This post was written by Amy J. Greer.

As the securities enforcement world awaits the U.S. Court of Appeals for the Second Circuit’s decision in the SEC v. Citigroup matter – where Judge Jed Rakoff balked at the Commission’s “neither admit nor deny” policy and refused to approve a settlement for lack of evidentiary support – it now appears the SEC may face increased scrutiny in its litigation practices, regardless of how the Court of Appeals rules. Just last month, another federal judge, this time in Colorado, refused to accept a settlement until the defendant, essentially, admits that the allegations against him are true.

But that might not be the worst of it – the SEC now may have to justify not just a litigation policy but also its own internal practices. In SEC v. Kovzan, the SEC has charged a CFO for his company’s failure to disclose as income certain perks paid to the then-CEO, among them commuting expenses, from the CEO’s home to the corporate headquarters, to the tune of $1.18 million over six years. Kovzan has argued that there was nothing improper about his conduct. And, as support for his position, he sought, and the Magistrate Judge has now ordered produced, the SEC’s own documents and records concerning its practice of reimbursing its officials for travel and lodging when they live in one location but work at an SEC office elsewhere. Ouch. Appropriate or not, you can just hear the gavel at the Congressional hearing as this stuff gets aired.

This is the second time that Mr. Kovzan has sought and been granted the right to receive non-public SEC documents, which he claims are relevant to his defense. Back in October 2012, the District Judge in the case, overruling the Magistrate Judge’s order, granted the defense the right to internal SEC documents relating to the SEC Staff’s decision-making and guidance on Regulation S-K, Item 402, which relates to executive compensation reporting.

So, it appears that even if the Second Circuit hands the SEC a victory, the agency seems to be facing a changed litigation landscape. Defendants are always willing to take shots at the Commission, but these days, the courts seem less willing to block those shots.