No Judicial Review of SEC Orders in District Court: DC Circuit | Practical Law

No Judicial Review of SEC Orders in District Court: DC Circuit | Practical Law

In Jarkesy v. S.E.C., the US Court of Appeals for the District of Columbia Circuit held that federal district courts do not have subject matter jurisdiction over challenges to a Securities and Exchange Commission (SEC) administrative hearing. Once the SEC issues a final order, a party may only seek judicial review in a United States Circuit Court of Appeals.

No Judicial Review of SEC Orders in District Court: DC Circuit

Practical Law Legal Update w-000-6296 (Approx. 3 pages)

No Judicial Review of SEC Orders in District Court: DC Circuit

by Practical Law Litigation
Published on 05 Oct 2015 • USA (National/Federal)
In Jarkesy v. S.E.C., the US Court of Appeals for the District of Columbia Circuit held that federal district courts do not have subject matter jurisdiction over challenges to a Securities and Exchange Commission (SEC) administrative hearing. Once the SEC issues a final order, a party may only seek judicial review in a United States Circuit Court of Appeals.
On September 29, 2015, in Jarkesy v. SEC, the US Court of Appeals for the District of Columbia Circuit held that federal district courts do not have subject matter jurisdiction over challenges to a Securities and Exchange Commission (SEC) administrative hearing. Only a United States Circuit Court of Appeals can review a final SEC order. (No. 14–5196, (D.C. Cir. Sept. 29, 2015).)
The SEC brought an administrative proceeding alleging that appellant Jarkesy and his investment company violated securities laws. While the matter was pending, the SEC settled with two of Jarkesy's co-defendants who it alleged had aided and abetted Jarkesy's conduct. The SEC issued an order approving the settlement which discussed Jarkesy's purported fraudulent conduct. Jarkesy and his company filed an action in the United States District Court for the District of Columbia seeking to prevent the SEC from proceeding with an administrative proceeding that they claimed would violate their constitutional rights. The district court dismissed the case, finding that it lacked subject matter jurisdiction. Jarkesy appealed.
The DC Circuit affirmed, joining the US Court of Appeals for the Seventh Circuit in holding that the SEC's statutory and regulatory scheme:
  • Precluded district courts from reviewing SEC-initiated proceedings.
  • Limited judicial review of adverse SEC orders to federal courts of appeal.