Houston hedge fund manager George Jarkesy Jr. took on the Securities and Exchange Commission Monday, arguing in the U.S. Court of Appeals for the District of Columbia that the agency’s internal process for hearing enforcement matters is unconstitutional.
After a District Court refused to stay SEC proceedings against him and Patriot28 LLC for allegedly misleading investors about who made investment decisions, Mr. Jarkesy asked the appeals court to intervene, arguing that the SEC is not the appropriate forum for litigating constitutional claims against itself.
“The court seemed very concerned about the issues and asked very incisive questions on both sides,” said Michael McCullough, Mr. Jarkesy’s lawyer, in an interview. In addition to a pending court decision, SEC commissioners are expected to issue a decision on the administrative case later this year.