# Cochran v. SEC

> Court of Appeals for the Fifth Circuit · December 13, 2021 · 20 F.4th 194

URL: https://www.frixlaw.com/law-library/cases/5134547

## Case

- **Court:** Court of Appeals for the Fifth Circuit
- **Decided:** December 13, 2021
- **Citations:** 20 F.4th 194
- **Precedential status:** Published
- **Opinion:** Opinion
- **Nature of suit:** Civil Rights
- **Cited by:** 27 later opinions in the Frix Law Library

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## Opinion text

Case: 19-10396 Document: 00516128227 Page: 1 Date Filed: 12/13/2021

United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit

FILED
December 13, 2021
No. 19-10396
Lyle W. Cayce
Clerk
Michelle Cochran,

Plaintiff—Appellant,

versus

U.S. Securities and Exchange Commission; Gary
Gensler, in his official capacity as Chairman of the U.S. Securities and
Exchange Commission; Merrick Garland, U.S. Attorney General,

Defendants—Appellees.

Appeal from the United States District Court
for the Northern District of Texas
USDC No. 4:19-CV-66

Before Owen, Chief Judge, and Jones, Smith, Stewart, Dennis,
Elrod, Southwick, Haynes, Graves, Higginson, Costa,
Willett, Duncan, Engelhardt, Oldham, and Wilson, Circuit
Judges. 1

1
Judge Ho is recused and did not participate in this decision.
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Haynes, Circuit Judge, joined by Jones, Smith, Elrod, Willett, 2
Duncan, Engelhardt, Oldham, and Wilson, Circuit Judges:
The question presented is whether a provision of the Securities
Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. § 78y, implicitly strips
federal district courts of subject-matter jurisdiction to hear structural
constitutional claims. The district court held yes, and a panel of our court
affirmed. Rehearing the case en banc, we determine that the Exchange Act
does not disturb the district court’s jurisdiction over such claims.
Therefore, as explained below, we AFFIRM the district court’s
judgment in part, REVERSE in part, and REMAND for further
proceedings consistent with this opinion.
I. Background
In April 2016, the Securities and Exchange Commission (“SEC”)
brought an enforcement action against Michelle Cochran, a certified public
accountant. The SEC alleged that Cochran violated the Exchange Act by,
inter alia, failing to comply with auditing standards issued by the Public
Company Accounting Oversight Board (“PCAOB”) when performing
quarterly reviews and annual audits between 2010 and 2013. After a hearing,
an SEC administrative law judge (“ALJ”) ruled against Cochran, imposing a
$22,500 penalty and a five-year ban on practicing before the SEC. The SEC
adopted the ALJ’s decision. Cochran objected.
Before the SEC ruled on Cochran’s objection, the Supreme Court
intervened. In Lucia v. SEC, the Court held that SEC ALJs are officers of the

2
Judge Willett concurs in the judgment because he believes this case is
controlled by Free Enterprise Fund v. Public Co. Accounting Oversight Board, 561 U.S. 477,
489 (2010) (“[T]he text [of § 78y] does not expressly limit the jurisdiction that other
statutes confer on district courts. See, e.g., 28 U.S.C. §§ 1331, 2201.”).

2
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United States under the Appointments Clause, who must be appointed by
the President, a court of law, or a department head. 138 S. Ct. 2044, 2049,
2051 & n.3 (2018). Because the ALJ who had issued the initial decision in
Lucia had not been appointed by a person or entity in one of those three
categories (but had instead been appointed by SEC staff members), the Court
remanded the case to the SEC for further proceedings before a
constitutionally appointed ALJ. Id. at 2050, 2055.
In response to Lucia, the SEC remanded all pending administrative
cases for new proceedings before constitutionally appointed ALJs. 3
Cochran’s case was reassigned to a new ALJ.
Cochran filed suit in federal district court to enjoin the SEC’s
administrative enforcement proceedings against her. Though the SEC had
fixed the appointment problem Lucia addressed, Cochran contended it did
not fix a removability problem Lucia declined to reach: she alleged that,
because SEC ALJs enjoy multiple layers of “for-cause” removal protection,
they are unconstitutionally insulated from the President’s Article II removal
power. Cochran also asserted that the SEC violated her due process rights
by failing to adhere to its own rules and procedures.
The district court dismissed Cochran’s case for lack of subject-matter
jurisdiction, reasoning that because § 78y permits judicial review of final SEC
orders in the courts of appeals, the Exchange Act implicitly strips district
courts of jurisdiction to hear challenges to ongoing SEC enforcement
proceedings. In the district court’s view, Cochran was required to raise her
constitutional claims in the ALJ proceeding and then petition for review in
the Fifth Circuit or the District of Columbia Circuit if she was dissatisfied

3
The SEC had previously cured the constitutional defect identified in Lucia by
ratifying the appointment of all of its ALJs.

3
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with the outcome. Cochran timely appealed, and we enjoined the SEC
administrative proceedings pending appeal.
Subsequently, a panel of this court affirmed the district court’s
dismissal of Cochran’s claims for lack of jurisdiction. Cochran v. SEC,
969 F.3d 507, 511–18 (5th Cir. 2020). Although there was no disagreement
on the ultimate decision to affirm as to Cochran’s due process claim, the
panel reached a 2-1 decision affirming on the removal power claim. See id. at
518 & n.1 (Haynes, J., dissenting in part). We then granted rehearing en banc.
Cochran v. SEC, 978 F.3d 975 (5th Cir. 2020) (mem.).
II. Jurisdiction and Standard of Review
The sole issue on appeal is whether the district court had subject-
matter jurisdiction over Cochran’s claims. 4 Nevertheless, the district court
undoubtedly had “jurisdiction to determine its own jurisdiction.” United
States v. Ruiz, 536 U.S. 622, 628 (2002). We have appellate jurisdiction
under 28 U.S.C. § 1291. We review de novo a district court’s dismissal for
lack of subject-matter jurisdiction. Rothe Dev., Inc. v. U.S. Dep’t of Def.,
666 F.3d 336, 338 (5th Cir. 2011).

4
In her en banc briefing, Cochran does not argue that the district court erred by
dismissing her due process claim. At oral argument, however, Cochran’s counsel insisted
that Cochran had not abandoned that claim. It is well established that a litigant cannot
resuscitate an abandoned claim by raising it at oral argument. See United States v. Menesses,
962 F.2d 420, 425–26 (5th Cir. 1992) (holding that a litigant waived an argument by failing
to brief the issue, instead raising it for the first time at oral argument). Accordingly, we
conclude that Cochran has abandoned her due process claim and therefore affirm the
district court’s dismissal of it. See Coke v. Gen. Adjustment Bureau, 640 F.2d 584, 586 n.2
(5th Cir. Mar. 1981) (en banc) (“[The party] has not renewed this argument in his briefs to
the en banc court, and we therefore consider the argument to have been abandoned.”);
Justiss Oil Co. v. Kerr-McGee Refin. Corp., 75 F.3d 1057, 1067 (5th Cir. 1996) (explaining
that “[w]hen an appellant fails to advance arguments in the body of its brief in support of
an issue it has raised on appeal, we consider such issues abandoned”).

4
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III. Discussion
The SEC presents two bases for affirming the district court. First, the
SEC argues that Congress implicitly stripped district courts of jurisdiction to
hear structural constitutional claims under § 78y. Second, the SEC argues
that Cochran’s claims are not yet ripe. We discuss and reject each argument
in turn.
A. Implicit Jurisdiction Stripping
We first consider the text of § 78y. We conclude that it did not
explicitly or implicitly strip the district court of jurisdiction over Cochran’s
claim. We next consider Supreme Court precedent. The Supreme Court has
already rejected the SEC’s precise jurisdictional argument under § 78y, so we
do the same. Finally, we independently consider the so-called “Thunder
Basin factors.” We conclude those factors do not warrant departing from the
statutory text or deviating from the Supreme Court’s interpretation of § 78y.
1. Statutory Text
Congress gave federal district courts jurisdiction over “all civil actions
arising under the Constitution.” 28 U.S.C. § 1331 (emphasis added). Not
some or most—but all. It is undisputed that Cochran’s removal power claim
arises under the Constitution. Moreover, the Supreme Court has repeatedly
told us that “when a federal court has jurisdiction, it also has a ‘virtually
unflagging obligation . . . to exercise that authority.’” Mata v. Lynch,
576 U.S. 143, 150 (2015) (ellipsis in original) (quoting Colo. River Water
Conservation Dist. v. United States, 424 U.S. 800, 817 (1976)); see, e.g.,
Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996) (“We have often
acknowledged that federal courts have a strict duty to exercise the
jurisdiction that is conferred upon them by Congress.”).

