Cochran and Jarkesy threaten the viability of the SEC’s home courts. But the reported death of the SEC’s enforcement regime at large has been greatly exaggerated. Before the enactment of the Dodd-Frank Act in 2010, the SEC could bring securities fraud actions against non-registered parties only in federal court. While the SEC increased its use of administrative proceedings post-Dodd-Frank, the SEC has resorted more often to litigating in federal court post-Lucia. And many administrative proceedings have historically been follow-on actions where the SEC seeks additional penalties based on facts already established in a civil or criminal action.
Until the Supreme Court has the last word on the possible constitutional defects in the SEC’s enforcement regime, respondents facing the SEC and other agencies with comparable ALJs should preserve the rights the Fifth Circuit has recognised, both as to the timing of constitutional challenges and the substance of those challenges.
‘Enforcement 40’ for 2020
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