Gray Financial Group won a preliminary injunction Wednesday stopping a Securities and Exchange Commission administrative proceeding in a federal court ruling addressing the larger question of whether such proceedings are constitutional.
Judge Leigh Martin May ruled in U.S. District Court in Atlanta that the firm had proved “a substantial likelihood of success” pursuing its argument that the SEC’s administrative proceeding process violates the Constitution because of the way administrative judges are appointed and overseen. The appointment question “could easily be cured by having the SEC commissioners issue an appointment or preside over the matter themselves,” Ms. May wrote.
“Judge May agreed with us that the SEC’s administrative process is unconstitutional under Article II” of the Constitution, said Gray’s attorney Terry Weiss with Greenberg Traurig, in an e-mail.
On Monday, U.S. District Judge Richard Berman in New York allowed a similar challenge to proceed.