One of my favorite lines from my kids’ books involves a cat named Pickles who’s having something of an identity crisis.  Pickles doesn’t really have an owner, but does have a temporary caretaker, who tells him, “Pickles, you’re not a bad cat.  You’re not a good cat. . . . You’re a mixed up cat.”  So it is with many of us, I guess, and so it is with SEC administrative proceedings.

Granted, I tend to agree with many of the SEC’s critics who have decried the Commission’s use – since Dodd-Frank was passed – of administrative proceedings to seek penalties against non-registered respondents.  It used to be that those penalties could be gotten only in federal court.  Not anymore.  Now the SEC can go into its own administrative forum and put respondents on an extremely fast track to an adjudication without the discovery provided in the Federal Rules of Civil Procedure.  It’s not all bad, though.

One Good Thing   

One thing the SEC does that I think is actually useful for those interested in the administrative proceedings is it makes all of the pleadings available online for free.  It’s true, and you can find them here.  It would be better if the archives went further back in time, but what is available is pretty good.  But it’s better than PACER, for the federal courts, which require an account and charge $.10 per page.  And it’s way better than the U.S. Tax Court, whose online docket is embarrassingly limited.  (Check it out.  It’s ridiculous.)

One Bad Thing

Here’s one more bad thing about the new age of the SEC’s administrative proceedings.   Until recently, I thought that in a settled case, it didn’t really matter.  Settle it in federal court or administrative court – six of one, half dozen of the other.  But that’s not really true.  Judge Rakoff got a lot of attention for disrupting the SEC’s process for settled matters, mostly because he thought the Commission was going too easy on Citigroup in 2011.  A number of other judges followed suit in refusing to rubber stamp other proposed SEC settlements for the same reason.  But it could go the other way, too.  Sometimes the SEC will take an extremely aggressive position against a financially weaker defendant who has little choice but to settle to onerous terms, even when the legal authority for the case is tenuous.  In that situation, it could be useful to have a federal court scrutinize the settlement to be sure the facts match up with existing law.  But if the settlement takes the form of an administrative order, it will never get that scrutiny.  Oh, well.  Only their lawyers are crying for those defendants.  But others should, because it could be them next.