Disclaimer

The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.

 Skip to Content

SEC Issues Proposed Changes to Administrative Proceedings
December 23, 2015

Amid controversy over its increased use of administrative proceedings to bring enforcement cases, the SEC has recently proposed several reforms. For instance, one change would ease the deadlines by which an initial decision must be rendered and provide a longer prehearing period. Additionally, rather than permitting depositions only where a witness is unable to testify at a hearing (as is currently the case), the SEC’s proposal allows each side to depose up to three persons (and, in multiple-defendant cases, the defense could collectively depose up to five persons). The SEC also proposed requiring the parties to file electronically.

The SEC appears to be responding directly to several recent legal challenges. See “Defendants Challenge SEC’s Increased Use of Administrative Forum” and “SEC Administrative Law Judge Appointments Held Likely Unconstitutional” in the Winter 2015 and Summer 2015 issues of Expect Focus, respectively. In addition to seeking to improve the process afforded defendants in administrative proceedings, there is some recent evidence that the SEC has reduced the proportion of such proceedings it is bringing, relative to court cases. It is unclear whether that reduction is, at least partly, a response to the legal challenges being raised, or will persist.

As for the proposed reforms, although they are a step in the right direction, they raise other questions, including why the SEC settled on the seemingly arbitrary number of depositions per side. And, the fact remains that the Federal Rules of Evidence are inapplicable, there are no juries, and the proceedings are presided over by SEC employees, not federal judges. Accordingly, even if these changes are implemented, challenges by defendants will likely persist.
Related Practices
Securities Litigation and Enforcement
©2024 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.