The SEC's increased use of administrative proceedings as the forum for its enforcement actions has come under fire in recent months, with many of the respondents in those cases filing lawsuits arguing (unsuccessfully, so far) that APs are actually unconstitutional. In a speech yesterday, SEC Commissioner Michael Piwowar acknowledged that as a matter of "fairness," the SEC should draft guidelines to establish "which cases are brought in administrative proceedings and which in federal courts."

Speaking at the annual SEC Speaks conference in Washington, D.C., Commissioner Piwowar observed that the SEC staff has indicated in recent public statements that the agency intends to bring more enforcement matters, including insider trading cases, as APs rather than in federal court. Indeed, in FY 2014, the SEC reportedly brought 235 APs, an increase of over 10 percent from FY 2013.

Commissioner Piwowar said that given that these statements by the staff followed the SEC's losses in two insider trading cases in federal court, "this change has the appearance of the Commission looking to improve its chances of success by moving cases to its in-house administrative system." He added that according to statistics compiled by U.S. District Judge Jed Rakoff, the SEC won 100 percent of its more than 200 APs in FY 2014 (this includes 14 consecutive victories in cases that went to trial before an SEC Administrative Law Judge, according to the National Law Journal). By comparison, the SEC prevailed in only 61 percent of its federal court trials.

Commissioner Piwowar concluded that

To avoid the perception that the Commission is taking its tougher cases to its in-house judges, and to ensure that all are treated fairly and equally, the Commission should set out and implement guidelines for determining which cases are brought in administrative proceedings and which in federal courts.