Challenge to SEC Judge System Gets Second Look in Fifth Circuit

An accountant facing a Securities and Exchange Commission enforcement action will have another chance to pursue a constitutional challenge against the agency, after the full Fifth Circuit agreed to revisit a panel’s ruling that federal courts lack jurisdiction while the SEC proceeding is ongoing.

The commission began an administrative proceeding against Michelle Cochran for allegedly failing to comply with auditing standards under federal securities law.

Cochran sued in federal district court, arguing that the commission’s administrative law judges judges enjoy unconstitutional protections against removal.

But “the statutory review scheme” requiring defendants to appeal within the agency before turning to federal ...