'Jarkesy 2.0': SEC Sees New Attack On In-House Courts

David Fredrickson’s commentary was included in a Law360 article exploring how a new lawsuit against the Securities and Exchange Commission (SEC) could limit the agency’s ability to use in-house courts to limit alleged lawbreakers’ ability to engage in the securities industry. The lawsuit was brought by Rev. Emmanuel Lemelson in D.C. district court, where he hopes to stop the SEC from banning him from the securities industry after a Boston jury found him liable for making false or misleading statements in reports about a company his hedge fund was shorting.

David explained that Lemelson is arguing that the SEC should have sought the injunction in the Massachusetts federal court where he was tried. "I guess that's conceivable, but in my experience it would be rare" for the SEC to take that step, he said, because the agency has for a very long time had the authority to ban people from the industry via administrative proceedings.