Description:
The Securities and Exchange Commission has announced its intention to increase its reliance on administrative proceedings and to reduce the frequency with which it litigates in federal court. The Commission has also clearly signaled its intent to call for Chevron deference to its rulings in administrative proceedings. These developments have triggered a firestorm of controversy. Critics challenge the fairness of the agency's administrative process. They also warn of the adverse implications of excessive reliance on the agency's interpretations of the federal securities laws to the exclusion of interpretations by the federal courts. This article addresses the possibility of removal legislation as a potential response to the Commission's initiative. It emphasizes a form of removal designed not to eliminate the administrative process, but to protect respondent rights in a manner that provides the Commission with a powerful incentive to reform its internal procedures. The proposal is also sensitive to the potential burdens that would be imposed on already crowed federal dockets. The proposed legislation would identify a category of cases that would not be removable because they raise matters that are well suited to administrative adjudication and need not clutter the federal courts' dockets. Late filing claims and allegations of violations of the Commission's net capital rules might fall in this category. A second category of cases would give rise to removal as of right because they likely implicate matters that would benefit from resolution in proceedings subject to the full panoply of rights available in federal court. Insider trading cases and allegations of bribery in violation of the Foreign Corrupt Practices Act might fall in this second category. Respondents in all other cases would have the right to petition a federal district court for an order of removal in a process modeled on Federal Rule of Procedure 23(f). In considering this petition for discretionary removal, the court could consider a range of factors including the adequacy of the Commission's procedures given the complexity of the allegations and the implications of the prosecution for respondents' businesses and careers. The discretionary nature of the review is designed to incentivize the Commission to reform its internal processes in an effort to prevent the grant of the discretionary petition in a larger percentage of proceedings