In what is sure to add more “fuel to the fire,” it was recently reported that the SEC has won every case brought in its administrative courts over the last year. The SEC has not been so successful with its federal court cases, winning 61% of those cases over that same period.
Of course, regular blog readers know that the Dodd-Frank Act expanded the SEC’s powers to permit it to bring more cases in its administrative courts. These SEC proceedings restrict discovery, testimony and evidence while federal court proceedings permit the full panoply of discovery as well as the protections afforded when appearing before a federal judge. One should also keep in mind that the SEC appoints the administrative law judges while federal judges are appointed by the President and confirmed by the United States Senate.
Ultimately, it is the SEC that makes the call on where the case is brought, however, these statistics are telling. If you are the respondent in a SEC administrative action, your chances of success are minimal as opposed to being a defendant in federal court. Accordingly, it may be worthwhile to start thinking settlement if you find yourself in a SEC administrative court.