Changes and Challenges in the SEC’s ALJ Proceedings

In recent years, when pursuing corporations and their officers for violations of the U.S. securities laws, the Securities and Exchange Commission (“SEC”) Division of Enforcement has increasingly brought its claims to the SEC’s in-house administrative law judges (ALJs) rather than the federal civil courts.

In fact, last year, over 90% of the SEC’s actions against public companies were brought to the SEC’s ALJs—whereas five years ago, only 33% of those cases were brought as ALJ proceedings.  The credit for this remarkable increase in ALJ proceedings belongs in large part to the 2010 Dodd–Frank Act, which expanded the ALJs’ jurisdiction and authorized new penalties that ALJs could impose, making it unnecessary for the SEC to bring many claims in civil courts. Click here, to continue reading on our Cleary M&A and Corporate Governance Watch blog.