Beyond Jarkesy, SEC Administrative Proceedings Face Attacks on Multiple Fronts

Securities Enforcement Defense attorney Scott Mascianica spoke with Thomson Reuters about how a recent federal appellate court ruling could affect the enforcement regime of the U.S. Securities and Exchange Commission (SEC). In Jarkesy v. SEC, the U.S. Court of Appeals for the Fifth Circuit vacated an SEC judgment, citing three constitutional defects. The decision affects litigated administrative proceedings, which Mr. Mascianica explained the SEC has avoided since the U.S. Supreme Court's decision in Lucia v. SEC. In Lucia, the court concluded that administrative law judges (ALJs) are "inferior officers," causing the SEC to send back numerous administrative cases for rehearing.

The agency now faces the question of whether to appeal the ruling in Jarkesy. Mr. Mascianca commented that an appeal risks making the decision applicable nationwide and affecting other agencies beyond the SEC.

"[I don't] see how they can't appeal this decision, just given how far ranging it is not just for the SEC, but for federal agencies in general."

READ: Beyond Jarkesy, SEC Administrative Proceedings Face Attacks on Multiple Fronts