with the administrative proceeding.
The original decision by U.S. District Judge Richard Berman in Manhattan rejected the agency’s method of selecting administrative law judges to whom it directs hundreds of cases a year. In the decision on August 3, 2015 the court reserved judgment on the request for an injunction for 7 days to allow the SEC time to decide if it was going to cure the violation of the constitution.
The SEC then advised the court that there is another case before the Commission, where the SEC is considering whether its process is unconstitutional, but that no decision has been made. The SEC Staff then took the curious position that it was going to move forward with the case, despite the court's decision, since the Commission itself had not made a decision.
In response, today the court entered a preliminary injunction preventing the SEC from pursuing the case. The preliminary injunction decision is also available at our site.
While this is only addresses one of many problems with the mis-use of the ALJs, it is one that the Commission can probably fix with relative ease - either reappoint their ALJs in accordance with the constitution, or hold the trials themselves.
My guess? They do neither and continue to abuse the process while they pursue appeals.
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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. We represent investors, financial professionals and investment firms, nationwide. For more information call 212-509-6544 or send an email to mja@sallahlaw.com.
Related Documents and Commentary:
Duka v SEC Decision and Order Re Preliminary Injunction
Duka vs. SEC Preliminary Injunction
Court Rules SEC In-House Judges "Likely Unconstitutional"
SEC Sued For Unconstitutional Use of Its Own Judges
SEC's Use of Administrative Hearings Under Fire
Former SEC ALJ Claims Bias in Administrative Proceedings
Judge Rakoff Questions the SEC's Overuse of Administrative Proceeding
How the SEC Avoids Judicial Oversight and the Constitution
Tuesday, June 9, 2015
Court Rules SEC In-House Judges "Likely Unconstitutional"
The decision provides an excellent overview of the SEC's administrative hearing process, with all of its warts and deficiencies. The SEC actually argued that the federal court, which has jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States," (28 U.S.C. § 1331), could not hear the case because it lacked jurisdiction. The court dismissed that argument by reference to Section 1331 as well as 28 U.S.C. § 2201 which authorizes declaratory judgments. “[I]t is established practice for [the Supreme] Court to sustain the jurisdiction of federal courts to issue injunctions to protect rights safeguarded by the Constitution” and “injunctive relief has long been recognized as the proper means for preventing entities from acting unconstitutionally." The citations are in the decision, which is available at SECLaw.com - Charles L. Hill, Jr. vs. Securities and Exchange Commission.
The decision is directed more toward the process of how the particular Administrative Law Judge in question was appointed, but hopefully it draws more attention to the SEC's use of its five administrative-law judges to hear its cases, rather than sending them to federal court. For those who have missed it, the SEC Commissioners decide to bring a case, in their own self-created "court" using rules that they wrote, a prosecutor that they pay, and try the case before a judge that they appoint and pay. And, when there is an appeal from the decision, THEY decide the appeal.
It is no surprise that the SEC has a win-rate of 90 to 100%, depending on the time frame examined. It is time for Andrew J.Ceresney, director of the SEC's Division of Enforcement, to admit that the abuse of the administrative law process is not "eminently proper, appropriate and fair," as he repeatedly claims, and for Mary Jo White, to stop this abuse.
For more information visit Federal Judge Rules SEC In-House Judge’s Appointment ‘Likely Unconstitutional’.
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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. We represent investors, financial professionals and investment firms, nationwide. For more information call 212-509-6544 or send an email to mja@sallahlaw.com.
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