5
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It is true, however, that Congress can limit district court jurisdiction
if it so chooses. See Sheldon v. Sill, 49 U.S. 441, 449 (1850) (confirming
congressional control over lower federal court jurisdiction). The SEC argues
that Congress chose to limit district court jurisdiction by enacting § 78y.
That section provides, in relevant part:
A person aggrieved by a final order of the Commission entered
pursuant to this chapter may obtain review of the order in the
United States Court of Appeals for the circuit in which he
resides or has his principal place of business, or for the District
of Columbia Circuit, by filing in such court, within sixty days
after the entry of the order, a written petition requesting that
the order be modified or set aside in whole or in part.
15 U.S.C. § 78y(a)(1). By giving some jurisdiction to the courts of appeals,
the SEC argues, Congress implicitly stripped all jurisdiction from every other
court—including district courts’ jurisdiction over removal power claims
under § 1331.
In assessing the merits of this argument, “[w]e start, of course, with
the statutory text.” BP Am. Prod. Co. v. Burton, 549 U.S. 84, 91 (2006). See
generally Salinas v. U.S. R.R. Ret. Bd., 141 S. Ct. 691, 698 (2021) (noting that
there is a “strong presumption favoring judicial review of administrative
action” that the Government may rebut only by carrying the “‘heavy
burden’ of showing that the statute’s ‘language or structure’ forecloses
judicial review” (quoting Mach Mining, LLC v. EEOC, 575 U.S. 480, 486
(2015))). The text of § 78y conflicts with the SEC’s position in three ways.
First, § 78y provides that only “person[s] aggrieved by a final order of
the Commission” may petition in the relevant court of appeals to review that
final order. The statute says nothing about people, like Cochran, who have
not yet received a final order of the Commission. Nor does it say anything
about people, again like Cochran, who have claims that have nothing to do

6
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with any final order that the Commission might one day issue. Cochran’s
removal power claim challenges the constitution of the tribunal, not the
legality or illegality of its final order. Her injury has absolutely nothing
whatsoever to do with a final order, and therefore her claim falls outside of
§ 78y. 5
Second, § 78y(a)(1) is phrased in permissive terms. It says a person
aggrieved by a final order “may” petition for review in the court of appeals.
But it does not say that anyone “shall” or “shall not” do anything. It would
be troublingly counterintuitive to interpret § 78y(a)(1)’s permissive language
as eliminating alternative routes to federal court review, especially in the
context of separation-of-powers claims of the sort at issue here. See Burton,
549 U.S. at 91 (“[S]tatutory terms are generally interpreted in accordance
with their ordinary meaning.”); cf. Collins v. Yellen, 141 S. Ct. 1761, 1780
(2021) (explaining that, generally, “whenever a separation-of-powers
violation occurs, any aggrieved party with standing may file a constitutional
challenge” in federal court because “the separation of powers is designed to
preserve the liberty of all the people”).
Third, § 78y elsewhere uses mandatory terms—and they confirm our
understanding that Congress did not strip district courts of § 1331

5
Here’s a different way of saying the same thing. Imagine two different SEC
investigation targets, Jane and Sue. Jane thinks the SEC is investigating her unfairly and
that she’s innocent. Implicit jurisdiction stripping helps the SEC avoid judicial review of
Jane’s claims until after the completion of its enforcement proceeding and the issuance of
a final order. The SEC could argue, by giving Jane the right to challenge a final order in
§ 78y, Congress implicitly stripped Jane’s right to pre-enforcement review before the
issuance of a final order. But what about Sue? Sue is aggrieved by the fact that her ALJ is
unconstitutionally appointed. Section 78y cannot strip jurisdiction over Sue’s claims
because Sue is completely outside the statute from the word go. The only way for the SEC
to avoid judicial review of Sue’s claims is to say that Congress implicitly stripped review of
Jane’s claims and that implicitly also stripped review of Sue’s. It’s implicit stripping
squared.

7
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jurisdiction over structural constitutional claims. Under § 78y(a)(3),
jurisdiction “becomes exclusive” in the court of appeals only after (1) the
SEC issues a final order, (2) an aggrieved party files a petition, and (3) the
SEC submits its administrative record. The use of the word “exclusive” in
§ 78y(a)(3) shows that Congress knew how to strip jurisdiction when it
wanted to—and it only highlights that Congress did not strip § 1331
jurisdiction elsewhere. 6 Cf. Vaden v. Discover Bank, 556 U.S. 49, 59 n.9
(2009) (“[W]hen Congress wants to expand [federal-court] jurisdiction, it
knows how to do so clearly and unequivocally.” (second alteration in
original) (citation omitted)). The SEC’s contrary position would effectively
write § 78y(a)(3) out of the statute—there would be no point in making
jurisdiction “exclusive” in the court of appeals if no other court ever had
jurisdiction. We are loath to reach such a result. See Duncan v. Walker, 533
U.S. 167, 174 (2001) (noting that courts are “‘reluctan[t] to treat statutory
terms as surplusage’ in any setting” (alteration in original) (quoting Babbitt
v. Sweet Home Chapter of Cmtys. for a Great Or., 515 U.S. 687, 698 (1995))).
Consequently, the text of § 78y does not support the SEC’s position with
respect to Cochran’s removal power claim. 7

6
Similarly, the statute’s use of the linking verb “become” adds a temporal
element, telling us that the subject (“jurisdiction”) is only linked to the complement
(“exclusive”) after a petition is filed. In contrast, for example, the statute could have said
that jurisdiction “is exclusive,” or that the court of appeals “has exclusive jurisdiction.”
See, e.g., 15 U.S.C. § 717r(d)(1) (providing that “[t]he United States Court of
Appeals . . . shall have original and exclusive jurisdiction over any civil action for the review
of an order or action of a Federal agency”). But the use of “becomes” necessarily implies
a transformation.
7
Our holding is limited to the specific removal power claim at issue here; as this is
not a “mine-run” securities law case, we do not consider the question of whether the text
of the Exchange Act evinces an intent to strip district courts of jurisdiction over claims that
actually relate to a final SEC order.

8
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2. Free Enterprise Fund
Any doubts we might have were put to rest by the Supreme Court’s
decision in Free Enterprise Fund v. Public Co. Accounting Oversight Board, 561
U.S. 477 (2010). In Free Enterprise Fund, the Supreme Court rejected the
precise argument the SEC makes here—that the Exchange Act divests
district courts of jurisdiction over removal power challenges. See id. at 489.
Hence, Free Enterprise Fund is squarely on point, foreclosing any possibility
that § 78y strips district courts of jurisdiction over structural constitutional
challenges.
In Free Enterprise Fund, the PCAOB inspected an accounting firm,
issued a report criticizing its auditing practices, and opened a formal
investigation. Id. at 487. The accounting firm (and a nonprofit organization
it belonged to) then filed suit in federal district court, seeking a declaratory
judgment that the PCAOB was unconstitutionally structured, as well as an
injunction preventing the PCAOB from exercising its powers. Id. The
accounting firm argued that the PCAOB’s double for-cause removal
protection violated the President’s Article II removal power. Id. It also
asserted that the members of the PCAOB had not been properly appointed
under the Appointments Clause. Id. at 487–88. Just as it does now, the
Government maintained that § 78y deprived the district court of jurisdiction
to hear the accounting firm’s constitutional challenges. 8 Id. at 489.
The Supreme Court rejected the Government’s argument and held
“the text [of § 78y] does not expressly limit [district court]
jurisdiction . . . . Nor does it do so implicitly.” Id. In reaching that result, the

8
According to the Government, § 78y was relevant in Free Enterprise Fund because
the SEC had the power “to review any [PCAOB] rule or sanction”; thus, § 78y permitted
review of PCAOB actions that were ratified as final SEC orders. 561 U.S. at 489.

