SEC Seeks Review of Ruling That Cast ‘Cloud’ Over Enforcement

The Securities and Exchange Commission asked the full Fifth Circuit to review a decision finding the agency’s administrative proceedings unconstitutional, arguing the ruling created uncertainty over federal agencies’ use of in-house judges to hear cases.

In May, a divided panel for the US Court of Appeals for the Fifth Circuit vacated a SEC decision that hedge-fund manager George Jarkesy Jr. committed securities fraud. The panel found, in part, that restrictions on removing SEC administrative law judges only for cause violated the separation of powers.

The ruling conflicts with a 2021 Ninth Circuit ruling, Decker Coal v. Pehringer, which upheld ...