The Administrative Law Judges supports the SEC’s mission by conducting hearings, issuing initial decisions, and adjudicating ancillary matters in administrative proceedings.
When the Commission orders that a proceeding be heard by an administrative law judge, the judge serves as an independent adjudicator who determines whether the allegations against one or more respondents are true. The judges conduct public hearings in a manner similar to federal bench trials at locations throughout the United States. During a proceeding, the judge may issue subpoenas, hold conferences with parties, and rule on motions and the admissibility of evidence. Following the hearing, the judge prepares an initial decision setting forth his or her factual findings and legal conclusions and determining whether sanctions are warranted. The statutory bases for the proceeding—specified in the Commission’s order instituting the proceeding—govern the available sanctions.
Judges may resolve certain proceedings without a live hearing. If a respondent fails to file an answer to the order instituting proceedings, appear at a conference or hearing, respond to a dispositive motion, or otherwise defend the proceeding, the judge may issue an initial decision finding the respondent in default and accepting the allegations in the order instituting proceedings as true. In some proceedings, summary disposition, a decision based on the written submissions of the parties rather than a live hearing, may be used to resolve all or some of the issues.
For fiscal year 2020 (October 1, 2019, to September 30, 2020), the judges issued 17 initial decisions in SEC matters. Initial decisions and orders appear in legal research databases and are posted on the SEC’s website.
An administrative law judge’s initial decision is subject to de novo review by the Commission, which may affirm, reverse, modify, set aside, or remand for further proceedings. A party may petition the Commission for review, or the Commission may choose to review an initial decision on its own initiative. If a party does not petition for review, and the Commission does not order review on its own initiative, the SEC’s Rules of Practice provide that the Commission will issue an order stating that the initial decision has become final. Appeals of Commission decisions may be taken to an appropriate U.S. Court of Appeals.