Having lost her initial suit (and appeal) to enjoin an SEC administrative enforcement action against her, the so-called "diva of distressed," Lynn Tilton recently filed another lawsuit trying to halt her upcoming October 24 hearing before an SEC administrative law judge.
In her last suit, Tilton argued the SEC's administrative forum - particularly the selection of the ALJs who hear the proceedings - was unconstitutional under the Appointments Clause. Her new suit raises different arguments, claiming that SEC has a pattern and practice of depriving respondents of their Fifth Amendment due-process rights in administrative enforcement actions:
Plaintiffs seek a declaration that the SEC's pattern and practice of requiring enforcement cases to be tried to an initial decision in no more than 300 days regardless of their complexity, its insistence that is need not specify salient factual allegations in charging documents, its reflexive refusal to grant depositions regardless of the interests of justice, its overly narrow view of the staff's obligation to turn over exculpatory materials, and its approval of the staff's improper use of experts to introduce legal conclusions violates the constitutional rights of no only these Plaintiffs, but also similarly situated respondents in SEC administrative proceeding generally, as a matter of due process.
Complaint at ¶ 1. Although the SEC recently amended some of its administrative procedures to address some of these concerns, the new amendments do not apply to pending cases ("deliberate manipulation of the timing," alleges Tilton). I addressed the amendments here.
Tilton filed the suit September 9, Lynn Tilton et al. v. Securities and Exchange Commission, No. 16 CV 7048 (USDC S.D.N.Y.).
Thomas K. Potter, III (tpotter@burr.com) is a partner in the Securities Litigation Practice Group at Burr & Forman, LLP. Tom is licensed in Tennessee, Texas and Louisiana. He has over 29 years' experience representing financial institutions in litigation, regulatory and compliance matters. See attorney profile.
© 2016 by Thomas K. Potter, III (all rights reserved).
PartnerTom Potter is a Partner in the firm's Nashville office, and his practice focuses on securities, corporate disputes, and appellate litigation. Tom has over 35 years of experience representing business interests.
Tom represents ...