9
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Court explained that “we presume that Congress does not intend to limit
jurisdiction if [1] ‘a finding of preclusion could foreclose all meaningful
judicial review’; [2] if the suit is ‘wholly collateral to a statute’s review
provisions’; and [3] if the claims are ‘outside the agency’s expertise.’” Id.
(quoting Thunder Basin Coal Co. v. Reich, 510 U.S. 200, 212–13 (1994) (laying
out these considerations, referred to as the “Thunder Basin factors”)).
First, the Court determined that the Government’s theory would
foreclose all meaningful judicial review because “[s]ection 78y provides only
for judicial review of [SEC] action, and not every [PCAOB] action is
encapsulated in a final [SEC] order or rule.” Id. at 490. The Court explained
that the PCAOB’s investigation of the accounting firm had not led to any
sanction and that the PCAOB’s critical inspection report was not subject to
judicial review. Id.
Second, the Court determined that the accounting firm’s challenge
was “collateral” to § 78y’s review provisions because it “object[ed] to the
[PCAOB]’s existence, not to any of its auditing standards.” Id. Thus, the
Court rejected the Government’s suggestion that the accounting firm could
have sought SEC review of a PCAOB rule or regulation, as such a challenge
would have been a pointless pretext for its structural constitutional claims.
Id. (noting that “[r]equiring petitioners to select and challenge a [PCAOB]
rule at random [would be] an odd procedure for Congress to choose”).
Finally, the Court held that the accounting firm’s constitutional
claims were outside the SEC’s expertise because they were “standard
questions of administrative law” that did not require any “fact-bound
inquiries” or “‘technical considerations of [agency] policy.’” Id. at 491
(alteration in original) (quoting Johnson v. Robinson, 415 U.S. 361, 373 (1974)).
Consequently, the Court concluded that § 78y did not deprive the district
court of jurisdiction over the accounting firm’s constitutional claims. Id.

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Just like Free Enterprise Fund, this case concerns the question of
whether the Exchange Act divests district courts of jurisdiction to consider
removal power challenges; every material aspect of the Supreme Court’s
reasoning in Free Enterprise Fund would seem to apply with equal force here.
Nevertheless, the SEC urges us to depart from Free Enterprise Fund, even
though that case involved the same statutory-review scheme and the same
type of constitutional claim.
The SEC primarily argues that Free Enterprise Fund is distinguishable
because, in that case, the PCAOB had not yet commenced an administrative
proceeding against the plaintiff accounting firm. Since Cochran is already in
the midst of an administrative proceeding, and that proceeding could
eventually result in a final SEC order that Cochran may challenge under
§ 78y, the SEC contends that she has a meaningful opportunity for judicial
review. Yet, this difference lacks meaning: although Cochran’s case is
farther along than in Free Enterprise Fund, she is still not guaranteed an
adverse final order, as the SEC might resolve her case in her favor. Hence,
just as in Free Enterprise Fund, it remains possible that Cochran will not be
able to obtain judicial review over her removal power claim unless the district
court hears it now. In short, Free Enterprise Fund still controls. 9

9
The dissenting opinion attempts to salvage the SEC’s “enforcement-
investigation distinction” on the basis that permitting district court jurisdiction over
challenges to pending enforcement proceedings would disrupt the statutory scheme. See
Dissenting Op. at 88 n.15. Of course, given the Supreme Court’s decision in Free Enterprise
Fund, the dissenting opinion is forced to concede that district court jurisdiction over
challenges to SEC investigations does not disrupt the statutory scheme. Id. Yet, the
dissenting opinion fails to point to anything in the text of the Exchange Act or in Free
Enterprise Fund that distinguishes between investigation and enforcement. Consequently,
we see no basis for supposing that permitting judicial review over ongoing SEC
enforcement proceedings would be more disruptive than judicial review over SEC
investigations.

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Nevertheless, the SEC asserts that other circuits have adopted its
view of Free Enterprise Fund and held that the Exchange Act strips district
courts of jurisdiction over structural constitutional claims. 10 But the other
circuits are not as unanimous as they appear, as their decisions have drawn
powerful dissents that largely support our position. See Tilton v. SEC, 824
F.3d 276, 292 (2d Cir. 2016) (Droney, J., dissenting) (“I conclude that Free

10
See Tilton v. SEC, 824 F.3d 276, 281–91 (2d Cir. 2016) (concluding that the
Exchange Act precluded district court jurisdiction over an Appointments Clause challenge
to an ongoing SEC proceeding); Bennett v. SEC, 844 F.3d 174, 186 (4th Cir. 2016)
(concluding that § 78y precluded district court jurisdiction over a removal power claim and
reasoning that Free Enterprise Fund did not control because the plaintiff was “already
embroiled in an enforcement proceeding”); Bebo v. SEC, 799 F.3d 765, 774–75 (7th Cir.
2015) (same); Hill v. SEC, 825 F.3d 1236, 1248, 1252 (11th Cir. 2016) (same); Jarkesy v.
SEC, 803 F.3d 9, 20, 30 (D.C. Cir. 2015) (holding that § 78y precluded district court
jurisdiction over various constitutional claims, including a nondelegation doctrine claim,
and determining that Free Enterprise Fund did not control because the plaintiff was “already
properly before the [SEC] by virtue of his alleged violations of [the securities] laws”); see
also Axon Enter., Inc. v. FTC, 986 F.3d 1173, 1182–83 (9th Cir. 2021) (holding that the
district court lacked jurisdiction to hear a pre-enforcement removal power challenge
regarding Federal Trade Commission ALJs and embracing the reasoning of Tilton, Bennett,
Bebo, Hill, and Jarkesy).
We note that several of the other circuits relied on their own precedents in
concluding that the plaintiffs’ claims were precluded. See Tilton, 824 F.3d at 285; Hill, 825
F.3d at 1248; Jarkesy, 803 F.3d at 19, 22, 24, 26, 29–30. It is likely that these courts were
required to follow their own prior decisions. See Christiansen v. Omnicom Grp., Inc., 852
F.3d 195, 199 (2d Cir. 2017) (per curiam) (explaining that the court is “bound by the
decisions of prior panels until such time as they are overruled either by an en banc panel of
our Court or by the Supreme Court” (quoting United States v. Wilkerson, 361 F.3d 717, 732
(2d Cir. 2004))); In re Burgest, 829 F.3d 1285, 1287 (11th Cir. 2016) (per curiam) (same);
United States v. Eshetu, 898 F.3d 36, 37 (D.C. Cir. 2018) (per curiam) (noting that “one
panel cannot overrule another”). By contrast, an en banc decision allows us to consider
again any prior precedents, although we do not have any that require a different outcome
here, as we explain. See United States v. Anderson, 885 F.2d 1248, 1255 (5th Cir. 1989) (en
banc) (noting that, when sitting en banc, we do not “hesitate[]” to overrule incorrect panel
decisions). Thus, we are free to focus exclusively on the Supreme Court’s precedents;
based on those precedents, we are bound to rule in Cochran’s favor, despite our reluctance
to disagree with our fellow circuits.

