At the annual SEC Speaks conference last week, Matthew Solomon, Chief Litigation Counsel in the Division of Enforcement, said pretty much exactly what you would expect someone in his position to say in response to criticism of the SEC's use of administrative proceedings in order to supposedly gain a “home court advantage.”

Solomon flatly refuted the notion that the SEC was in any way "shying away from federal court” in favor of APs. He pointed out that, in fact, the agency had an extraordinarily busy year in federal court, going undefeated in 27 federal court trials in its FY 2015 (while actually losing in two APs). He also stated that despite recent constitutional challenges, APs “play a crucial role in our enforcement program and will continue to [ ] in the years to come.” To date, the two appellate courts that have considered constitutional challenges to the SEC's use of APs have both found in favor of the SEC (Bebo v. SEC in the Seventh Circuit and Jarkesy v. SEC in the D.C. Circuit). Solomon added that any assertion that the SEC was seeking a “home court advantage” though its use of APs was “garbage.”

Maybe it was the "garbage" comment that provoked Rep. Scott Garrett to respond, but the next business day Rep. Garrett issued a press release "hitting back" ("Garrett Hits Back at SEC Official’s Defense of Commission’s Overuse of In-House Tribunals"). In the press release, Rep. Garrett said it was

"extremely distressing to see a senior SEC enforcement official so callously disregard the Constitutional and due process concerns that have been raised over the SEC’s in-house tribunals. The Commission is missing the point that this isn’t about how many cases are won or lost – it’s about protecting every American’s due process rights and their ability to have a fair trial."

Despite the fact that the constitutional "concerns that have been raised" have been rejected at the appellate level to date, Rep. Garrett has been quite vocal with his opinion that the AP process is unfair because it lets the agency serve as "a veritable judge, jury, and executioner."  

In October 2015, Rep. Garrett, a longtime critic of the SEC, introduced the Due Process Restoration Act (H.R. 3798) that allows respondents in APs to force the SEC to terminate the AP and bring the case in federal court.  The bill also heightens the standard of proof the SEC must satisfy to prevail in an AP to a "showing by the Commission of clear and convincing evidence" rather than a mere "preponderance of the evidence." Thus far, however, the bill has not gone anywhere in Congress.

Topics