WASHINGTON (Reuters) - The top U.S. securities regulator is considering making public how it decides whether a case is handled by a federal court or by its in-house judge, after some defendants claimed the in-house court violates their rights.
In testimony on Tuesday, Securities and Exchange Commission Chair Mary Jo White told a U.S. Senate appropriations panel she takes such concerns seriously and is weighing action to address them.
“I do believe the appearance of fairness is important,” White said. “One of the things that I am considering is whether we should do public guidelines to make that clear and transparent.”
The SEC has ramped up its use of the in-house court since 2010 when the Dodd-Frank law empowered the commission to seek penalties against a broader array of defendants through administrative proceedings.
In administrative trials, an SEC judge presides over the hearing. Such trials are usually expedited, there is no jury, and discovery is limited.
Defendants in SEC cases have been pushing back against the increased use of the in-house court. Some have filed legal challenges, saying administrative proceedings violate their constitutional rights.
Defense attorneys complain the process is especially unfair to individuals, who have limited resources and often struggle to wade through the vast amount of documents the SEC collects before the trial begins.
Earlier this year, SEC Republican Commissioner Mike Piwowar raised concerns about the process and called on the agency to release guidelines.
“To avoid the perception that the Commission is taking its tougher cases to its in-house judges, and to ensure that all are treated fairly and equally, the Commission should set out and implement guidelines for determining which cases are brought in administrative proceedings,” Piwowar said in a speech in February.
White said on Tuesday that 57 percent of the SEC’s cases are still brought in federal courts.