Saturday, May 21, 2022

SEC Use of In-House Judge Violates Defendant Rights, Appeals Court Says - The New York Times

A divided federal appeals court panel on Wednesday threw a wrinkle into how the Securities and Exchange Commission prosecutes some enforcement actions by declaring that its administrative proceedings can violate a defendant’s constitutional rights.

The U.S. Court of Appeals for the Fifth Circuit, in a 2-1 decision, ruled that the S.E.C. violated a hedge fund manager’s Seventh Amendment right to a jury trial when it let an in-house judge decide a civil fraud case. Such administrative proceedings are common among regulatory agencies, which use them to decide some enforcement actions.

The ruling from the Fifth Circuit — one of the nation’s most conservative federal appellate courts — is another legal challenge to the S.E.C.’s growing reliance on administrative law judges, rather than the filing of civil complaints in federal court. But for the moment, the ruling’s impact is limited to federal courts in the court’s jurisdiction, which covers Texas, Louisiana and Mississippi.

via www.nytimes.com

This is big news. Stay tuned.

https://rightcoast.typepad.com/rightcoast/2022/05/sec-use-of-in-house-judge-violates-defendant-rights-appeals-court-says-the-new-york-times.html

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