SEC proposes to loosen rules for administrative proceedings

Amendments would answer some of the criticisms against use of in-house judges versus federal court

Sep 24, 2015 @ 6:09 pm

By Mark Schoeff Jr.

The Securities and Exchange Commission on Thursday proposed to loosen rules governing the use of its in-house judges to hear enforcement cases.

The proposals would allow more time before administrative proceedings must occur, permit the parties involved in the case to depose witnesses, and require the parties to submit filings and serve each other electronically. The measures also would simplify the appeal process and make it more transparent, and clarify rules surrounding the use of hearsay.

“The proposed amendments seek to modernize rules of practice for administrative proceedings, including provisions for additional time and prescribed discovery for the parties,” SEC Chairman Mary Jo White said in a statement.

The SEC's increasing use of administrative forums instead of federal court to try cases has generated much criticism and several lawsuits, including some from investment advisers.

Opponents say the administrative process does not allow defendants the same latitude to make their cases as they have in a jury trial. Supporters argue the system is faster and less costly than a court proceeding, provides protections and uses judges with expertise in securities laws.

The proposals released on Thursday address some of the criticism of the administrative route.

A lawyer who has been critical of the SEC's reliance on administrative proceedings said the proposals help make those proceedings fairer.

“This is a significant step in the right direction,” said Thomas O. Gorman, a partner at Dorsey & Whitney. “It should improve the overall quality of the evidence being presented.”

But the proposals don't go far enough, Mr. Gorman said. For instance, they don't prohibit the use of hearsay.

“It's disappointing that they didn't adopt rules of evidence to govern the hearings,” Mr. Gorman said.

The proposals, which were circulated to commissioners individually for votes rather than brought up at an open meeting, will be subject to a 60-day public comment period after they are published in the Federal Register. After reviewing the comments, the agency could modify the measures before they are finalized.

0
Comments

What do you think?

View comments

Recommended for you

Latest news & opinion

Focus Financial files for an IPO valued at $100 million

The RIA aggregator, founded by CEO Ruediger 'Rudy' Adolf (above), has partnered with more than 50 registered investment adviser firms.

Piwowar defends SEC's best-interest rule

SEC commissioner says the Department of Labor rule set up an 'unworkable, impossible set of standards for people to comply with.'

RIA in a Box acquired by private equity firm Aquiline Capital

New owners plan more growth for the software service provider.

IBDs with the most female reps

Here are the 10 independent-broker dealers that have the most female reps.

Pass-through tax strategies for business-owner clients

Shifting business structure, changing filing status and spinning off equipment are examples of ways business owners can take advantage of the deduction.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print