Source: https://securitiesdiary.com/tag/timbervest-llc/
Timestamp: 2019-04-21 08:33:48+00:00

Document:
We previously wrote about the SEC’s desperate effort to avoid the assignment of Timbervest, LLC v. SEC, Civil Action No. 1:15-CV-2106 (N.D. Ga.), to District Judge Leigh Martin May. See SEC, Desperate To Avoid Judge May, Challenges Related Case Designation in Timbervest Action and SEC Argues Common “Facts” Are Not Common “Issues of Fact” — I Kid You Not. You recall that Judge May ruled in Hill v. SEC that the appointment of SEC ALJ James Grimes violated the appointments clause of Article II of the Constitution — see Court Issues Preliminary Injunction Halting Likely Unconstitutional SEC Proceeding.
Well, it appears that the SEC’s motion challenging the “related case” assignment of the Timbervest action to Judge May failed. There is no order in the docket denying the motion, but a recent scheduling order issued by Judge May suggests she will continue to preside over the case. See Timbervest v. SEC Scheduling Order. In the Order, Judge May states that the SEC must respond to plaintiffs’ Motion for a Temporary Restraining Order and/or Preliminary Injunction by June 29, plaintiffs must file a reply brief by July 16, and “the parties will attend a hearing in this matter a hearing” on July 21, in Courtroom 2107. Courtroom 2107 is listed in the N.D. Georgia directory as Judge May’s courtroom.
In the meantime, in the SEC administrative case brought against Gray Financial Group, In the Matter of Gray Financial Group, Inc. et al., File No. 3-16554, SEC ALJ Cameron Elliot declined to issue a stay of proceedings in response to an unopposed motion founded on the pending federal action for injunctive relief by Gray Financial in the same Georgia federal court, which was also assigned to Judge May. He said: “Commission Rule of Practice 161 instructs that I ‘should adhere to a policy of strongly disfavoring’ stay requests unless ‘the requesting party makes a strong showing that the denial of the request or motion would substantially prejudice their case.’ 17 C.F.R. § 201.161(b)(1). Respondents have not made such a showing. I will abide by an injunction if it is issued; however, as of now I have been instructed to resolve this proceeding within 300 days of service of the OIP.” See Order Denying Unopposed Motion To Stay Administrative Proceeding Against Gray Financial Group.
“Is the commission opposed to an easy fix?” Judge Berman asked.
“The Department of Justice is very actively considering the best litigation approach to address this issue,” Lin answered.
“I’m asking you if [appointing the judges] would solve this issue,” Judge Berman pressed, pointing out that the case pending before him had nothing to do with the SEC’s litigation strategy.
“It’s not like if we pursue one of these options this case or other cases will go away,” Lin answered, adding that changing the way it appoints its judges is not a “meaningful way” to address Judge May’s decisions or a “practical way” for it to approach its long-standing administrative court scheme.
Meanwhile, the SEC’s administrative proceeding against Laurie Bebo continues to be tried, even while the appeal of Ms. Bebo’s injunctive action moves forward in the Seventh Circuit.
The ship is plainly adrift.
This entry was posted in Administrative Proceedings, Enforcement Overreaching, SEC Enforcement, Securities Law and tagged administrative courts, administrative law judge, administrative proceeding, ALJ, ALJ Cameron Elliot, Article II, Barbara Duka, Bebo v. SEC, Cameron Eliot, Charles Hill, Duka v. SEC, Enforcement Division, equal protection, fraud, Gray Financial Group, Gray Financial Group v. SEC, Hill v. SEC, In the Matter of Bebo, In the Matter of Timbervest, In the Matter og Gray Financial Group, Inc., James Grimes, Judge Leigh Martin May, Judge Leigh May, Judge Richard Berman, Laurie Bebo, lawyer, legal analysis, Rule 10b-5, SEC, SEC ALJ James Grimes, SEC enforcement, securities, securities fraud, securities law, securities litigation, Timbervest LLC, Timbervest LLC v. SEC on June 23, 2015 by Straight Arrow.
That would seem to leave the SEC in a bit of a pickle. The Commissioners obviously thought there would be some value in gathering information on the issue of pressure on ALJs to act favorably to the Commission, which was raised by former ALJ Lillian McEwen with Wall Street Journal reporter Jean Eaglesham. See Fairness Concerns About Proliferation of SEC Administrative Prosecutions Documented by Wall Street Journal. The invitation to ALJ Elliot to supply data specific to him has now been rejected. The Commission apparently still has not acted on respondent Timbervest’s request for discovery on the issue. So what next step can the Commission take that doesn’t smack of arbitrarily ignoring the question, even after acknowledging it could be relevant? We can only wait and see. The Wall Street Journal reported that in a recent interview, Ms. McEwen explained that a sitting SEC judge would have difficulty discussing whether he or she felt pressure to favor the SEC, but that she said “she would ‘of course’ be happy to give evidence about her own experience” to the commissioners “if the agency decided to ask her for that.” See SEC Judge Declines to Submit Affidavit of No Bias.
This entry was posted in Administrative Proceedings, Enforcement Overreaching, SEC Enforcement, Securities Law and tagged administrative courts, administrative law judge, administrative proceeding, ALJ, ALJ Cameron Elliot, ALJ James Grimes, Bebo v. SEC, Cameron Elliot, constitutionality, discovery, Division of Enforcement, due process, Duka v. SEC, Enforcement Division, equal protection, Hill v. SEC, In the Matter of Timbervest LLC, Jean Eaglesham, Judge Leigh Martin May, Judge Leigh May, lawyer, legal analysis, Lillian McEwen, SEC, SEC ALJ James Grimes, SEC enforcement, securities, securities fraud, securities law, securities litigation, separation of powers, Timbervest, Timbervest LLC on June 11, 2015 by Straight Arrow.

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