The Securities and Exchange Commission’s three commissioners will vote tomorrow on tweaks to rules governing administrative proceedings before SEC in-house judges, despite complaints from the white-collar defense bar that the proposed rule changes do not resolve the fundamental unfairness of trying enforcement actions before in-house SEC judges, Reuters reported yesterday. The Dodd-Frank financial reform act of 2010 gave the SEC leeway to bring even complex securities fraud cases as administrative proceedings before judges hired by the agency, rather than as federal-court enforcement actions overseen by U.S. district judges. Ever since, defense lawyers have insisted that SEC administrative proceedings curtail their clients’ due process rights because the federal rules of civil procedure don’t apply. Those arguments mostly failed to persuade judges to enjoin administrative proceedings, which is why defense lawyers developed alternative constitutional challenges to the SEC in-house trials. The inherent constitutionality of the proceedings is now at issue before the District of Columbia U.S. Circuit Court of Appeals.
