Uncivil Procedure: The Need for Heightened Due Process Protection in SEC Enforcement Prosecutions | Russ Ryan

Can we admit the obvious? Today’s Securities and Exchange Commission (SEC) law enforcement cases are criminal in nature, and courts should start treating them as such. Despite the misnomer Congress applied in the relevant securities-law provisions, and no matter how many times the SEC and courts insist these cases are “civil” in nature, SEC charges threaten financial sanctions that far exceed those imposed for most federal misdemeanor and petty crimes, and for many federal felonies as well. True, SEC cases don’t raise the specter of incarceration—no small distinction, to be sure—but more than a quarter of criminally convicted defendants are also spared incarceration, especially those whose offenses do not involve violence, weapons, or illegal drugs. See, e.g., Mark Motivans, Federal Justice Statistics, 2021, BJS Bull., Dec. 2022, at 12. Moreover, this distinction is irrelevant where the defendant is a corporation or other non-natural person that cannot be incarcerated.

***

Dispensing with the fiction that SEC enforcement cases are just routine civil lawsuits—i.e., on par with private contractual disputes or slip-and-fall accident cases—would bring much-needed clarity and due process enhancement to SEC enforcement. This article briefly discusses four essential changes that would make for a worthy start.

Source: Uncivil Procedure: The Need for Heightened Due Process Protection in SEC Enforcement Prosecutions | Russ Ryan