In June 2015, the SEC responded to an interesting article in The Wall Street Journal (May 6, 2015, "SEC Wins With In-House Judges") that reported on the SEC's 90% success rate from October 2010 through March 2015 in contested administrative proceedings (as compared to a 69% success rate against defendants in federal court during the same period).
The article noted that Judge Cameron Elliot, in particular, "has found all of the 28 defendants who came before him in contested cases liable on at least some of the charges the SEC enforcement arm had brought against them," and included an allegation of bias from former ALJ Lillian McEwen. Judge McEwen told the WSJ that during her time as an ALJ, the SEC's chief ALJ Brenda Murray "questioned my loyalty to the SEC” for finding too often in favor of defendants.
Judge Eliot was the ALJ assigned to the case of In the Matter of Timbervest LLC et al. Following the WSJ article, the respondents in the Timbervest case argued that the "administrative forum lacks impartiality" and sought discovery including depositions of Judge Elliot, Judge Murray and former Judge McEwen to determine whether there is, in fact, pressure on ALJs to rule in favor of the Commission. Separately, the SEC "invited" Judge Eliot to voluntarily submit an affidavit addressing whether he has had any communications or experienced any pressure similar to that alleged in the May 6, 2015 article. Judge Eliot declined to submit the affidavit.
On August 7, 2015, the SEC's Office of Inspector General issued an "Interim Report" stating that it was looking into "allegations of bias on the part of Administrative Law Judges in the Commission's Administrative proceedings" at the request of SEC Chair Mary Jo White. Specifically noting the May 6 WSJ article, the OIG stated that it had already interviewed Judge Elliot and Chief Judge Murray, among other people. According to the OIG, Judge Eliot denied any bias in his rulings and stated that he made his decisions independently. He also stated that he decided not to provide the requested affidavit for "multiple reasons" that he declined to share with the OIG.
The OIG report also stated that Chief Judge Murray denied influencing Elliot's decision regarding the affidavit or with respect to any APs before Judge Eliot. She told the OIG that she is responsible only for assigning the ALJs' workload and "sees
the decisions only after they are formally issued by the respective ALJ."
The OIG report concluded by stating that while its investigation remains ongoing, "as of this date, the OIG has not developed any evidence to support the allegations of bias in ALJs' decisions in the Commission's administrative proceedings."