SEC In Constitutional Danger Zone Following Several Recent Decisions

Highlights

• Enforcement practices by the U.S. Securities and Exchange Commission (SEC) have come under constitutional scrutiny recently through a series of opinions and filings with high-level courts, including the U.S. Supreme Court and U.S. Court of Appeals for the Fifth Circuit.
• Three matters in particular – SEC v. Cochran, Jarkesy v. SEC and Romeril v. SEC – raise unique issues that could challenge some longtime SEC Division of Enforcement procedures and policies.
• How these cases play out could significantly impact not only the SEC's enforcement approach and settlement terms, but also how other federal agencies handle administrative proceedings.

The constitutional spotlight is shining on the U.S. Securities and Exchange Commission (SEC). In the last several weeks, the U.S. Supreme Court agreed to hear a case seeking broader federal jurisdiction for constitutional challenges, the U.S. Court of Appeals for the Fifth Circuit found multiple