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Enterprise controls here.”); Axon Enter., Inc. v. FTC, 986 F.3d 1173, 1196 (9th
Cir. 2021) (Bumatay, J., concurring in part and dissenting in part) (addressing
a different statute and concluding, based on Free Enterprise Fund, “that all
three Thunder Basin factors—meaningful review, wholly collateral, and
agency expertise—favor[ed] district court jurisdiction” over the plaintiff’s
removal power claim). Moreover, the consensus view is not always correct.
See, e.g., Rehaif v. United States, 139 S. Ct. 2191, 2201 (2019) (Alito, J.,
dissenting) (noting that Rehaif rejected an interpretation of the relevant
statute that had “been adopted by every single Court of Appeals to address
the question”). So the SEC’s tallying of the circuits does not change our
conclusion.
The SEC also relies on Bank of Louisiana v. FDIC, where we discussed
the “ongoing proceeding” distinction in holding that the district court lacked
jurisdiction over a separation-of-powers challenge to an administrative
proceeding before the Federal Deposit Insurance Corporation (“FDIC”).
919 F.3d 916, 925–27, 930 (5th Cir. 2019). Critically, the statutory-review
scheme at issue in that case differed in a key respect from the Exchange Act’s:
in Bank of Louisiana, the scheme included an explicit statutory bar on any
court enjoining “the issuance or enforcement of any . . . [FDIC] order.” Id.
at 920 (quoting 12 U.S.C. § 1818(i)(1)). Accordingly, we held that district
court jurisdiction was explicitly divested. Id. at 924 (explaining that “the plain
terms of section 1818(i) bar jurisdiction here”). Although we proceeded to
analyze the Thunder Basin factors, we did so merely to “reinforce” our
conclusion based on the explicit jurisdictional bar. Id. at 925. Consequently,
we clarify that Bank of Louisiana was addressing the explicit statute at issue
there—not all statutes that may be questioned—and it does not mandate the
outcome here. Thus, the SEC’s effort to rely on Bank of Louisiana is
unconvincing.

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3. The Supreme Court’s Other Precedents
As stated above, Free Enterprise Fund is enough to decide this case.
However, because the SEC contends otherwise, we will proceed by assuming
arguendo that we cannot rely exclusively on Free Enterprise Fund and conduct
a further analysis using the so-called “Thunder Basin factors.” Before doing
so, it is necessary to review the Supreme Court’s two other major precedents
on implicit jurisdiction stripping, Thunder Basin itself and Elgin v. Department
of Treasury, 567 U.S. 1 (2012).
i. Thunder Basin
In Thunder Basin, the Supreme Court set forth the framework now
used to determine whether Congress implicitly precluded initial judicial
review by creating a statutory framework that delegates initial review to an
administrative agency. See 510 U.S. at 207. First, the Court considered
whether Congress’s intent to preclude district court jurisdiction was “fairly
discernible in the statutory scheme.” Id. (quoting Block v. Cmty. Nutrition
Inst., 467 U.S. 340, 351 (1984)). Then, it addressed whether the claims at
issue could “be afforded meaningful review” if the agency considered the
claims first. Id. To determine whether a claimant would receive meaningful
judicial review, the Court considered three factors: (1) whether “a finding of
preclusion could foreclose all meaningful judicial review”; (2) whether the
claims were “‘wholly “collateral”’ to a statute’s review provisions”; and
(3) whether the claims were “outside the agency’s expertise.” Id. at 212–13
(quoting Heckler v. Ringer, 466 U.S. 602, 618 (1984)).
Then the Court applied that framework to the Federal Mine Safety
and Health Amendments Act of 1977 (the “Mine Act”), 30 U.S.C. §§ 811–
26. Like the Exchange Act, the Mine Act provides a detailed statutory
scheme for review of administrative orders. In particular, mine operators are
able to challenge adverse orders before the Federal Mine Safety and Health

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Review Commission (the “Mine Commission”). Thunder Basin, 510 U.S. at
207 (citing 30 U.S.C. § 815(a) and (d)). Such challenges are heard before an
ALJ. Id. at 207–08. The Mine Commission may review the ALJ’s decision
or simply permit it to become the Commission’s final order. Id. at 208 n.9.
Aggrieved persons may appeal adverse Mine Commission decisions to a
court of appeals. Id. at 208 (citing 30 U.S.C. § 816(a)(1)–(2)). Like the SEC
in this case, the Department of Labor argued that the Mine Act’s review
scheme prevented district courts from exercising subject-matter jurisdiction
over pre-final decision challenges to the Mine Act. Id. at 202.
The Supreme Court held that the Mine Act’s detailed statutory
scheme evidenced Congress’s intent to preclude district court jurisdiction
over pre-enforcement challenges. Id. at 207–10. Further, the Court
determined that the Mine Commission had exclusive original jurisdiction
over claims like the plaintiff mine operator’s National Labor Relations Act
(“NLRA”) and due process claims. Id. at 216. Although the Mine
Commission had no particular experience with the NLRA, the mine
operator’s claims were ultimately about interpretation of the Mine Act’s
posting requirement. Id. at 214–15. That is, the mine operator’s NLRA
challenge was not “wholly collateral” to the provisions of the Mine Act and
was actually “squarely within the Commission’s expertise.” Id. at 212, 214.
Further, even if the operator’s constitutional claim was “beyond” the Mine
Commission’s jurisdiction, the operator’s “statutory and constitutional
claims . . . [could] be meaningfully addressed in the Court of Appeals.” Id.
at 215 (citation omitted).
Finally, the Court held that the mine operator had a meaningful
opportunity for judicial review of its claims. Id. at 216–18. The Court
determined that compliance with the posting requirement would not be
overly burdensome for the mine operator because the operator’s fear that its
NLRA rights would be violated was “speculative” and any such violation

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could be separately remedied. Id. Further, despite the fact that the Mine
Act’s penalties were “onerous,” the Court concluded that they did not have
the “practical effect” of “foreclos[ing] all access to the courts” because they
would not become “final and payable” until after appellate review. Id. at 218.
Thus, the mine operator did not face “a constitutionally intolerable choice.”
Id. Consequently, the Court held that the Mine Act was intended to preclude
district court review of the mine operator’s claims and that those claims
could be meaningfully reviewed. Id.
ii. Elgin
Decided two years after Free Enterprise Fund, Elgin is the Supreme
Court’s most recent application of the Thunder Basin factors. Although the
case further illustrated the framework, it did not break new ground.
In Elgin, the Supreme Court considered whether the Civil Service
Reform Act of 1978 (“CSRA”), Pub. L. No. 95-454, 92 Stat. 1111, “provides
the exclusive avenue to judicial review when a qualifying employee
challenges an adverse employment action by arguing that a federal statute is
unconstitutional.” 567 U.S. at 5. Just as it did in Free Enterprise Fund, the
Elgin Court applied the Thunder Basin factors.
First, the Elgin Court held that the CSRA’s “elaborate” statutory-
review scheme evidenced Congress’s intent to foreclose district court
jurisdiction. Id. at 10–13. Next, the Court rejected the plaintiff-employees’
argument that the Thunder Basin factors indicated that their claims were not
the type Congress intended to be reviewed through the CSRA. Id. at 15–16.
The Court concluded that the CSRA offered the plaintiffs meaningful review
of their claims because the Federal Circuit was “fully competent to
adjudicate [those] claims” on appeal. Id. at 17. Then the Court held that the
plaintiffs’ claims were not “wholly collateral” to the CSRA’s statutory-
review scheme because these claims were “the vehicle by which [plaintiffs]

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seek to reverse the removal decisions,” and the CSRA scheme was designed
to process removal challenges. Id. at 21–22. Finally, the Court determined
that the Merit Systems Protection Board (“MSPB”)’s expertise was still
relevant because there were many “preliminary questions unique to the
employment context [that could] obviate the need to address the
constitutional challenge.” Id. at 22–23. Consequently, the Court ruled that
“the CSRA review scheme was intended to preclude district court
jurisdiction over [the employees’] claims.” Id. at 23.
iii. Application of the Thunder Basin Factors
We follow Free Enterprise Fund in breaking the Thunder Basin analysis
down into two steps: first, whether a “‘statutory scheme’ displays a ‘fairly
discernible’ intent to limit jurisdiction,” and second, whether “the claims at
issue ‘are of the type Congress intended to be reviewed within th[e] statutory
structure.’” 561 U.S. at 489 (quoting Thunder Basin, 510 U.S. at 207, 212).
At step two, “we presume that Congress does not intend to limit jurisdiction
if [1] ‘a finding of preclusion could foreclose all meaningful judicial review’;
[2] if the suit is ‘wholly collateral to a statute’s review provisions’; and [3] if
the claims are ‘outside the agency’s expertise.’” 11 Id.

