The contention that SEC administrative proceedings deny respondents due process has been an underlying theme in many of the recent federal court cases challenging the constitutionality of SEC enforcement actions, although the argument hasn’t gained as much traction as challenges to the propriety of the SEC’s appointment of administrative law judges. Nonetheless, the SEC yesterday took steps to address some of the due process concerns that have been raised in proposed amendments to its Rules of Practice. Among other things, the proposed rules would slow down the pace of enforcement actions, allow both respondents and the Division of Enforcement to take a limited number of depositions, and “clarify that hearsay may be admitted if it is relevant, material, and bears satisfactory indicia of reliability so that its use is fair.”
The public now has a chance to comment on the proposed changes.
Brune & Richard LLP currently represents a plaintiff in an action raising a similar constitutional challenge.