SEC

U.S. District Judge Richard Berman of the Southern District of New York ruled last week that the Securities and Exchange Commission is likely to lose the fight to defend its use of in-house judges as constitutional, The Wall Street Journal's Eaglesham reports. Berman, who previously ruled the SEC’s system of having its in-house judges named by the staff, rather than the agency’s commissioners, may violate the constitution, said he thinks the SEC's appeals will fail.

The SEC in-house courts have been criticized as unfairly biased in favor of the agency's position in cases.

The Securities and Exchange Commission is defending its use of in-house courts to handle enforcement of financial regulations, The Wall Street Journal's Jean Eaglesham reports: "The SEC accused several defendants of 'judge shopping' by trying to get a case heard in a particular court and in another instance asked one of its own judges to submit a formal statement about whether he has ever felt pressure to favor the agency."

Seven cases have been brought by defendants against those in-house courts, and they argue the administrative-law process denies them important protections. One federal judge has said the process is likely unconstitutional.

For the first time, the Securities and Exchange Commission has provided guidance on when it chooses in-house judges to preside over securities cases, the Wall Street Journal's Aruna Viswanatha reports. The SEC revealed "it would consider bringing cases before its in-house courts when the alleged misconduct was old or if it presented unsettled legal issues."

The SEC got the ability to bring cases before administrative law judges in the 2010 Dodd-Frank law. The SEC has won 90 percent of those cases.

Defendants are arguing that the SEC's administrative-law process violates their due process rights.

Securities and Exchange Commission Chair Mary Jo White expressed concern this week about corporate bylaws that force shareholders to pick up legal bills if they lose their lawsuits against boards of directors, Reuters reports. The Delaware Supreme Court upheld that sort of bylaws in May, even though, under the "American rule," each litigant normally has to pay for its own legal costs.

The Washington Post reports the Securities and Exchange Commission split 3-2 along party lines to require publicly traded corporations with more than $1 billion in revenues or $75 million in publicly traded securities to disclose the rate of their chief executives' pay in relation to the pay of a valid statistical sample of their workforce around the globe. Proponents say the measure will give stockholders and investors more information to make informed decisions, while opponents said the measure will have too much regulatory costs for American businesses. The regulation fulfills a measure of the Dodd-Frank bill enacted over outrage over high executive pay.