Skip to content

The SEC Enforcement Division’s Statement on Forum Selection

May 13, 2015

On May 8th, the SEC’s Division of Enforcement issued a statement describing the factors it considers when determining whether a contested enforcement action should be brought as an administrative proceeding before the Commission’s administrative law judges or as a civil action in the federal courts.  View the statement here.

The statement, discretely tucked to the side of the Division’s homepage, was issued three days after SEC Chair Mary Jo White told Senators she was considering the issuance of guidelines that would describe the forum selection process. See e.g., Reuters.

Forum_Romanum_panorama

Photo from Wikipedia Commons. Some rights reserved.

The Enforcement Division’s statement makes clear that the approach it describes is non-exhaustive, fact driven, and subject to Commissioner review. Among other things, the Division considers:

  • Who is being sued. If multiple defendants from different jurisdictions are being sued jointly, personal jurisdiction and venue considerations may make it easier to bring the matter in an administrative court.
  • What relief is sought. Associational bars and suspensions can only be imposed in an administrative proceeding. Judicial economy may therefore direct that an action be brought in an administrative proceeding rather than first commencing a district court action and later instituting an administrative proceeding.
  • Where the Division is authorized to initiate the action. Proceedings for control person liability, for example, can only be brought administratively while a suit seeking emergency relief can only be pursued in a district court.

Interestingly, the Division openly states that if the action involves novel or unsettled legal issues it may bring the action in-house in order to take advantage of the Commission’s expertise. “[O]btaining a Commission decision on such issues, subject to appellate review in the federal courts, may facilitate development of the law,” the Enforcement Division notes.

Comments are closed.

%d bloggers like this: