As reported in this blog on June 19, 2014, SEC Enforcement Director Andrew Ceresney recently stated the SEC may pursue more insider trading actions administratively. The SEC is now ramping up to proceed in that direction.

On June 30, 2014, the SEC announced that it will add two judges to its Office of Administrative Law. These two additions will give the Office of Administrative Law five judges in total, a 66 percent expansion.

To date, only one of the two new judges has been named, James E. Grimes. According to the SEC’s release, Mr. Grimes previously spent 13 years at the U.S. Department of Justice where he was a senior litigation counsel in its civil division and a member of the faculty at the Department of Justice National Advocacy Center.  He began his career in the U.S. Navy’s Judge Advocate General’s Corps, where he first served as a trial defense counsel defending service members in courts-martial and later served as an appellate counsel representing the government before military appellate courts.  Mr. Grimes received his B.A. degree, cum laude, in 1992 from Miami University in Oxford, Ohio, and graduated with honors from The Ohio State University College of Law in 1995.

As discussed by Ms. Kerridge, SEC administrative enforcement proceedings provide the SEC with distinct procedural advantages compared to federal courts. Moreover, the administrative law judges are likely more amenable to the SEC’s aggressive theories of insider trading liability and other interpretations of the law that have been rejected by some courts and juries. This expansion will enable the SEC to bring more insider trading actions in these friendlier venues.