White Collar Roundup - July 2015

SEC Put to the Test on Administrative Hearings

In the wake of several rulings from the U.S. Court of Appeals for the Second Circuit that have narrowed the flexibility of the U.S. Securities and Exchange Commission (SEC) to enforce the securities laws in U.S. District Court, the SEC has increased its use of administrative proceedings. But the U.S. District Court for the Northern District of Georgia dealt a hearty blow to that process. Judge Leigh Martin May ruled that the manner in which the SEC's administrative law judges (ALJs) are appointed is unconstitutional. The plaintiff, Charles Hill, brought an action for a preliminary injunction to prevent the SEC from proceeding against him in an administrative hearing for violating various securities laws and regulations. Hill's contention was that the manner in which the SEC's ALJs are appointed violates the appointments clause of the U.S. Constitution. Judge May reasoned that "[i]nferior officers must be appointed by the