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SDNY Enjoins SEC Administrative Proceeding

by   |   August 13, 2015

In Duka v. SEC, the District Court for the Southern District of New York entered a preliminary injunction to enjoin an SEC administrative proceeding because the proceeding is “likely unconstitutional.” The court gave the same reason as a previous injunction that was granted in the Hill case – that being the appointment of the administrative law judge violated the Appointments Clause of the Constitution.

In the Duka case, the presiding judge had previously given the SEC seven days to notify the Court of its intention to cure any violation of the Appointments Clause. The DOJ, responding on behalf of the SEC, didn’t have much to say, noting only that “in at least one proceeding, the Commission has heard argument on the constitutional challenge and has also ordered supplemental briefing. Although the Commission in its adjudicatory capacity may decide in due course whether SEC ALJs’ appointments violate the Constitution and, if so, the appropriate remedy for such a violation, as of the filing of this letter, the Commission has not issued a decision or otherwise taken any public action on these questions.”

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