11
At no point did the Elgin Court say or suggest that it was changing the Thunder
Basin inquiry or overruling all or part of Free Enterprise Fund, which is yet another reason
we remain bound by Free Enterprise Fund. We “should not lightly assume that a prior
decision has been overruled sub silentio merely because its reasoning and result appear
inconsistent with later cases.” Williams v. Whitley, 994 F.2d 226, 235 (5th Cir. 1993). As
between the directly on-point decision (Free Enterprise Fund) and some other decision
(Elgin), we must follow the former—even if we think it is inconsistent with the latter: “We
reaffirm that ‘[i]f a precedent of this Court has direct application in a case, yet appears to
rest on reasons rejected in some other line of decisions,’ the Court of Appeals should follow
the case which directly controls, leaving to this Court the prerogative of overruling its own
decisions.” Agostini v. Felton, 521 U.S. 203, 237 (1997) (emphasis added) (quoting
Rodriguez de Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477, 484 (1989)); see also
Bryan A. Garner et al., The Law of Judicial Precedent 302 (2016).

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Assuming arguendo that Congress intended § 78y to have a
jurisdiction-stripping effect as to some securities-law claims, we advance to
step two and hold that Cochran’s removal power claim is not the type of
claim Congress intended to funnel through the Exchange Act’s statutory-
review scheme. Our conclusion is supported by the “wholly collateral,”
“agency expertise,” and “meaningful judicial review” Thunder Basin
factors.
First, Cochran’s removal power claim is wholly collateral to the
Exchange Act’s statutory-review scheme. Elgin suggests that whether a
claim is collateral to the relevant statutory-review scheme depends on
whether that scheme is intended to provide the sort of relief sought by the
plaintiff. 567 U.S. at 22 (ruling that the employees’ claims were not “wholly
collateral to the CSRA scheme” because they were “requesting relief that
the CSRA routinely affords”). This rule accords with Thunder Basin:
although the mine operator in that case brought claims under the NLRA and
the Constitution, it ultimately sought to avoid compliance with the Mine
Act’s posting requirement. 510 U.S. at 205, 213–14. By contrast, the Free
Enterprise Fund accounting firm did not seek relief of the sort the Exchange
Act’s scheme is designed to offer; rather than seeking to challenge the
propriety of any particular rule or regulation, or to establish that it was not
liable for a violation, the accounting firm sought to abolish the PCAOB. 561
U.S. at 490 (explaining that the plaintiffs “object[ed] to the [PCAOB]’s
existence”). That is, the accounting firm’s claims were structural

Indeed, even if the tension between the two cases was so stark that we could confidently
predict Free Enterprise Fund’s impending demise, we would still have to follow it—it is the
Supreme Court’s “prerogative alone to overrule one of its precedents.” State Oil Co. v.
Khan, 522 U.S. 3, 20 (1997).

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constitutional claims, rather than substantive securities claims, and were
therefore beyond the bounds of the Exchange Act’s statutory-review scheme.
As in Free Enterprise Fund, Cochran challenges the existence of SEC
ALJs. The nature of her challenge is structural—it does not depend on the
validity of any substantive aspect of the Exchange Act, nor of any SEC rule,
regulation, or order. Indeed, she is challenging the Exchange Act’s statutory-
review scheme itself. Contra Thunder Basin, 510 U.S. at 218 n.22 (noting that
the mine operator “expressly disavow[ed] any abstract challenge to the Mine
Act’s statutory review scheme”). Further, the outcome of her constitutional
challenge to the ALJs’ removal protection will have no bearing on her
ultimate liability for allegedly violating the securities laws. Consequently, she
does not seek relief of the sort the Exchange Act’s scheme is designed to
provide, meaning that the “wholly collateral” factor weighs against
preclusion.
Second, Cochran’s removal power claim is outside the SEC’s
expertise. As in Free Enterprise Fund, there is no doubt that Cochran’s claim
presents only “standard questions of administrative law, which the courts are
at no disadvantage in answering.” 561 U.S. at 491. For example, her claim
does not depend on a special understanding of the securities industry. Contra
Thunder Basin, 510 U.S. at 214–15 (determining that the mine operator’s
NLRA challenge was within the Mine Commission’s expertise because it
rested on interpretation of the Mine Act’s posting requirement). Nor is there
any suggestion that the SEC is an experienced adjudicator of structural
constitutional issues. See Carr v. Saul, 141 S. Ct. 1352, 1360 (2021) (noting
that “agency adjudications are generally ill suited to address structural
constitutional challenges, which usually fall outside the adjudicators’ areas

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of technical expertise”). Thus, the “agency expertise” factor also weighs
against preclusion. 12
Third, the Exchange Act’s statutory-review scheme threatens to
deprive Cochran of the opportunity for meaningful judicial review. Thunder
Basin and Elgin both held that even if the agency was incapable of
adjudicating a constitutional claim, meaningful judicial review was still
available in the court of appeals. Thunder Basin, 510 U.S. at 215; Elgin, 567
U.S. at 17. Yet this rule cannot be absolute: even though § 78y similarly
provides for eventual court of appeals review, in Free Enterprise Fund, the
Supreme Court held that the accounting firm “could [not] meaningfully
pursue [its] constitutional claims.” 561 U.S. at 490. The key question is why
Free Enterprise Fund had an outcome different from those in Thunder Basin
and Elgin.
The answer is that the Thunder Basin and Elgin plaintiffs sought
substantive relief, while the Free Enterprise Fund accounting firm sought

12
Elgin is not to the contrary. There, the Court held that the employees’
constitutional challenge was not outside the expertise of the MSPB because there were non-
constitutional “threshold questions” that, once resolved, could “obviate the need to
address the constitutional challenge.” Elgin, 567 U.S. at 22–23. Here, the SEC might
similarly resolve the administrative proceedings in Cochran’s favor on a threshold
securities-law issue, rather than on the basis of her removal power challenge. But Cochran
is not similarly situated to the Elgin plaintiffs because she asserts that she will be harmed
by the very act of having to appear in proceedings before an ALJ who is unconstitutionally
insulated from the President’s removal power. Therefore, if the SEC were to decide
Cochran’s case in her favor on other grounds, it would be denying her any opportunity for
meaningful judicial review of her alleged source of harm. By contrast, in Elgin, the MSPB
could meaningfully review the employees’ source of harm—their terminations—without
reaching their constitutional challenges. Id. Consequently, Elgin does not alter our analysis
based on Free Enterprise Fund. See Axon Enter., 986 F.3d at 1186 (concluding that the
Federal Trade Commission lacked the expertise to adjudicate a removal power challenge
to its ALJs and explaining that Elgin “does not establish a broad rule that an agency can
always moot a claim by simply ruling for the party”).

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structural relief: while the mine operator in Thunder Basin ultimately desired
to avoid potential harm from third parties (the miners), 510 U.S. at 215, the
accounting firm in Free Enterprise Fund asserted that it was harmed by being
investigated by a constitutionally illegitimate agency, 561 U.S. at 490.
That is, the accounting firm in Free Enterprise Fund asserted that it was
harmed by the structure of the Exchange Act’s statutory-review scheme
itself. By contrast, in Thunder Basin, the Court determined that the mine
operator would face only “speculative” harm if it complied with the Mine
Act’s statutory-review scheme. 510 U.S. at 216–17. As for Elgin, if the MSPB
had granted those plaintiffs the substantive relief they sought—
reinstatement, backpay, and attorney’s fees—their harm would have been
fully redressed, and they would have had no basis to seek further review in
the court of appeals. 567 U.S. at 22. Accordingly, the structural nature of
the accounting firm’s claim explains the different results in Free Enterprise
Fund on the one hand and Thunder Basin and Elgin on the other.
To put it plainly: Free Enterprise Fund held that § 78y does not provide
an adequate possibility of meaningful judicial review for challenges to the
structure of the Exchange Act’s statutory-review scheme. Like the
accounting firm in Free Enterprise Fund, Cochran is challenging the
constitutional authority of her adjudicator. The Exchange Act’s statutory-
review scheme does not guarantee Cochran meaningful judicial review of her
claim because the enforcement proceedings will not necessarily result in a
final adverse order; as a final adverse order is a prerequisite for judicial review
under § 78y(a)(1), Cochran may thus be left unable to seek redress for the
injury of having to appear before the SEC. Consequently, “a finding of
preclusion could foreclose all meaningful judicial review.” Free Enter. Fund,
561 U.S. at 489 (quoting Thunder Basin, 510 U.S. at 212–13). Therefore, Free
Enterprise Fund itself as well as all three Thunder Basin factors indicate that

