Sovereign Immunity Blocks Informant’s Challenge to SEC Inquiry

A former government informant lost his bid to halt an SEC inquiry after the Third Circuit ruled Thursday that sovereign immunity protects the agency from challenges to its decision to investigate.

Guy Gentile, a broker and former FBI informant, argued that the Securities and Exchange Commission investigation and related subpoenas were unlawful and should be shut down. But the agency’s decision to open a formal investigation isn’t subject to judicial review, the U.S. Court of Appeals for the Third Circuit said, affirming the lower court’s dismissal.

Gentile and the SEC “are not strangers,” Judge Peter J. Phipps’s opinion ...