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In Law360, Amy Longo Comments on Supreme Court Scrutiny of SEC Courts

Practices: Securities & Futures Enforcement

The U.S. Supreme Court agreed to hear a case that could severely curtail administrative courts used by the U.S. Securities and Exchange Commission and other federal agencies that prosecute alleged rulebreakers in-house. The case is reminiscent of SEC v Cochran, in which the Supreme Court ruled in favor of a plaintiff claiming the agency’s administrative proceedings were unconstitutional.

In a Law360 article, litigation & enforcement partner Amy Longo stated, “Even if the court does side with the SEC, the agency isn't completely out of the woods because the Cochran ruling left it vulnerable to constitutional challenges outside the ones raised by the Jarkesy case.”

Prior to the Cochran ruling, defendants in SEC administrative actions had to wait for their cases to conclude before appealing in a circuit court. Now they can appeal directly to a district court while their administrative case is ongoing.

"I think right now, for anyone representing a defendant in an SEC administrative proceeding, it really behooves you to consider [the] kinds of constitutional challenges that may be able to be brought and I think we'll see a lot more of those," said Amy, herself a former SEC enforcement attorney.  "I don't think Jarkesy will be the end of that."

Amy also noted, “The Cochran case, which was heard concurrently with an attack on the U.S. Federal Trade Commission's enforcement proceedings, also demonstrates the potential spill-over effects any time the high court steps into an agency dispute.”

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