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Day: August 17, 2016

ALJ Rejects Selective Prosecution Defense

blind justice

An SEC Administrative Law Judge rejected a convicted respondent’s assertion that claims against him should be dismissed because of selective prosecution because the SEC did not prosecute others involved in the alleged offering fraud.  The ALJ asserted that the fact that “individuals other than [respondent] may have been involved in [the firm’s] misconduct does not relieve [the firm] from responsibility for acts committed through [respondent] (or through others).”  The ALJ opined that the decision to seek civil sanctions against respondent and not others was an exercise of “prosecutorial discretion,” not selective prosecution which requires a finding that a respondent was singled out for prosecution based on “improper considerations such as race, religion, or the desire to prevent the exercise of a constitutionally protected right.”  The respondent was charged and criminally convicted for engaging in securities fraud in connection with the offering of private funds.

OUR TAKE: The SEC has wide latitude when deciding against whom it wants to bring charges.  Just because others may have been involved in alleged wrongdoing does not allow a named respondent to claim unconstitutional selective prosecution.

https://www.sec.gov/alj/aljdec/2016/id1047cff.pdf