By Jacquelyn Lumb
In the keynote address at the New York City Bar’s annual white collar institute, Enforcement Director Andrew Ceresney said the SEC’s ability to successfully litigate cases is critical to its mission of protecting investors. Litigation and trials are among the Division’s most important work, he said. He also emphasized that the SEC uses fair, reasonable, and consistent factors when choosing where to bring its cases.
Litigated cases. The SEC typically does not litigate cases where it has obtained the strongest evidence of wrongdoing, according to Ceresney. Those cases typically are brought by the criminal authorities or they settle on terms that are favorable to the Commission, he explained. Litigated cases tend to be those where the evidence is less clear, the law is unsettled, or the defendants are willing to spare no expense to clear their names, he advised.
Last year, the SEC litigated 30 cases — the largest number in the last 10 years. Ceresney reported that the SEC has filed more than 80 litigated actions and tried 16 cases in fiscal 2015. He reviewed the litigators’ results, which he characterized as remarkable, and highlighted some of the significant wins at trial. He also reviewed some of the Division’s successes in administrative proceedings. What is important to him is that the SEC continues to bring important cases and is willing to litigate those cases, Ceresney advised.
Other remedies. He noted that the Division has had other litigation achievements besides trial wins, including prejudgment relief, summary judgment wins, subpoena enforcement actions, post-filing settlements, and robust remedies after prevailing on summary judgment or at trial. He said that the litigators have an impressive record in obtaining prejudgment relief, including significant asset freezes. They also have had strong success in obtaining summary judgments. Summary judgments are as valuable as wins at trial, he said, and are obtained without expending the resources needed to win at trial.
The SEC also has had strong success in subpoena enforcement actions in which parties are required to produce documents or to appear for investigative testimony. These actions are critical to the SEC’s ability to effectively investigate misconduct and protect investors, he said.
Ceresney reported that the SEC’s admissions settlements have been a success given that the Commission obtains the same findings and relief without the risk and expense of a trial. The trial teams also have had great success in winning robust remedies decisions from district court judges and administrative law judges, according to Ceresney. These remedies send a powerful message of deterrence, he said.
Forum selection. Ceresney concluded with remarks about the SEC’s forum selection, which has generated a lot of interest. He said one point that is often overlooked by commentators is that the vast majority of the increased actions brought as administrative proceedings are settled actions. The SEC continues to bring more litigated cases in federal district court than in administrative proceedings, he said, including tough cases, such as insider trading.
Ceresney reviewed the Division’s recently issued guidance on forum selection in contested actions. The guidance was issued to increase the transparency in the Division’s forum selection process. There is no rigid formula for deciding the appropriate forum, he noted. The Division’s goal is to achieve strong and effective enforcement of the federal securities laws in a fair and efficient manner. The Division recommends the forum that will best use the SEC’s limited resources to carry out its mission, he noted. He added that all of the Division’s recommendations are subject to review and approval by the Commission.