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we should presume that Congress did not intend to preclude district court
jurisdiction over Cochran’s removal power claim. 13
The SEC contends Cochran’s alleged harm is not irreparable, so it
urges us to disregard the possibility that Cochran may never get her day in
court. On this point, the SEC relies on FTC v. Standard Oil Co. of California,
in which the Supreme Court ordered the dismissal of a collateral attack on an
administrative enforcement proceeding before the Federal Trade
Commission (“FTC”). 449 U.S. 232, 234–37, 247 (1980). There, the Court
strongly rebuffed the plaintiff’s argument that it would suffer irreparable
harm if forced to undergo the administrative proceedings because “[m]ere
litigation expense, even substantial and unrecoupable cost, does not
constitute irreparable injury.” Id. at 244 (quoting Renegotiation Bd. v.
Bannercraft Clothing Co., 415 U.S. 1, 24 (1974)); see also id. (further explaining
that “the expense and annoyance of litigation is ‘part of the social burden of
living under government’” (quoting Petroleum Expl., Inc. v. Pub. Serv.
Comm’n, 304 U.S. 209, 222 (1938))).

13
Contrary to the SEC’s protestations, the Thunder Basin factors do not lend any
credibility to its argument that we should not follow Free Enterprise Fund because Cochran
is involved in an ongoing administrative enforcement proceeding. At bottom, the SEC’s
proffered distinction between pre- and para-enforcement challenges fails to explain the
implied preclusion holding in Thunder Basin. In that case, the mine operator sought an
injunction prior to any adverse order from the Secretary of Labor, meaning that there were
no ongoing proceedings at the time the case was filed. Thunder Basin, 510 U.S. at 205. If
the SEC’s interpretation of Free Enterprise Fund was right, then the operator in Thunder
Basin should have been able to proceed with at least its constitutional claims in federal
district court. But the Court barred the operator from proceeding with any of its claims.
Id. Hence, the rule the SEC is apparently proposing—that district court jurisdiction is
precluded once administrative proceedings begin but is not precluded prior to the initiation
of such proceedings—is untenable. By contrast, our analysis above—focusing on the relief
sought by the plaintiff—squares all three of the Supreme Court’s major precedents.

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By contrast, Cochran challenges the entire legitimacy of her
proceedings, not simply the cost and annoyance. Nevertheless, even
assuming arguendo that Cochran’s alleged harm is “mere litigation
expense,” we find this argument unpersuasive. Standard Oil did not concern
implied jurisdiction stripping; rather, the issue before the Court was whether
the FTC had taken a “final agency action” within the meaning of the
Administrative Procedure Act (“APA”), 5 U.S.C. § 704. 449 U.S. at 233,
238. Consequently, Standard Oil is irrelevant to our inquiry. 14
Further, although the threat of irreparable harm may justify pre-
enforcement judicial review under principles of equity, see Ex parte Young,
209 U.S. 123, 145–48 (1908), irreparable harm is not ordinarily required to
invoke a district court’s general § 1331 federal question jurisdiction. As the
SEC seems to concede, the Thunder Basin inquiry offers the only possible
path to determining that Cochran cannot rely on § 1331; on that inquiry, the
SEC loses so long as “a finding of preclusion could foreclose all meaningful
judicial review”—no irreparable harm is required. Free Enter. Fund, 561 U.S.
at 489 (emphasis added) (quoting Thunder Basin, 510 U.S. at 212–13). It
seems plain that if a plaintiff ends up without any avenue to having her claim
heard by a court, judicial review is foreclosed, regardless of whether the harm
she suffers is truly irreparable (as Cochran contends it is). To be sure, it is

14
We take no position regarding Standard Oil’s relevance to the questions of
(1) whether Cochran may rely on the APA’s cause of action; and (2) whether she is entitled
to a preliminary injunction. See 5 U.S.C. § 704 (limiting judicial review under the APA to
“[a]gency action made reviewable by statute and final agency action for which there is no
other adequate remedy in a court”); Janvey v. Alguire, 647 F.3d 585, 595 (5th Cir. 2011)
(noting that to obtain a preliminary injunction, a plaintiff “must establish . . . a substantial
threat of irreparable injury if the injunction is not issued” (quoting Byrum v. Landreth, 566
F.3d 442, 445 (5th Cir. 2009)); cf. Free Enter. Fund, 561 U.S. at 508, 513 (holding that the
PCAOB’s structure violated the Constitution, but nevertheless concluding that the
plaintiffs were not entitled to injunctive relief).

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possible that Cochran could ultimately wind her way through enforcement
proceedings and get some later chance at judicial review 15—but it is also
possible that she could never have that opportunity, and that is enough to
preserve district court jurisdiction. 16

15
At least one individual has successfully followed this path. See Pet. for Review,
Jarkesy v. SEC, No. 20-61007 (5th Cir. Nov. 2, 2020). In addition to Jarkesy, the dissenting
opinion cites three other cases in which litigants were able to raise separation-of-powers
claims in federal court after undergoing administrative proceedings. Dissenting Op. at 81–
82 (citing Lucia, 138 S. Ct. at 2049–50, NLRB v. Noel Canning, 573 U.S. 513, 520–21 (2014),
and Carr, 141 S. Ct. at 1356–58, 1362). But the fact that only a handful of litigants have
been successful in navigating the administrative process demonstrates how difficult that
process is—these cases are the exceptions that prove the rule, so to speak. Cf. Adam M.
Katz, Eventual Judicial Review, 118 Colum. L. Rev. 1139, 1153 (2018) (explaining that
because the SEC wins the “vast majority” of the cases it brings through administrative
proceedings, “the incentive to settle SEC enforcement actions is therefore paramount,
making it, practically speaking, extremely unlikely for defendants to . . . have the
opportunity to appear before a federal court”). It is the likelihood of success for the many
that concerns us; the question is whether delaying Cochran’s claims will deny her
meaningful judicial review, not any possibility of judicial review. Consequently, the cases
relied on by the dissenting opinion do not support affirmance.
16
The dissenting opinion asserts that, because cases like Lucia and Carr have
recognized a meaningful opportunity to bring post-enforcement Appointments Clause
challenges, and the injury Cochran would suffer from an enforcement proceeding presided
over by an unconstitutionally insulated ALJ is supposedly less “serious” than the injury
caused by an enforcement proceeding presided over by an unconstitutionally appointed
ALJ, Cochran must have a meaningful opportunity for post-enforcement judicial review of
her claim. Dissenting Op. at 83–84. In making this curious argument, the dissenting
opinion relies solely on the Supreme Court’s recent decision in Collins, which held that the
Director of the Federal Housing Finance Agency was unconstitutionally insulated from the
President’s removal power, but that this constitutional defect did not render the Director’s
acts “void.” 141 S. Ct. at 1787.
Collins does not impact our conclusion in this case because Cochran does not seek
to “void” the acts of any SEC official. Rather, she seeks an administrative adjudication
untainted by separation-of-powers violations. Although we will not engage in the
dissenting opinion’s efforts to weigh the relative severity of constitutional injuries,
Cochran’s injury is sufficiently serious to justify pre-enforcement review in federal court.
Moreover, the dissenting opinion seems to imply that, because a removal power
violation does not render an improperly insulated official’s acts void, Cochran would not

