SCOTUS Decision Threatens SEC In-House Courts, Home of FCPA Enforcement, Lawyer Says
The U.S. Supreme Court's recent decision in SEC v. Cochran could usher in the end of the agency's in-house court for most cases, including Foreign Corrupt Practices Act matters, according to Richard Cassin, founder of the FCPA blog. Should this happen, Cassin said in a June 12 post, it would be hard to imagine how the SEC could maintain its current level of enforcement activity.
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The court's unanimous opinion in Cochran said laws creating and empowering the SEC and Federal Trade Commission don't "displace" federal courts from hearing "constitutional challenges to what those agencies are doing," Cassin said. As a result, the opinion paves the way for defendants in SEC administrative court cases to scrap over jurisdictional issues in federal courts before the in-house court settles the proceeding.
A second case pending before the Supreme Court, Jarksey v. SEC, also carries big implications for the in-house SEC cases, the post said. In that case, the high court is looking into whether the SEC's court violates the constitutional right of defendants to a jury trial guaranteed by the Seventh Amendment, whether Congress can delegate to the SEC the ability to choose enforcement via the in-house court instead of federal courts and whether the protections enjoyed by the SEC administrative judges from for-cause removal hinder the president's powers to supervise the executive branch, Cassin summarized.
The Cochran ruling showcased the court's constitutional concerns, potentially spelling further trouble for the SEC, despite the "huge enforcement dividends" that have come from the "enormous power Congress granted to the SEC's in-house court," the post said. Massive sums raised by this court has left SEC defendants feeling "steamrolled by an opaque, conflicted, and largely unaccountable in-house adjudication," Cassin said.