Altman v. United States Securities & Exchange Commission
768 F. Supp. 2d 554
S.D.N.Y.2011Background
- Altman sued the SEC seeking to stay SEC proceedings and vacate a lifetime ban imposed after an administrative hearing and SEC appeal.
- SEC investigated Harrison Securities and Blummer in 2003; Rosen of Nextgen provided information to the SEC but later declined cooperation.
- Altman, Rosen’s attorney, advised Rosen and engaged in communications that the SEC treated as offering to have Rosen testify falsely for financial gain.
- Recordings of Altman-Einhorn conversations suggested a scheme to induce Rosen to evade SEC testimony; ALJ found Rosen unreliable but Harrison/Blummer liable.
- In 2008 the SEC’s OGC charged Altman with unethical conduct; the ALJ in 2009 found violations of NY law and SEC rules, recommending nine months’ denial before SEC.
- On Nov. 10, 2010 the SEC affirmed and upgraded the sanction to a lifetime ban; Altman filed suit in SDNY on Dec. 7, 2010 seeking relief and review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court may hear Altman’s challenge despite the Exchange Act review scheme | Altman argues district court jurisdiction per Free Enterprise Fund. | SEC maintains exclusive appellate review under 15 U.S.C. §78y(a)(1). | Court lacks jurisdiction; must dismiss. |
| whether Free Enterprise governs preclusion or is distinguishable | Altman relies on Free Enterprise to bypass §78y review. | Free Enterprise is distinguishable; PCAOB not at issue here. | Distinguishable; no district-court review. |
| Whether Touche Ross supports district-court jurisdiction over SEC disciplinary challenges | Altman cites Touche Ross to avoid SEC procedures. | Touche Ross narrowly read; not controlling here. | Not controlling; jurisdiction remains in Court of Appeals. |
Key Cases Cited
- Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994) (preclusion of district-court review for constitutional challenges when meaningful appellate review exists)
- Free Enterprise Fund v. Public Company Accounting Oversight Bd., 130 S. Ct. 3138 (2010) (constitutional challenges may be reviewed in district court only in limited circumstances)
- Touche Ross & Co. v. SEC, 609 F.2d 570 (2d Cir. 1979) (SEC rulemaking authority and review scheme; narrowly construed in later context)
- Barbara v. New York Stock Exchange, Inc., 99 F.3d 49 (2d Cir. 1996) (exclusive statutory review limits district-court jurisdiction over certain disciplinary actions)
- Massieu v. Reno, 91 F.3d 416 (3d Cir. 1996) (precludes district-court review for some immigration-related review provisions)
- Massieu v. Reno, 91 F.3d 416 (3d Cir. 1996) ((duplicate entry retained for completeness))