Following Criticism, SEC Slows Use of In-House Courts

Following wide criticism from groups including the U.S. Chamber of Commerce, the U.S. Securities and Exchange Commission (SEC) “has quietly pulled back on its use of in-house judges.”

The Wall Street Journal reviewed 160 cases affecting more than 500 defendants over a three month period ending in September. That analysis shows the SEC sent 11% of its contested cases to its administrative law judges, compared to 40% during the same period in 2014. For the full fiscal year, the SEC used the in-house courts for 28% of its contested cases, compared with 43% for the previous 12 months.

“The pullback comes on the heels of a meeting this spring in which Andrew Ceresney, SEC director of enforcement, told his senior staff it should send contested cases alleging insider trading or accounting fraud to federal court unless there were good reasons to use the SEC judges,” reports the Journal.

In July, the Wall Street Journal reported on the U.S. Chamber’s call for the SEC to overhaul its use of administrative courts, saying the high number of cases being sent to these in-house courts “raises serious fairness issues.”

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