SEC opts for non jury 'trials' for rogue insider traders


THE Securities Exchange Commission (SEC) opts for non jury 'trials' in an attempt to increase regulatory compliance by rogue insider traders.

The SEC's Director of Enforcement, Andrew Ceresney, delivered a lunchtime Q&A session (11 June) to the District Columbia Bar Association about the Commission's preference for administrative proceedings.

Allegations of compliance wrongdoing, presented to jurors have been both complex and complicated, but juries have been unwilling to return guilty verdicts in some recent high profile cases brought by SEC prosecutors.

The Commission's shift away from federal courts' has raised concerns about due process within some sections of the American Bar Association.

Reuters (Washington DC) reported former SEC prosecutor Stephen Crimmins and current defense attorney at K&L Gates D.C. - which hosted the session - of his concerns for the administrative proceedings lacking important rules of evidence gathering in cases to be heard by the SEC's in-house five judge commission of inquiry. Crimmins is reported as saying: "Prosecuting insider trading cases in administrative proceedings would be a significant change" away from serious allegations being adduced by one's peers in open court jury trials.

Ceresney, for the SEC, dismissed 'unfair' criticism of the administrative proceedings claiming penalties at Federal courts' were higher and that the shift was not a reaction to failed 'trading on inside information' prosecutions brought by the commission.

On 6 June, charges against Manouchehr Moshayed of sTec Inc were rejected at jury trial whilst the 11-year legal drama between the SEC and Nelson Obus of Wynnedfield Capital Inc was similarly rejected on 31 May.

The SEC secured additional regulatory powers under the Dodd-Frank Wall Street Reform and Consumer Protection Act 2010 to enforce proceedings against non-compliant third party traders in public companies not already regulated by the Commission.


Bloomberg By Bob Van Voris and Patricia Hurtado.

Reuters Hedgeworld by Sarah N Lynch with additional reporting by Nate Raymond.