U.S. SEC beefs up administrative court to meet rising demand
WASHINGTON, June 30
WASHINGTON, June 30 (Reuters) - The U.S. Securities and Exchange Commission is hiring two new administrative law judges and three law clerks as its lawyers turn increasingly to the agency's administrative court as a preferred venue over federal court for filing enforcement actions.
James Grimes, a former litigator in the civil division of the U.S. Justice Department, joined the SEC as a judge on Monday, the agency said.
The SEC also said three new law clerks were joining the agency, and a second judge is expected to join the staff in August.
The three new lawyers are Darien Capron, William Weihao Miller and Jessica Neiterman. The new hires will nearly double the size of the SEC's administrative court, which currently has three full-time judges.
The increased manpower will help meet growing demand since the 2010 Dodd-Frank Wall Street reform law.
Prior to 2010, the SEC tended to file fewer cases in its own administrative court because it was more limited in the kinds of remedies it could seek. It could not, for instance, seek financial penalties against the employees of firms it did not regulate such as brokerages.
But Dodd-Frank changed that, by bestowing the regulator with the power to seek financial penalties against a broader array of defendants.
That has given the SEC the incentive to use its own court more frequently.
In fiscal 2013, the SEC brought 469 cases as administrative proceedings, compared with only 207 in federal district court, according to SEC data.
The numbers were more closely aligned in fiscal 2009, with the SEC bringing 352 cases in administrative court versus 312 in federal court.
Although the bulk of the SEC's cases are typically settled, some of the cases go to trial.
For administrative proceedings, that can involve a lot of time-consuming work, and it may also require judges to travel to venues outside of Washington, D.C.
Increasingly, more high-profile contested cases are being filed in administrative court.
One of the most notable administrative trials that will be coming up is the SEC's civil case against SAC Capital founder Steven A. Cohen, who is accused of failing to supervise employees who were convicted of insider-trading.
Earlier this year, the SEC also won a high-profile administrative trial against the Chinese units of the "Big Four" accounting firms in a dispute over access to audit work papers of Chinese companies listed on U.S. stock exchanges.
Many defense attorneys have lamented the increased use of administrative proceedings, saying they lack procedural protections available in federal courts, including the ability to take depositions, spend more time gathering evidence, and present cases to juries.
The SEC has disputed such complaints, saying the venue is fair. Any initial decisions can also be appealed, first to the full five-member commission, and eventually, to a federal appeals court. (Reporting by Sarah N. Lynch; Editing by Tom Brown)
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