Richard Hong Tells Law360 that Recent Attacks on Follow-On Administrative Proceedings Are Not New

Partner Richard Hong was quoted in a Law360 article entitled “‘Jarkesy 2.0:’ SEC Sees New Attack on In-House Courts.” The article discussed a new lawsuit filed by Greek Orthodox Rev. Emmanuel Lemelson in D.C. district court last week seeking to stop the SEC from banning him from the securities industry after a Boston jury found him liable for making false or misleading statements about a company his hedge fund was shorting. His lawsuit challenges the SEC’s continued ability to seek industry bars in-house, and comes two months after the Supreme Court’s SEC v. Jarkesy ruling, which restricted the SEC’s ability to litigate fraud cases through administrative proceedings.

Richard, a former SEC trial lawyer and federal prosecutor, said the Lemelson case “is a natural outgrowth, an organic outgrowth of the many tabletop discussions the defense bar has had over the years that is now coming to life because of a conservative Supreme Court that has overruled Chevron” and other long-standing precedents like Roe v. Wade.

“These arguments attacking administrative follow-on proceedings have been around for a while,” Richard said. But he noted that the defense bar may be more emboldened to bring them after recent decisions like Jarkesy and Loper-Bright Enterprises v. Raimondo, in which the high court eliminated the Chevron deference, giving agencies more leeway in their rulemaking authority. “This is not a new vintage, this is not a wine that just came out of a winery yesterday,” Richard said.

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