SEC Enforcement Division Issues Guidance On Venue Selection

What criteria does the Securities and Exchange Commission’s Enforcement Division use to determine whether it will bring an enforcement action as an administrative proceeding or a civil suit in federal court?

This question was tentatively answered when the SEC Enforcement Division recently released its Division of Enforcement Approach to Forum Selection in Contested Actions guidelines, which describes four factors the Division may consider when making a forum selection. These four factors include:

“The availability of the desired claims, legal theories, and forms of relief in each forum” — Certain claims, theories or relief may only be available in one forum. For example, charges that an individual has failed to supervise or caused another individual’s violation can only be brought in an administrative proceeding. Conversely, charges that involve a call for emergency relief can only be determined in a federal district court.

“Whether any charged party is a registered entity or an individual associated with a registered entity” — Registered entities or individuals are automatically subject to SEC discipline and oversight in an administrative forum. In addition, the SEC’s Administrative Law Judges have more experience dealing with these issues than federal courts, so issues involving registered entities or persons may be better handled through an administrative proceeding.

“The cost-, resource-, and time-effectiveness of litigation in each forum” — The Division has expressed its preference for the most “efficient and effective” forum due to its limited resources. In general, the Division finds that administrative hearings are more effective than federal court actions when speed is an issue. Efficiency is also an important consideration, so actions that involve multiple defendants that can be handled in a single proceeding in a federal court may be preferable. In addition, the Division notes that the limitations on or availability of discovery may dictate the appropriate forum.

“Fair, consistent, and effective resolution of securities law issues and matters” — If an action involves complex or unsettled issues of securities law, the Division may find an administrative proceeding to be the proper venue since ALJs have more experience and expertise in this area of the law. Conversely, if an action involves an application of state or federal law, a federal district court may be appropriate.

The Division notes that while these four areas of consideration are not exhaustive, forum selection may take into account any or all of the above factors.

The Cogdell Law Firm is a full service criminal litigation and appellate law firm with a focus on federal fraud defense, Medicare fraud defense, bank fraud defense, and white collar criminal defense. We provide client-focused representation at all stages of the process, whether our clients are seeking to avoid charges, have been charged, or are seeking reversal of a conviction on appeal. When results matter most, contact Dan Cogdell at

What criteria does the Securities and Exchange Commission’s Enforcement Division use to determine whether it will bring an enforcement action as an administrative proceeding or a civil suit in federal court?

This question was tentatively answered when the SEC Enforcement Division recently released its Division of Enforcement Approach to Forum Selection in Contested Actions guidelines, which describes four factors the Division may consider when making a forum selection. These four factors include:

“The availability of the desired claims, legal theories, and forms of relief in each forum” — Certain claims, theories or relief may only be available in one forum. For example, charges that an individual has failed to supervise or caused another individual’s violation can only be brought in an administrative proceeding. Conversely, charges that involve a call for emergency relief can only be determined in a federal district court.

“Whether any charged party is a registered entity or an individual associated with a registered entity” — Registered entities or individuals are automatically subject to SEC discipline and oversight in an administrative forum. In addition, the SEC’s Administrative Law Judges have more experience dealing with these issues than federal courts, so issues involving registered entities or persons may be better handled through an administrative proceeding.

“The cost-, resource-, and time-effectiveness of litigation in each forum” — The Division has expressed its preference for the most “efficient and effective” forum due to its limited resources. In general, the Division finds that administrative hearings are more effective than federal court actions when speed is an issue. Efficiency is also an important consideration, so actions that involve multiple defendants that can be handled in a single proceeding in a federal court may be preferable. In addition, the Division notes that the limitations on or availability of discovery may dictate the appropriate forum.

“Fair, consistent, and effective resolution of securities law issues and matters” — If an action involves complex or unsettled issues of securities law, the Division may find an administrative proceeding to be the proper venue since ALJs have more experience and expertise in this area of the law. Conversely, if an action involves an application of state or federal law, a federal district court may be appropriate.

The Division notes that while these four areas of consideration are not exhaustive, forum selection may take into account any or all of the above factors.

The Cogdell Law Firm is a full service criminal litigation and appellate law firm with a focus on federal fraud defense, Medicare fraud defense, bank fraud defense, and white collar criminal defense. We provide client-focused representation at all stages of the process, whether our clients are seeking to avoid charges, have been charged, or are seeking reversal of a conviction on appeal. When results matter most, contact Dan Cogdell at (713) 426-2244 or dan@cogdell-law.com.

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