SEC Administrative Proceedings Resume After Two-month Pause

August 27, 2018

Kyle DeYoung comments on the SEC’s recent order lifting the stay on all administrative proceedings it had put in place following the Supreme Court’s Lucia decision in June. The Lucia decision meant SEC administrative law judges must be appointed, not simply hired by commission staff as previously practiced.

An excerpt from “SEC Administrative Proceedings Resume After Two-month Pause,” HFM Compliance, August 27, 2018:

Kyle DeYoung, a partner with Cadwalader, Wickersham & Taft, said he thinks initially the ALJs will be under some pressure but it’s too early to tell how that will impact future cases. “The order allows both parties to agree to alternative procedures to settle in individual cases so that could allow more APs to be resolved in a timely manner.”

He added: “There is still a question of how aggressive the SEC will be going forward in bringing new cases before the ALJs. I think they will be more conservative in the cases they bring forward, mostly focusing on the types of cases they have to bring as APs; cases such as failure to supervise or causing a violation.” 

And while the appointments issue has been addressed, DeYoung said there are still other challenges to the SEC administrative proceedings, although these challenges could be less successful. “These include due process challenges, inequal protection challenges and a seventh amendment ‘right to a jury trial challenge.’ It’s likely plaintiffs will continue to challenge APs on these grounds but those challenges are less likely to succeed.”