The U.S. Chamber of Commerce on Wednesday called for reforms of the U.S. Securities and Exchange Commission’s investigative process that would bolster due-process protections for defendants in enforcement actions.
Under the 2010 Dodd-Frank law, the SEC has increased its use of administrative trials as an alternative to federal courts. Critics say the trials violate constitutional rights because there is no jury and limited discovery.
In a report released Wednesday, the Chamber said the SEC should adopt a uniform policy on when to use such trials , create a process for defendants to challenge the choice of venue, and amend its rules to permit more pretrial discovery.
“SEC enforcement should have a fair process for all,” the report says.
But according to Reuters, the SEC has repeatedly defended its right to bring a case in the venue of its choice, citing the speediness of in-house trials and the expertise of the judges who hear the cases.
“The report contains certain recommendations that would significantly weaken the Commission’s ability to protect investors through strong and effective enforcement of the federal securities laws,” SEC Enforcement Director Andrew Ceresney said in a statement, adding that the agency will continue to “aggressively hold wrongdoers accountable.”
The U.S. Chamber said in a news release that it “would be a mistake to misinterpret any of these recommendations as calling for changes that would either weaken enforcement or erect any process barriers that would impede vigorous action by the SEC.”
“We were very careful to propose changes that will both further enable tough-as-nails efforts to punish and deter fraud while ensuring that honest market participants benefit from a clear and predictable process,” the U.S. Chamber wrote. “Investors, market participants, and the SEC all benefit from this approach — vigorous, effective enforcement coupled with a clear and fair process.”