In recent months, the U.S. Securities and Exchange Commission’s increasing reliance on administrative proceedings has drawn criticism from defendants and observers, who claim that the odds are unfairly stacked in favor of the agency. Several defendants facing administrative enforcement actions have argued that the agency’s in-house adjudication process is unconstitutional. Their arguments had mostly failed to gain traction, but that changed Monday.
U.S. District Judge Leigh Martin May in Atlanta blocked the SEC from continuing administrative proceedings over insider trading claims against real estate developer Charles Hill Jr. Siding with lawyers at Kilpatrick Townsend & Stockton, the judge ruled that Hill deserved an injunction partly because he was likely to succeed in showing that the SEC’s administrative process violates the Appointments Clause in Article II of the U.S. Constitution.
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