Analysis

5th Circ. Says SEC's Court Is Unconstitutional. Now What?

By Hannah Albarazi (May 20, 2022, 10:43 PM EDT) -- A Fifth Circuit ruling that the U.S. Securities and Exchange Commission's in-house courts are unconstitutional has legal experts wondering whether the decision could not only upend the role of administrative law judges, but also strike at the heart of the agency's powers.

A divided appellate panel ruled Wednesday that the SEC's in-house administrative proceeding against a hedge fund manager accused of fraud violated his right to a jury trial and that the in-house judges who oversee SEC administrative proceedings are unconstitutionally protected from removal.

David Kornblau, a partner at Dentons and former chief litigation counsel at the SEC, told Law360 that...

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