WSJ Reports that SEC Has Won Every ALJ Case in Past 12 Months
The SEC has won every case it has brought before an administrative law judge through the 12-month period ending in September, according to a Wall Street Journal story. By contrast, the SEC won only 61% of federal court cases during the same period. The Journal, quoting two SEC officials including Andrew Ceresney, the SEC’s Director of Enforcement, asserts that that the SEC has shifted policy to try more cases before ALJs instead of proceeding in the federal courts. The Journal says the increased use of ALJs has occurred because of “enhanced powers” arising from the Dodd-Frank Act. The SEC appoints the ALJs, and the proceedings restrict testimony and evidence, as compared to federal court litigation.
OUR TAKE: If the SEC accuses you of securities law violations, work hard to settle because you simply can’t win if it goes to litigation. Given the new reality, the best course of action is to implement a robust compliance program to avoid any course of conduct that could lead to litigation.