SEC Administrative Proceedings: Backlash and Reform

52 Pages Posted: 29 Oct 2015 Last revised: 8 Aug 2016

Date Written: October 27, 2015

Abstract

The Securities and Exchange Commission’s aggressive prosecution of securities violations inside administrative proceedings (APs) has generated backlash. Key stakeholders are now attacking the agency’s enforcement program as illegitimate and a growing number of respondents charged in APs have launched broad constitutional challenges. Though these suits target deeply entrenched features of administrative adjudication, they have already begun to prove successful, and threaten significant transformations to the SEC and beyond.

Historically, the SEC’s enforcement architecture embodied respect for the principle that, holding all else equal, procedures ought to be commensurate with the stakes of the adjudication. After Dodd-Frank, the agency abandoned this principle. The backlash is, at least in part, attributable to and justified by this reversal.

The SEC should have done after Dodd-Frank what it had done after previous expansions of its administrative penalty powers: reestablish the equilibrium between penalties and procedures by revising the Rules of Practice that govern APs. The SEC’s recently proposed amendments to these rules are too little, too late. A bolder approach is required.

Keywords: Securities and Exchange Commission, Administrative Proceedings

Suggested Citation

Platt, Alexander I., SEC Administrative Proceedings: Backlash and Reform (October 27, 2015). 71 Bus. Law. 1 (2016)., Available at SSRN: https://ssrn.com/abstract=2681907

Alexander I. Platt (Contact Author)

University of Kansas School of Law ( email )

Green Hall
1535 W. 15th Street
Lawrence, KS 66045-7577
United States

HOME PAGE: http://law.ku.edu/alexander-platt

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