SEC Says It Has No Bias When It Acts as Both Prosecutor and Judge
In a recent case, the SEC denied a respondent’s petition to stay consideration of his case until resolution of a related federal court matter where the SEC acted as prosecutor. The respondent argued that he would be denied due process rights because the SEC, acting as adjudicator, could not be unbiased when it also acted as prosecutor on the same set of facts in federal court. The SEC rejected his request to delay the SEC proceedings until resolution of the federal court case because “the mere fact that an agency both investigates and adjudicates alleged violations does not demonstrate bias or prejudice.” Moreover, “courts have permitted agencies to investigate, file complaints resulting from the investigation, receive evidence, and judge the resulting proceedings.” The court suggested that the respondent would have to argue that one of the Commissioners has a personal interest in the outcome.
OUR TAKE: We do not argue that the SEC properly interpreted the applicable judicial precedent allowing an administrative agency to serve as both prosecutor and judge. However, we also believe that it is very difficult for an administrative agency to deliver an unbiased ruling when it has a vested interest as a prosecutor. Said another way: “You can’t fight City Hall.”