At this moment, it remains unclear whether the SEC will be allowed to continue using the ALJ process. This lack of clarity does not mean that directors, officers, and companies should be any less vigilant when it comes to enforcing things like insider trading policies.
Remember: The SEC doesn’t have to get a conviction to make life miserable for directors and officers in a government investigation. The win isn’t arguing with the SEC for years only to have your conviction overturned. The win is never having the SEC knock at your door in the first place.
Having said that, there is no doubt that the outcome of the Supreme Court’s review in Jarkesy will be consequential for both the SEC and the potential subject of the SEC’s enforcement actions. For now, anyone being threatened with going before ALJ will want to think carefully about any constitutional defense they may have against being subject to the ALJ process.
‘Enforcement 40’ for 2020
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