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The SEC’s final fallback position—that other statutory schemes will
be threatened if we permit structural challenges to the Exchange Act to be
brought in district court—fares no better. Specifically, the SEC asserts that
there are many administrative schemes similar to the Exchange Act’s and
that these schemes are equally vulnerable to separation-of-powers
challenges. Consequently, the SEC contends, if we carve out structural
challenges from what it views as the general rule of implied preclusion,
“every person hoping to enjoin an administrative proceeding [will be able to]
sue in district court to allege that the proceedings were unconstitutional,”
wreaking havoc across the Government’s operations. This is a “policy
consideration[] more properly addressed to Congress than to this Court.”
Reiter v. Sonotone Corp., 442 U.S. 330, 345 (1979). Such a consideration
surely “cannot govern our reading of the plain language” of § 1331 and § 78y.
Id.
In any event, there are four reasons that the approach we take today is
unlikely to be as disruptive as the SEC fears. First, this case presents only
the issue of whether the Exchange Act divested district court jurisdiction
over claims that SEC ALJs are unconstitutionally insulated from the
President’s removal power; our holding extends no further, and the result in
other cases, even those concerning similar statutory schemes and claims, may
be different. 17 Second, even if Congress did not divest jurisdiction, other

be entitled to any relief on post-enforcement review even if she prevailed on her removal
power claim. See Dissenting Op. at 84. If it were true that Cochran could not obtain any
post-enforcement relief, then Cochran’s only hope for meaningful judicial review would be
through the present lawsuit. Therefore, even under the dissenting opinion’s view,
Cochran’s removal power claim was properly before the district court.
17
The dissenting opinion asserts that we “make[] no effort” to delineate between
structural constitutional claims that go beyond the Exchange Act’s statutory-review
scheme and substantive securities claims that do not. See Dissenting Op. at 86 n.14. But it
is unnecessary to delineate between the two because our limited holding applies only to the

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doctrines, such as standing, ripeness, exhaustion, sovereign immunity, and
abstention, may prevent district courts from hearing challenges to ongoing
administrative enforcement proceedings. Third, to actually prevail on their
claims, plaintiffs must demonstrate that their arguments are meritorious, a
task that will only grow more difficult as more of these cases are resolved and
the Government accordingly adjusts its operations (or is ruled to already
comply with the Constitution).
Finally, as the Texas Public Policy Foundation notes as amicus curiae,
our court does not break new ground by allowing Cochran to challenge her
adjudicator at the outset of her case. “Since 1792, federal statutes have
compelled district judges to recuse themselves when they have an interest in
the suit . . . .” Liteky v. United States, 510 U.S. 540, 544 (1994). Congress
has since enacted statutes to expand judicial recusal requirements. 13D
Charles Alan Wright et al., Federal Practice and
Procedure § 3551 (3d ed. 2002) (citing 28 U.S.C. §§ 144, 455). These
statutes serve “to protect the parties’ basic right to a fair trial in a fair
tribunal.” Caperton v. A.T. Massey Coal Co., 556 U.S. 868, 887 (2009). They
also serve to prevent harm to the public’s confidence in these tribunals. In re
Sch. Asbestos Litig., 977 F.2d 764, 776 (3d Cir. 1992). Given that
disqualification disputes concern the basic integrity of a tribunal, they must
be resolved at the outset of the litigation. So “virtually every circuit” allows
parties to promptly challenge a judge’s decision not to recuse. Id. at 778
(collecting cases, including from our circuit); see, e.g., In re Chevron U.S.A.,
Inc., 121 F.3d 163, 165 (5th Cir. 1997) (noting that “mandamus is an

issue presented here—whether the Exchange Act divested district court jurisdiction over
claims that SEC ALJs are unconstitutionally protected from removal. Accordingly, our
decision will not bear on related statutory-review scheme challenges, including, as the
dissenting opinion notes, the issue of whether the Seventh Amendment requires a jury for
securities fraud cases being decided in agency proceedings.

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appropriate legal vehicle for challenging the denial of a disqualification
motion”). That does not create an undue hindrance to the judicial system,
and the same logic applies to the SEC’s administrative system.
To sum up, Cochran’s removal power claim is wholly collateral to the
Exchange Act’s statutory-review scheme, is outside the SEC’s expertise, and
might never receive judicial review if district court jurisdiction were
precluded. Therefore, the Thunder Basin inquiry simply reaffirms that Free
Enterprise Fund controls this case and that Cochran’s removal power claim is
within the district court’s jurisdiction.
B. Ripeness
We now turn to the SEC’s other argument for affirmance: a lack of
ripeness. Ripeness doctrine reflects “Article III limitations on judicial
power” and “prudential reasons for refusing to exercise jurisdiction.” Reno
v. Cath. Soc. Servs., Inc., 509 U.S. 43, 57 n.18 (1993); see also Abbott Lab’ys v.
Gardner, 387 U.S. 136, 148 (1967) (explaining that the doctrine’s “basic
rationale is to prevent the courts, through avoidance of premature
adjudication, from entangling themselves in abstract disagreements”),
abrogated on other grounds by Califano v. Sanders, 430 U.S. 99 (1977). The
ripeness inquiry hinges on two factors: (1) “the fitness of the issues for
judicial decision”; and (2) “the hardship to the parties of withholding court
consideration.” Roark & Hardee LP v. City of Austin, 522 F.3d 533, 545 (5th
Cir. 2008) (quoting Monk v. Huston, 340 F.3d 279, 282 (5th Cir. 2003)).
Generally, issues are fit for judicial decision if “any remaining questions are
purely legal ones; conversely, a case is not ripe if further factual development
is required.” Id. However, some degree of hardship is always required to
establish ripeness. Id.
There is no dispute that Cochran’s removal power claim is a pure
issue of law, meaning that it is fit for judicial decision without any additional

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fact-finding. Further, if Cochran’s claim is meritorious, then withholding
judicial consideration would injure her by forcing her to litigate before an ALJ
who is unconstitutionally insulated from presidential control. See Stolt-
Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 670 n.2 (2010)
(determining that the petitioners had adequately demonstrated hardship
where withholding judicial review would have forced them to participate in
an arbitration proceeding that they alleged to be “ultra vires”); Sea-Land
Serv., Inc. v. Dep’t of Transp., 137 F.3d 640, 648 (D.C. Cir. 1998) (“The
concrete cost of an additional proceeding is a cognizable Article III injury.”).
Hence, both factors indicate that Cochran’s removal power claim is ripe.
In support of its argument that Cochran’s claim is not ripe, the SEC
principally relies on Energy Transfer Partners, L.P. v. FERC, 567 F.3d 134 (5th
Cir. 2009), and TOTAL Gas & Power North America, Inc. v. FERC, 859 F.3d
325 (5th Cir. 2017). As relevant here, in Energy Transfer Partners, a natural
gas company challenged the statutory authority of the Federal Energy
Regulatory Commission (“FERC”) to require it to participate in trial-type
enforcement proceedings before an ALJ. 567 F.3d at 137–38. TOTAL Gas
concerned a similar challenge to FERC administrative proceedings, including
a structural claim that FERC ALJs were unconstitutionally appointed.
859 F.3d at 334. In both cases, we concluded that the plaintiffs’ claims were
not ripe. Energy Transfer Partners, 567 F.3d at 146; TOTAL Gas, 859 F.3d at
339. Based on these cases, the SEC asserts that structural challenges to
ongoing administrative enforcement proceedings are not ripe until those
proceedings conclude.
Energy Transfer Partners and TOTAL Gas are both materially
distinguishable from this case. In Energy Transfer Partners, the plaintiff
sought judicial review of particular FERC orders, which we determined were
not sufficiently “final” so as to be susceptible to judicial review. 567 F.3d at
136, 139–44. By contrast, Cochran did not seek review of any particular SEC

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order; rather, she sought a declaration that SEC ALJs are unconstitutionally
insulated from the president’s removal power and an injunction barring the
SEC from continuing its administrative proceedings against her. Thus, the
concern in Energy Transfer Partners—the finality of agency action—is not
relevant to the issue of ripeness in this case.
Like Cochran, the TOTAL Gas plaintiffs sought a declaration that
FERC was precluded from conducting administrative enforcement
proceedings against them. 859 F.3d at 327. However, in that case, FERC
had not actually scheduled a hearing before an ALJ prior to the plaintiffs filing
suit. Id. at 336. Consequently, we held that the plaintiffs’ fear of being
subjected to a constitutionally defective proceeding was too speculative to
establish hardship for ripeness purposes. Id. at 337 (explaining that “whether
FERC ultimately takes actions that Total claims would violate its
constitutional rights rests on a series of contingencies and is not a certainty”).
As the SEC has already assigned Cochran’s case to an ALJ, her risk of
hardship is substantially more concrete than in TOTAL Gas. Therefore, we
hold that Cochran’s removal power challenge is ripe.
Accordingly, we AFFIRM the district court’s dismissal of Cochran’s
due process claim, REVERSE the dismissal of her removal power claim,
and REMAND for further proceedings consistent with this opinion.

