Alison Frankel

The SEC’s twisty argument to toss pay-to-play muni bond rule challenge

July 28, 2016

(Reuters) – Last December, Congress wanted to make sure that the Securities and Exchange Commission would keep its nose out of campaign finance reform. As you know, there’s been considerable debate in recent years about whether the SEC should require corporations to disclose their political spending. The agency hasn’t shown much eagerness to do so, but in the Appropriations Act of 2016 (which was actually passed in December 2015), the House and Senate seemed to take the issue out of the SEC’s control. The law barred the commission from using SEC funds to “finalize, issue or implement any rule, regulation or order regarding the disclosure of political contributions.”

Distressed debt diva Lynn Tilton on ‘unfair’ SEC trial: ‘You don’t believe it could happen’

July 27, 2016

(Reuters) – Lynn Tilton, the flamboyant financier sued by the Securities and Exchange Commission last March for allegedly defrauding investors in three distressed debt funds, accused the commission in an interview Tuesday of depriving her of due process rights.

SEC to vote Wednesday on rule changes for administrative proceedings

July 11, 2016

(Reuters) – The Securities and Exchange Commission’s three commissioners will vote Wednesday on tweaks to rules governing administrative proceedings before SEC in-house judges, despite complaints from the white-collar defense bar that the proposed rule changes do not resolve the fundamental unfairness of trying enforcement actions before in-house SEC judges.

Accused lawyer says SEC has no power to police alleged pay-to-play scheme

March 15, 2016

(Reuters) – Remember Robert Crowe, the Nelson Mullins partner and pre-eminent Democratic lobbyist who was targeted in a Securities and Exchange Commission fraud suit in January? The SEC, as I reported at the time, claimed Crowe felt so much pressure to hold on to State Street as a client that he illicitly steered $20,000 in campaign contributions to an Ohio official who controlled a contract State Street wanted to be awarded. The SEC characterized the arrangement as a pay-to-play scheme, accusing Crowe of securities fraud and aiding and abetting State Street’s fraud.

Unlike SEC, FTC makes quick fix to ward off ALJ constitutional challenges

September 16, 2015

(Reuters) – For the second time this month, a federal agency has declared its in-house judges are mere employees whose hiring is not addressed by the Appointments Clause of the U.S. Constitution. On Monday, four Federal Trade Commissioners denied LabMD’s motion to dismiss the FTC’s data security administrative proceeding against the cancer testing center, ruling that under the District of Columbia U.S. Circuit Court of Appeals’ 2000 decision in Landry v. Federal Deposit Insurance Corporation, its in-house judges are not “inferior officers’ because their initial decisions are reviewed by the commission before becoming final.

SEC not entitled to deference in State Street fraud appeal – law prof

September 14, 2015

(Reuters) – When it comes to Securities and Exchange Commission enforcement litigation, the constitutionality of in-house proceedings is dominating journalists’ coverage (including mine). Former SEC officials, though, are dedicating a lot of attention of late to a less sexy – but perhaps more lastingly significant – question: Can the SEC redefine the parameters of securities fraud through a final determination in an enforcement action?

SCOTUS history backs 2nd Circuit insider trading opinion in Newman: law prof

July 17, 2015

The first day of August is the Justice Department’s deadline for asking the U.S. Supreme Court to review the most consequential ruling on insider trading in recent memory, the 2nd U.S. Circuit Court of Appeal’s decision in U.S. v. Newman. You might think that seeking certiorari would be an easy decision for the government, since both federal prosecutors and the Securities and Exchange Commission have said the 2nd Circuit’s Newman ruling will cost them cases because it restricts the definition of what constitutes a “personal benefit” for corporate insiders who pass along confidential information.

Why the SEC can’t easily solve Appointments Clause problem with ALJs

June 17, 2015

(Reuters) – It seems as though there ought to be an easy way for the Securities and Exchange Commission to stomp out claims that its in-house judges are unconstitutionally appointed through a bureaucratic process, a defense theory that has spread as fast among SEC defendants as viral cute-animal memes on the Internet. But the SEC has so far avoided even addressing the potential consequences of that quick fix – perhaps because the solution isn’t so simple after all. If the SEC changed the way it appoints in-house judges, the fix could call into question the outcome of scores of past and present SEC enforcement actions as well as cases at other regulatory agencies.

SEC commissioners order affidavits on hiring of in-house judges

May 28, 2015

(Reuters) – The commissioners of the Securities and Exchange Commission seem to think there may just be something to the latest defense arguments that its in-house administrative law judges are unconstitutional.

N.Y. judge to Wylys: You can’t keep SEC away by declaring bankruptcy

November 5, 2014

Onetime Texas billionaire Sam Wyly and the estate of his late brother Charles just can’t seem to outsmart the Securities and Exchange Commission. Their latest attempt to evade the consequences of their allegedly fraudulent offshore trust scheme failed Monday, when U.S. District Judge Shira Scheindlin of Manhattan, in a ruling of first impression in the 2nd U.S. Circuit Court of Appeals, said that the SEC is entitled to freeze the Wylys’ assets, even though both Sam and Charles’ estate declared Chapter 11 bankruptcy in late October, after the SEC began to take steps to collect the nearly $200 million (plus interest) Scheindlin awarded the agency in September.