Systemic Forum Selection Ambiguity in Financial Regulation Enforcementעמימות סיסטמית בבחירת פורום אכיפה ברגולציה כלכלית

Abstract

The growing use of administrative proceedings in financial regulation, as an alternative to criminal enforcement, has raised concerns about forum selection ambiguity. These concerns led to challenges of forum selection ambiguity for under-criminalization, expropriation of defendants’ rights, and harm to the principle of legality. Contemporary literature identifies ambiguity in forum selection and describes it as a discretionary problem. Much of today’s literature therefore calls for clear forum selection guidelines. As a step towards addressing the ambiguity problem, the SEC recently issued guidance on its approach to forum selection in contested actions.This Article suggests that the SEC has taken a step in the wrong direction. Contrary to the current literature, I argue that forum selection ambiguity does not stem from the lack of clear policy guidelines, but rather from the legal theory behind them, which has created systemic ambiguity in punitive forum selection. Due to this ambiguity, not only can the regulated entity, on its part, not know in advance whether its conduct will be deemed criminal or administrative, but the regulator herself cannot justify her forum selection decision coherently.