SEC Counters Tilton's Supreme Court Claims

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By Rob Tricchinelli

Sept. 21 — Distressed debt financier Lynn Tilton should be forced to defend the agency's enforcement action against her before she can appeal can to the U.S. Supreme Court, the federal government told the high court Sept. 21 ( Tilton v. SEC, U.S., No. 16-A-242, 9/21/16 ).

Tilton asked the Supreme Court earlier in September to stop the SEC’s enforcement against her as she readies her constitutional challenge to the agency's in-house venue (175 SLD, 9/9/16). The U.S. Court of Appeals for the Second Circuit rejected her suit in June (106 SLD, 6/2/16).

The burden of proof is high for such a stay to be granted by the Supreme Court, and Tilton didn't meet it, the government argued in a brief signed by Ian Heath Gershengorn, acting solicitor general.

Prospect of Victory

To stop the SEC's action, Tilton has to show that the court is likely to take up her challenge, a “fair prospect” that the justices would decide in her favor and irreparable harm if they don't step in immediately. The government said her application failed on all three counts.

Tilton argued that her ability to run Patriarch Partners LLC was jeopardized by the agency's enforcement action and that the SEC's administrative law judges are appointed unconstitutionally.

Justice Ruth Bader Ginsburg had requested a response from the SEC.

Tilton's challenge is one of many against the ALJs, even as the D.C. Circuit held in August that the forum is constitutional (154 SLD, 8/10/16).

To contact the reporter on this story: Rob Tricchinelli in Washington at rtricchinelli@bna.com

To contact the editor responsible for this story: Susan Jenkins at sjenkins@bna.com .

For More Information

For the government's response, visit http://src.bna.com/iNp

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