SEC member seeks guidelines for use of in-house judges

Securities and Exchange Commission member Michael Piwowar wants the agency to be more transparent about deciding whether to try enforcement cases with judges employed by the regulator. The SEC has been sending an increasing number of enforcement actions to one of its administrative law judges, where Mr. Piwowar said that defendants' rights are more limited than in federal court. In the most recent fiscal year, the SEC filed 57% of its cases in district court and 43% in administrative forums that are overseen by five administrative law judges the SEC hires. The SEC wins most of its cases in the administrative venue. “[T]his change has the appearance of the commission looking to improve its chances of success by moving cases to its in-house administrative system,” Mr. Piwowar said in a Feb. 20 speech at the Practising Law Institute's SEC Speaks conference in Washington, D.C. “To avoid the perception that the commission is taking its tougher cases to in-house judges, and to ensure that all are treated fairly and equally, the commission should set out and implement guidelines for determining which cases are brought in administrative proceedings and which in federal courts,” he said. Last week, Atlanta-based investment firm Gray Financial Group Inc. sued the SEC in Georgia federal court, challenging the agency's use of its own administrative law judges to try enforcement cases.