The Securities and Exchange Commission has amended its "rules of practice"to speed up administrative proceedings and appeals by setting mandatory deadlines bywhich such proceedings should be completed.
The amendments, which were approved by the commission on June 9, are to become effective30 days after they are published in the Federal Register, according to a nine-pagerelease the SEC issued late Wednesday.
The SEC said in its release that, for every non-settled administrative proceeding, thecommission's "order instituting proceedings" will specify a maximum time frame of either120, 210, or 300 days in which the hearing is to be completed and an initial decision isto be issued by the administrative law judge. The time frame will be based on the typeof proceeding and the complexity and urgency of the matter, the release said.
Each of these time frames is to be broken down into three segments "to ensure fairnessto both the litigants and the law judges by providing sufficient time," the SEC said.The first is a period during which the litigants and judge are to prepare for thehearing. The second is the period for the litigants to obtain the transcript to preparebriefs. And the third is the period during which the administrative law judge is toreach an initial decision in the case.
If the presiding hearing officer in the case decides that the proceeding cannot beconcluded during the specified time frame, the hearing officer will be able to requestan extension of the deadline from the chief administrative law judge, the SEC said. Ifthe chief administrative law judge concurs in the need for an extension, he or she willfile a motion with the commission on behalf of the hearing officer explaining why it iswarranted. The SEC must approve the extension.
The amendments also encourage parties to administrative proceedings not to requestextensions, postponements, or adjournments, except when the requesting party can make astrong case showing that the denial of such a request would substantially prejudice itscase.
The commission said it has issued guidance warning its staff not to seek extensions orstays that are inconsistent with the new standards.
In addition, the amendments would reduce to seven months from 11 months the deadline forthe SEC to issue opinions on appeals of administrative law judges' initial decisions.Opening briefs in such appeals cases will have to be filed with the commission within 30days, rather than the current 40 days, of the date of the briefing schedule.
The SEC said the rule changes were needed after it and administrative law judges failedto meet nonbinding goals set forth in 1995 for speeding up such proceedings. The goalfor an administrative proceeding was to have the hearing completed and an initialdecision issued by the administrative law judge within 10 months. The goal for an appealof an initial decision by an administrative law judge or a determination by a self-regulatory organization was to have the commission issue an opinion within 11 months.
"In the seven years since the adoption of these nonbinding targets, the commission andits administrative law judges have generally failed to meet these goals," the SEC saidin its release.
