Opinion ID: 3214287
Heading Depth: 3
Heading Rank: 2

Heading: The Gray Respondents

Text: The second case in this consolidated appeal was brought by Gray Financial Group, Inc. (“Gray Financial”), its founder and principal Laurence O. Gray, and its Co-Chief Executive Officer Robert C. Hubbard (collectively the “Gray respondents”). Gray Financial is an investment advisory firm registered with the SEC and the States of Georgia and Michigan. The firm provides financial 2 The court declined to reach whether the ALJ’s two-layer tenure system violated Article II’s removal protections and rejected Mr. Hill’s remaining arguments. 9 Case: 15-12831 Date Filed: 06/17/2016 Page: 10 of 37 consulting services to a variety of public and private entities. In August 2013, the Commission began investigating whether Gray Financial complied with the Georgia Public Retirement Systems Investment Authority Law (“Georgia Pension Law”), O.C.G.A. § 47-20-87. After about a year, the SEC reached a preliminary conclusion that the Gray respondents had violated federal securities laws by offering an investment fund not in compliance with the Georgia Pension Law. The SEC urged the Gray respondents to settle or else they would risk an enforcement action brought in an administrative proceeding. Based on the SEC’s threat, in February 2015 the Gray respondents filed a complaint in federal district court seeking to enjoin the impending SEC administrative proceeding and requesting a declaratory judgment that the dual layer of tenure for SEC ALJs violates the removal protections of Article II. In May 2015, the Commission served the Gray respondents with an OIP, initiating an administrative enforcement action against them. The Gray respondents then filed an amended complaint, adding the allegation that the appointments process for SEC ALJs also violates Article II. Then, on June 15, 2015, the Gray respondents filed a motion for preliminary injunction. After oral argument, the district court—with the same judge presiding as in Mr. Hill’s case—again concluded that it had subject matter jurisdiction and that the hiring of SEC ALJs violated the Appointments Clause because the ALJs were 10 Case: 15-12831 Date Filed: 06/17/2016 Page: 11 of 37 inferior officers under the Constitution. The district court thus granted the Gray respondents’ motion for a preliminary injunction. Gray Fin. Grp., Inc. v. SEC, No. 1:15-cv-0492-LMM, 2015 WL 10579873, at  (N.D. Ga. Aug. 4, 2015). The Commission appealed. Upon the respondents-appellees’ consent motion, we consolidated the Commission’s two appeals.