While (perhaps) not quite as abusive as the Star Chamber in 15th- to 17th-century England, SEC administrative courts are, to say the least, a decided home-court advantage for agency prosecutors.
The SEC won against 90% of defendants before its own judges in contested cases from October 2010 through March of this year, according to an analysis by the Wall Street Journal. That was markedly higher than the 69% success the agency obtained against defendants in federal court over the same period, based on SEC data. Going back to October 2004, the SEC has won against at least four of five defendants in front of its own judges every fiscal year.
The Journal analysis also reveals the SEC’s high success rate in appeals of its administrative law judges’ rulings—the appeals its own commissioners hear. The commissioners decided in their own agency’s favor concerning 53 out of 56 defendants in appeals—or 95%—from January 2010 through this past March, the Journal found. “In an administrative law proceeding” at the SEC, said Bradley Bondi, a former counsel to two former SEC commissioners, “the commission is akin to the prosecutor and then, in an appeal, the judge in the same case.” Defendants who appealed risked making their situations even worse. During the same stretch, the SEC commissioners reduced financial sanctions imposed on one defendant but increased the sanctions for seven others. For comparison, U.S. attorneys had an average win rate of 84% before federal appellate courts in the past three fiscal years, according to Justice Department data. That rate applies to criminal cases, in contrast to the SEC’s civil cases. Mary Jo White, the head of the SEC, has termed its in-house adjudication system “very fair.” Enforcement chief Andrew Ceresney said the SEC’s “excellent record in administrative proceedings reflects the strength of the evidence presented in each case, and not our choice of venue.”