US appeals court rejects lenient test for asset freezes in SEC enforcement actions | Reuters

A U.S. appeals court has just deepened a split among the federal circuits on the proper test for asset freezes in cases brought by the U.S. Securities and Exchange Commission.

The Philadelphia-based 3rd U.S. Circuit Court of Appeals ruled on Tuesday that the SEC cannot sidestep the stringent, four-part test for obtaining a preliminary injunction when it seeks to freeze the assets of a defendant in an enforcement action.

That conclusion is at odds with precedent from the New York-based 2nd Circuit, which requires the SEC only to meet one element of the four-part test. To obtain an asset freeze in the 2nd Circuit, the SEC must simply establish an inference that a defendant violated federal securities laws.

Source: US appeals court rejects lenient test for asset freezes in SEC enforcement actions | Reuters