Will the combination of Cochran and Jarkesy lead the SEC to enter into more settlements in pending investigations or administrative proceedings?
If the SEC faces a large percentage of respondents in administrative proceedings asking for injunctions from federal district courts, this could create a logistical nuisance, if not a nightmare, for the Commission. Despite the request for 125 additional Enforcement Division personnel, the SEC still has limited resources and will need to pick and choose its battles. Will the Commission and its staff decide that it would be beneficial to show the public that it can still bring settled administrative proceedings with civil money penalties despite the constitutional questions that remain open—and, if so, will this lead to more settlements? This would appear to be contrary to a recent Law360 article reporting that there have been conflicts within the SEC staff based on “Chair Gary Gensler’s approach to enforcement and his drive for more litigation and settlement penalties.” The article also states that, “in contrast to prior SEC leadership, . . . Gensler’s top brass has pushed back more often on settlement proposals, which has produced tensions between the front office and the litigators trying to move cases across the finish line.” Time will tell whether the recent successes of constitutional challenges will affect the Commission’s willingness to agree to more settlements in administrative proceedings.
