December 29, 2016

SEC’s ALJs: Going to SCOTUS Again?

Back in September, the US Supreme Court denied cert in the Tilton case based on a constitutionality argument of the SEC’s administrative law judge framework. Now there is another split in the circuit courts over the ALJ’s constitutionality that might be heading SCOTUS’s way in the wake of the new decision, Bandimere v. SEC (we’re posting memos about this new case in our “SEC Enforcement” Practice Area). Here’s this WSJ article by Dave Michaels:

A federal appeals court dealt a strong blow to Wall Street’s top cop this week, deciding that the Securities and Exchange Commission’s in-house courts don’t meet constitutional requirements. A three-judge panel of the U.S. Court of Appeals for the 10th Circuit, based in Denver, ruled 2-1 that the SEC’s process for hiring administrative-law judges violates a clause of the U.S. Constitution that governs presidential and other appointments. The 10th Circuit’s decision, issued Tuesday, diverges from an August ruling by the U.S. Court of Appeals for the District of Columbia Circuit, which upheld the SEC’s use of its in-house courts to air claims against people accused of violating securities laws.

The SEC’s five administrative-law judges are a cornerstone of the agency’s enforcement efforts, handling most routine cases. “This is the first time that an appellate court has accepted the argument that challenges the constitutionality of the administrative-law judge system,” said Stephen Crimmins, a partner at law firm Murphy & McGonigle in Washington. “It sets up a conflict with other courts of appeals on a very important issue and it would appear ripe for a U.S. Supreme Court review to resolve that conflict.” An SEC spokesman said the agency is reviewing the court’s decision and wouldn’t immediately have further comment.

How Emotional Baggage Will Cost You!

As I wrap up a nice year of self-discovery (being an empty nester helps!), I can’t help but chuckle over this hilarious promo from Air Canada about how it intends to start charging for emotional baggage in 2017:

Air Canada announced this morning that as of 2017, passengers will be required to pay an extra fee to transport any emotional baggage they happen to be carrying with them onto their flight. Jacqueline Villeneuve, head of communications, explains that the exact amount of the fee will depend on the nature of the emotional baggage, how much space it will take up on the flight, and likely it is to interfere with the other passengers.

“When it comes to homophobia, misogyny, and deep-seated racism, we’ll be charging $500 per issue,” she explains. “That kind of emotional baggage is quite heavy and nearly impossible to store safely. It takes tremendous effort on behalf of the cabin crew to make room for those kinds of issues.” “However,” Villeneuve continues, “low-level anxiety, trust issues, fear of commitment, a sense of entitlement, or garden variety anger due to a delayed flight or a lack of gluten-free options in Terminal B – we will be happy to transport those for you for just $250.”

IPOs: Accounting & Legal Fees

Check out this “Audit Analytics” blog for the latest on legal & auditing fee levels in IPOs. One member notes that the accounting & legal fee data “trend” suffers from small sample sizes and the nature of IPO companies in the past three years…

Broc Romanek