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U.S. CFTC enforcement chief to revive use of in-house courts
March 12, 2015 / 6:06 PM / 3 years ago

U.S. CFTC enforcement chief to revive use of in-house courts

WASHINGTON, March 12 (Reuters) - The U.S. derivatives regulator’s enforcement director said on Thursday that his division planned to revive the use of in-house administrative courts, after more than a decade of bringing contested cases only to federal courts.

“We are going to start to do that very soon,” said Aitan Goelman, the enforcement chief of the Commodity Futures Trading Commission, in remarks at Georgetown Law’s Corporate Counsel Institute. He added that the move would help the agency, which has a very constrained budget.

The plans to bring contested litigation before administrative law judges would put the CFTC on similar footing with the Securities and Exchange Commission, which routinely files cases before in-house judges and has stepped up the practice in recent years.

The SEC won new powers from Congress in the 2010 Dodd-Frank law to seek financial penalties and other remedies against a wider array of defendants through administrative proceedings, prompting the spike.

Defense lawyers have criticized the SEC’s use of administrative judges, saying the proceedings give them fewer protections than federal courts because the trial is expedited, there is limited discovery and there is no jury.

About a handful of defendants in SEC cases have challenged the choice of venue in court, but no judge has declared the system invalid.

The CFTC has only rarely used its in-house court in recent years. It has mostly been a forum for investors seeking to recover money from brokers who they felt had scammed them. The enforcement division has been filing all of its contested cases in federal district courts.

The in-house court has no administrative law judges after a series of controversies, including a situation in which one judge accused another of bias against investors.

Goelman told Reuters on the sidelines of Thursday’s conference that the CFTC planned to borrow administrative judges from other agencies for when a case is filed.

Andrew Ceresney, the SEC’s enforcement chief who spoke alongside Goelman Thursday, defended the use of in-house courts, saying they resolve matters more expeditiously and that the judges are better equipped to tackle complex legal matters.

Goelman said he was on the same page with Ceresney’s points, and he fully expected the CFTC to face similar challenges by defendants over the choice of venue. (Reporting by Sarah N. Lynch; Editing by Lisa Von Ahn)

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