A panel of the D.C. Circuit recently relied on Lucia and Cochran to enjoin a FINRA regulatory enforcement action pending appeal of an Appointments Clause challenge....more
8/21/2023
/ Administrative Law Judge (ALJ) ,
Appointments Clause ,
Article II ,
Article III ,
Constitutional Challenges ,
Enforcement Actions ,
Financial Industry Regulatory Authority (FINRA) ,
Financial Regulatory Reform ,
Motion To Enjoin ,
Popular ,
Regulatory Agencies ,
Regulatory Authority ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Seventh Amendment ,
Standing
On June 20, 2023, the Supreme Court granted certiorari to review three questions about the Securities and Exchange Commission’s (SEC’s) administrative courts...more
7/6/2023
/ Administrative Law Judge (ALJ) ,
Appointments Clause ,
Article II ,
Certiorari ,
Disgorgement ,
Enforcement Actions ,
Investment Adviser ,
Investment Funds ,
Public Rights Doctrine ,
SCOTUS ,
Securities and Exchange Commission (SEC)
Last week, the D.C. Circuit held that the SEC can’t prosecute the same conduct as both willful and as negligent under the tandem sections found in most of the nation’s securities laws. The ruling prevents the SEC from piling...more
On January 12, the US Supreme Court agreed to review the constitutionality of the SEC’s administrative law judges.
On November 29, 2017, the SEC did an abrupt about-face, telling the Court it now regards its ALJs as...more
On November 29, the SEC did an about-face and admitted its ALJs are “inferior officers” (not merely employees) subject to the Constitution’s Article II appointment provisions. The Solicitor General’s brief on behalf of the...more
Cut, paste and forward ? just as the boss instructed. But Lorenzo’s email to two clients was misleading, so the SEC filed an enforcement action. The ALJ held Lorenzo liable for violating anti-fraud provisions and imposed a...more
10/23/2017
/ Administrative Law Judge (ALJ) ,
Anti-Fraud Provisions ,
Appeals ,
Enforcement Actions ,
False Statements ,
Interstate Commerce ,
Investment Schemes ,
Makers ,
Regulatory Violations ,
Rule 10b-5 ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Securities Litigation
In an Opinion highlighting the Circuit split over the constitutionality of SEC administrative law judges (“ALJs”), the Fifth Circuit recently stayed an FDIC civil-penalty and bar order against a Bank director, pending...more
Trader Joseph Ruggieri finally prevailed last week, when SEC Commissioners Stein and Piwowar split on whether Enforcement proved his four trades (in 2010-2011) were made on inside information....more
On Monday, May 22, the SEC stayed all its administrative proceedings assigned to an ALJ in which a Respondent has an option for review by the 10th Circuit. (Securities laws provide appellate review of SEC administrative...more
The Tenth Circuit recently held that the SEC’s in-house judges are “inferior officers” hired in violation of Article II’s Appointment Clauses, creating a split with the D.C. Circuit over the issue.
The Tenth Circuit held...more
Having lost her initial suit (and appeal) to enjoin an SEC administrative enforcement action against her, the so-called “diva of distressed,” Lynn Tilton recently filed another lawsuit trying to halt her upcoming October 24...more
The D.C. Circuit has affirmed that SEC ALJs are not constitutional Officers subject to the Appointments Clause, rejecting perhaps the strongest of the constitutional challenges to the Commission’s administrative forum. The...more
The Eleventh Circuit Friday joined three others in concluding that Congress intended Respondents must wait until appeal from the Commission to have a Court consider their challenges to the Constitutionality of the SEC’s...more
The Second Circuit has affirmed dismissal of “diva of distressed” Lynn Tilton’s constitutional challenge to the SEC’s administrative forum, holding that issue isn’t reviewable by the courts until an appeal after two levels of...more
The SEC recently affirmed its ALJ’s ruling barring Alan Stanford’s former CCO from the industry and ordering monetary penalties of $260,000 together with $591,992 in disgorgement. The Commission held the CCO approved false...more
In a January 21, 2016 Report of Investigation, the Inspector General for the Securities Exchange Commission found no evidence to substantiate allegations of pro-agency bias among SEC administrative law judges. The allegations...more
The SEC granted two petitions for review last week that tee-up significant issues for full Commission consideration late next Spring. The Commission will consider the application of the Second Circuit’s Newman decision...more
Five years after the SEC brought charges that cost two fund executives their jobs, the U.S. First Circuit overturned the sanctions, chiding the SEC for misreading critical evidence, lacking substantial evidence for its...more
Laurie Bebo, CEO of Assisted Living Concepts, initially got some sympathetic words from the U.S. District Judge who felt constrained to turn away her constitutional challenge to the SEC’s administrative forum:
The Court...more
10/12/2015
/ Administrative Law Judge (ALJ) ,
Administrative Proceedings ,
Appointments Clause ,
Bebo v SEC ,
Disclosure ,
Due Process ,
Enforcement Actions ,
Equal Protection ,
Fraud ,
Publicly-Traded Companies ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
Seventh Amendment
The citadel of the SEC’s administrative forum has been under assault from several vectors over the past year or so, as a chorus of dissenting Respondents have mounted increasing challenges to its constitutional legitimacy, as...more
10/5/2015
/ Administrative Law Judge (ALJ) ,
Administrative Proceedings ,
Article II ,
Bebo v SEC ,
Chamber of Commerce ,
Criminal Investigations ,
Due Process ,
Enforcement Actions ,
Fifth Amendment ,
Insider Trading ,
Non-Delegation Doctrine ,
Rules of Practice ,
Securities and Exchange Commission (SEC) ,
Transparency ,
White Collar Crimes
The SEC recently – and predictably – rejected a Respondents’ arguments challenging the constitutionality of the agency’s administrative forum. The September 17 Timbervest decision was the first of the constitutional...more
The SEC has announced a series of proposed changes to the Rules of Practice governing its internal enforcement actions. The changes update the decade-old Rules and respond in small part to a groundswell of criticism about the...more
An SEC administrative law judge (“ALJ”) found that former Wells Fargo trader Joseph Ruggieri traded on material nonpublic information tipped him by former analyst Greg Bolan, but dismissed the insider-trading charges against...more
9/16/2015
/ Administrative Law Judge (ALJ) ,
Appointments Clause ,
Banking Sector ,
Banks ,
Due Process ,
Enforcement Actions ,
Fiduciary Duty ,
Financial Institutions ,
Financial Markets ,
Insider Trading ,
Material Nonpublic Information ,
Personal Benefit ,
Publicly-Traded Companies ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Seventh Amendment ,
Tippees ,
Wells Fargo
Manhattan federal Judge Richard Berman yesterday (August 12) issued a preliminary injunction halting the SEC’s administrative action against former S&P executive Barbara Duka, holding the SEC’s in-house courts were “likely...more
The SEC’s administrative forum has been under increasing scrutiny over the past year. Now the SEC has removed an ALJ from a high-profile case, after he refused the Commission’s “invitation” to provide a no-bias affidavit in...more
8/3/2015
/ Administrative Law Judge (ALJ) ,
Bebo v SEC ,
Bonds ,
CMBS ,
Dodd-Frank ,
Financial Markets ,
Rating Agencies ,
S&P ,
Securities and Exchange Commission (SEC) ,
Stocks ,
Wall Street Journal