Garrett Hits Back at SEC Official’s Defense of Commission’s Overuse of In-House Tribunals
WASHINGTON, D.C. – Rep. Scott Garrett (NJ-05), Chairman of the Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, issued the following statement after a senior SEC enforcement official last week defended the Commission’s increased use of in-house administrative law judges.
“It’s extremely distressing to see a senior SEC enforcement official so callously disregard the Constitutional and due process concerns that have been raised over the SEC’s in-house tribunals. The Commission is missing the point that this isn’t about how many cases are won or lost – it’s about protecting every American’s due process rights and their ability to have a fair trial. The SEC has become more concerned about making headlines than executing an effective enforcement program, and these comments are reflective of that approach.”
Garrett is the author of the Due Process Restoration Act that would rein-in the Securities and Exchange Commission’s controversial overuse of in-house administrative law judges and ensure that all Americans are given due process by allowing defendants the option of having their case heard before a federal court.
In the wake of the 2010 Dodd-Frank Act, which granted the SEC expanded administrative enforcement powers, the SEC started trying an increasing number of alleged wrongdoers before its in-house administrative panels rather than in the federal courts established by Article III of the Constitution.
The SEC has heard repeated criticism of these in-house panels from defendants who feel they weren’t given due process, former SEC judges who felt pressure to rule in favor of the Commission, and U.S. District Judges who find the panels unconstitutional.
The Commission announced that it will be giving more legal safeguards to defendants that come before its in-house administrative panels. Unfortunately, the SEC’s proposed changes fall well short of addressing many of these concerns and its enforcement practices continue to violate the separation of powers guaranteed by the Constitution.