THE ADMINISTRATION OF JUSTICE IN THE SECURITIES AND EXCHANGE COMMISSION: SANCTIONING BROKER-DEALERS (REGULATION, WHITE-COLLAR CRIME, LAW ENFORCEMENT)

This research deals with the adjudicative activities of the Securities and Exchange Commission. Focusing on this function of the Commission raises a host of questions that have been largely ignored as a result of the traditional preoccupation with the legislative or rule-making function of regulatory agencies. These questions address the allocative and adjudicative decisions involved in sanctioning; the patterns to which these decisions conform; the ideals of justice which animate these decisions; and the organizational realities that constrain them.;Two agency characteristics were found to influence sanctioning discretion: the scarcity of enforcement resources and a preference for decision-making autonomy. Limitations on personnel, time and budget dictate that only the most serious and visible offenders are formally processed. In the face of this relatively serious caseload, the agency's preference for administrative remedy strains its limited arsenal of sanctions. Combined these factors explain the agency's heavy reliance upon its most severe sanction, expulsion.;Additionally, a number of offender characteristics systematically influenced sanctioning. Most importantly, whether the respondent is an individual or an organization makes a significant difference in the basis of the sanctioning decision, although not in the sanctioning outcome. For individuals, conventional measures of culpability figure prominently into the decision. For organizations, operational viability is the principal determinant of sanction. This reliance upon measures of viability in the case of organizations at once indicates a more pragmatic standard of justice in the case of firms, while it also renders much of the SEC's control of organizations redundant: the most severe sanctions are reserved for firms that are already operationally moribund.;Finally, characteristics of the offense--such as the number and type of offense and loss of money by victims--were related to sanction for all respondents.;This research examines 472 SEC disciplinary actions involving broker-dealer misconduct for which a sanction was imposed sometime during fiscal years 1974 or 1975. The data were obtained through a systematic archival survey of the SEC Docket. From the final orders, 47 variables were coded for each individual or organization in the sample. These variables can be classified into three categories: legal process variables, offender related variables and offense related variables. Selected variables were used in regression analysis to discover the best fitting model for predicting sanction.;Despite charges of regulatory inaction and leniency, this study suggests an unexpected similarity between the operations of regulatory and criminal courts.