Judge denies SEC’s motion to dismiss case over in-house panels

U.S. District Judge Richard Berman ruled Monday that a legal challenge to the SEC's handling of enforcement cases through administrative proceedings will be allowed to proceed

A legal challenge to the SEC’s handling of enforcement cases through administrative proceedings will be allowed to proceed, U.S. District Judge Richard Berman ruled Monday.
The lawsuit, brought by Barbara Duka in U.S. District Court in New York, stated the Securities and Exchange Commission proceedings violate the Constitution because of the way administrative judges are appointed and overseen.
(More: SEC appointment of in-house judges ‘likely unconstitutional’)
Ms. Duka, a former managing director at Standard & Poor’s Ratings Services, was charged by the SEC with overseeing misleading ratings of commercial mortgage-backed securities. Her suit seeks to have the SEC order overturned.
Mr. Berman denied the SEC’s motion to dismiss the case.
(More: Chamber calls on SEC to reform use of in-house judges)
“Among other reasons, the plaintiff has no opportunity for meaningful judicial review,” he said. He also wrote that a related order in the U.S. District Court in Atlanta — Hill vs. SEC — allowing a similar challenge to proceed, had “persuasive” reasoning.
Hazel Bradford is a reporter at sister publication Pensions & Investments.