As previously discussed here, there has been a barrage of recent cases attacking the constitutionality of the SEC’s use of administrative proceedings in its enforcement efforts. Recently, respondents challenging the SEC’s ability to bring these cases have had success in two such cases in federal district court. This week, the Seventh Circuit became the first appellate court to weigh in on this issue — and found in favor of the SEC. The Seventh Circuit held that the district court properly granted the SEC’s motion to dismiss the challenge to its AP because the district court did not have jurisdiction to hear such a challenge.
Earlier in August 2015, two other district courts had rejected the SEC’s motions to dismiss similar cases–thus allowing these federal court challenges to the SEC’s APs to proceed. On August 4, U.S. District Judge Leigh Martin May (N.D. Ga.) granted Gray Financial Group a preliminary injunction against an SEC administrative proceeding after finding that there was a “substantial likelihood” that Gray Financial could prove that the AP process was unconstitutional. On August 12, U.S. District Judge Richard Berman (S.D.N.Y.) similarly granted a preliminary injunction against the SEC and in favor of former Standard & Poor’s executive Barbara Duka.
