House Republicans and Securities and Exchange Commission Enforcement Director Andrew Ceresney sparred over the agency’s increased use of administrative law judges, instead of the courts, to go after alleged securities law violators.

At a House Financial Services Committee Capital Markets Subcommittee hearing, Chairman Scott Garrett claimed that administrative proceedings put financial advisors and other defendants at a disadvantage because they lose full discovery rights, the right to a jury trial and the exclusion of hearsay evidence.

In response, Ceresney said in-house administrative actions provide some protections for accused violators the courts don’t, including the requirement that the SEC tell them of evidence supporting their claims of innocence, their right to receive witness lists from the SEC and the ability to subpoena documents.

“Administrative proceedings do provide fairness,” Ceresney said.

Subcommittee Republicans also contended that in-house proceedings give the SEC a home court advantage, pointing to the enforcement unit’s 100 percent success rate before administrative law judges last year when the success rate in the courts was just a little over 60 percent.

The SEC’s enforcement chief countered that the administrative law judges did not give his staffers all of the penalties they sought.

Ceresney said the increased use of administrative proceedings has come with an ability to use that venue to seek penalties against non-registered companies and individuals for the first time because of the Dodd-Frank Act.

Last year, 57 percent of the cases the SEC litigated were in court while 43 percent were in administrative proceedings.

The SEC is also seeking more money from Congress for enforcement workers because asset management schemes have become more sophisticated, Ceresney said. He added that his staffers are trolling the Internet for microcap fraud and pyramid fraudsters.