The Securities and Exchange Commission is increasingly steering cases to hearings in front of the agency’s appointed administrative judges, who found in its favor in every verdict for the 12 months through September, rather than taking them to federal court, the Wall Street Journal reported today. The winning streak comes amid a marked shift at the agency toward trying cases that are more complex before its administrative law judges. Historically, the SEC had more often turned to these judges for relatively straightforward legal actions, such as barring stockbrokers who had been convicted of criminal fraud. Thanks in part to enhanced powers granted in the 2010 Dodd-Frank financial-reform bill, lately the SEC has been using the administrative judges for complicated cases, including several involving insider trading. The move is creating a backlash among lawyers and defendants, who say in federal court that they have more extensive rights to take witness testimony and collect evidence ahead of a trial. When contested, the cases are decided by one of five SEC judges, who are appointed by the agency. The penalties in administrative hearings are broadly comparable to those faced in federal court for most types of cases.
