SEC Loses Second Round in Battle Over In-House Judges
- Appeals court halts SEC hearing for Diva of Distressed Tilton
- Agency says `ability to enforce securities laws' is at stake
The SEC lost twice Thursday in bids to preserve its internal court system for meting out justice in the securities markets, but there may be light at the end of the tunnel at least in one case.
A federal appeals court in Manhattan on Thursday agreed to halt an in-house hearing for Lynn Tilton, known as the Diva of Distressed, which was set to begin Oct. 13. The SEC accuses Tilton and her firm, Patriarch Partners, of misleading investors about the value of risky pools of corporate loans.
Tilton had asked the appeals court Wednesday for the delay until she can fully challenge a lower court’s ruling that federal court judges don’t have authority to hear her claims that the regulator’s process is unconstitutional. U.S. District Judge Ronnie Abrams in June ruled Tilton must go through the SEC’s administrative process before challenging the handling of her case or its outcome.