The Securities and Exchange Commission is increasingly relying on administrative hearings for its enforcement actions, according to a new report.
The
“Enforcement activity in the first half of fiscal year 2015 indicates that the U.S. Securities and Exchange Commission is on track for another strong year of new enforcement actions filed,” they wrote. “The SEC continues to bring the vast majority of its enforcement cases as commission administrative proceedings before administrative law judges, a venue that has received intensifying scrutiny for allegedly favoring the SEC. In the past two years, the SEC has increased its use of administrative proceedings for many areas the commission designates high priority.’”
In the first half of the current fiscal year, the SEC filed more than 80 percent of its over 300 enforcement actions as administrative proceedings, a 20 percent increase from before passage of the Dodd-Frank Act of 2010. That’s not surprising. As
Cornerstone anticipates financial reporting actions brought as administrative proceedings will only increase. The report points out that accounting and auditing enforcement releases, or AAERs, filed in the first half of fiscal year 2015 serve as a good indicator of this trend. Of the 55 AAERs filed in the first half of fiscal year 2015, 93 percent were filed as administrative proceedings, compared to only 74 percent of the 43 AAERs filed as administrative proceedings in the same period in fiscal year 2014, and only 63 percent of the 35 releases filed in the same period in fiscal year 2013.