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Andrew S. Oldham, Circuit Judge, joined by Smith, Willett,
Duncan, Engelhardt, and Wilson, Circuit Judges, concurring.

I agree with the majority that this case can be resolved based on the
statutory text in 28 U.S.C. § 1331 and 15 U.S.C. § 78y, along with Supreme
Court precedent interpreting those provisions. The dissent nonetheless looks
behind text and precedent to the purposes and policies of the Securities
Exchange Act of 1934. I disagree with the dissent for two principal reasons.
First, as should go without saying by now, “our inquiry begins with
the statutory text, and ends there as well if the text is unambiguous.” BedRoc
Ltd., LLC v. United States, 541 U.S. 176, 183 (2004). Here, the text is as
unambiguous as can be. Section 1331 creates jurisdiction, and § 78y strips
only part of it. The part that § 78y strips (as to “[a] person aggrieved by a
final order of the [SEC]”) undisputedly does not apply to Cochran. So
jurisdiction remains. And any conceivable dispute on that score is resolved
by Free Enterprise Fund v. Public Company Accounting Oversight Board, 561
U.S. 477 (2010). That should end this case.
Second, even if the dissent is correct to peer behind the text of § 78y,
what lurks back there is profoundly disturbing. Section 78y reflects the
thinking of men like Woodrow Wilson who argued that universal suffrage
would make the three branches of government ignorant, indolent, and
incapable of regulating modern affairs. Wilson’s solution? He wanted
administrative agencies to operate in a separate, anti-constitutional, and anti-
democratic space—free from pesky things like law and an increasingly
diverse electorate. One of Wilson’s acolytes, James Landis, was the SEC’s
founding father and drafted § 78y into the original Securities Exchange Act.
Landis hoped that the SEC could set upon Americans without interference
from courts—unless and until the SEC gave courts permission to review its

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work. That is obviously not how our government is supposed to work. And
in the Landisonian view, that’s precisely the point.
The balance of this opinion joins the dissent in considering “the 80-
plus year history of the SEC,” the purported policy “benefit[s] of agency
expertise,” and the supposed “efficiency” purpose of § 78y. Post, at 70, 90,
94 (Costa, J., dissenting). Part I explains the intellectual and statutory history
of § 78y. Part II explains Landis’s purposes and policy objectives. Then Part
III shows that § 78y falls short of Landis’s goal. It fails to give the SEC the
separate, anti-constitutional, and unaccountable space Landis wanted. And
all of this underscores why it’s important to interpret the words that
Congress enacted rather than the purposes Landis pursued. 1
I.
The separation of powers is the defining feature and virtue of our
Constitution. As James Madison wrote, “[t]he accumulation of all powers,
legislative, executive, and judiciary, in the same hands, whether of one, a few,
or many, and whether hereditary, self-appointed, or elective, may justly be
pronounced the very definition of tyranny.” The Federalist No. 47, at
301 (C. Rossiter ed. 1961). So the Founders separated the legislative,
executive, and judicial powers into three distinct branches and then balanced
them against one another. See The Federalist No. 51, at 321–23;
Bowsher v. Synar, 478 U.S. 714, 722 (1986) (“Even a cursory examination of
the Constitution reveals the influence of Montesquieu’s thesis that checks

1
I obviously do not think that any of my esteemed colleagues are sympathetic to
the profoundly anti-democratic views that motivated the SEC’s founding fathers. To the
contrary, I have the utmost respect for my colleagues, and I believe that all of us are
attempting to interpret the law as Congress wrote it and not as Landis imagined it. I also
believe, however, that we should take seriously the origins of § 78y rather than dismiss
them as a “screed.” Post, at 70 n.2 (Costa, J., dissenting).

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and balances were the foundation of a structure of government that would
protect liberty.”).
Wilson and Landis fundamentally disagreed with the Founders’
vision. Wilson and Landis thought the accumulation of all powers into one
set of hands was—far from a vice—a virtue. And they wanted those all-
powerful hands connected to an administrative agency, far away from the
three branches of government the Founders worked so hard to create,
separate, and balance. And most of all, Wilson and Landis wanted power as
far away from democracy and universal suffrage as possible.
A.
Woodrow Wilson derived his political theories from German
historicism. See Ronald J. Pestritto, Woodrow Wilson and
the Roots of Modern Liberalism 14 (2005); Philip
Hamburger, Is Administrative Law Unlawful? 458 (2014). In
1883, Wilson began his doctoral studies in history and government at Johns
Hopkins, where he studied under professors who had themselves been
educated in Germany—most notably, Richard T. Ely and Herbert Baxter
Adams, who both studied at the University of Heidelberg under Johann K.
Bluntschli, a renowned Hegelian state theorist. Pestritto, supra, at 8, 18.
These German historicists considered history an evolutionary process. See
id. at 9, 14 (citing Joseph Dorfman, The Role of the German Historical School in
American Economic Thought, 45 Am. Econ. Rev. 17 (1955)). They viewed
history as “a progression of . . . epochs,” through which each age’s “spirit”
becomes more advanced than the one preceding it. Id. at 15. “More advanced
historical spirits replace inferior ones through a dialectical process, where
progress is the result of great clashes, conflicts, and struggles.” Ibid. (citing
G.W.F. Hegel, The Philosophy of History 17–18 (J. Sibree

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trans., Dover Publ’ns 1956)). 2 “[H]istoricism has a particular future in mind,
and progress is all about reaching it.” Id. at 16.
In Wilson’s view, administration was key to reaching his idealized
future. Wilson lamented that “[u]p to [his] own day all the political writers
. . . had thought, argued, dogmatized only about the constitution of
government; about the nature of the state, the essence and seat of
sovereignty, popular power and kingly prerogative; about the greatest
meanings lying at the heart of government; and the high ends set before the
purpose of government by man’s nature and man’s aims.” Woodrow Wilson,
The Study of Administration, 2 Pol. Sci. Q. 197, 198 (1887). Back when the
nation was founded, he wrote, “[t]he functions of government were simple,
because life itself was simple.” Id. at 199. But things were different now: The
“difficulties of governmental action” in the modern era required a new
“science of administration which shall seek to straighten the paths of
government, . . . [and] strengthen and purify its organization.” Id. at 200–01.
Wilson lauded Europe for embracing this new science and chided
America for supposedly staying stuck in the past. The study of
administration, Wilson noted, “is a foreign science, speaking very little of the
language of English or American principle. It employs only foreign tongues;
it utters none but what are to our minds alien ideas.” Id. at 202. Though
Wilson appeared to recognize the implications of adopting German political
principles, he tried to reassure liberty-minded readers that administration
could be “Americanize[d].” Ibid. As Wilson put it:
If I see a murderous fellow sharpening a knife cleverly, I can
borrow his way of sharpening the knife without borrowing his

2
Hegel, like Wilson, held outrageous views on race. Hegel’s dialectic depended in
part on “advanced races” clashing with “inferior ones” and then either “defeating them”
“or assimilating them.” Pestritto, supra, at 15.

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probable intention to commit murder with it; and so, if I see a
monarchist dyed in the wool managing a public bureau well, I
can learn his business methods without changing one of my
republican spots. . . . We can thus scrutinize the anatomy of
foreign governments without fear of getting any of their
diseases into our veins; dissect alien systems without
apprehension of blood poisoning.
Id. at 220.
Notwithstanding his reassurance that German political principles
could be Americanized, Wilson elsewhere made clear that he would scrap the
Constitution if he could. One of his most notable departures from the
Constitution was his distaste for democracy and popular sovereignty—
especially after the document was amended to allow for an increasingly
diverse electorate. See Perez v. Mortgage Bankers Ass’n, 575 U.S. 92, 129 n.6
(2015) (Thomas, J., concurring in the judgment) (crediting Wilson’s “deep
disdain for the theory of popular sovereignty” as contributing to the
Progressive Era’s “move from the individualism that had long characterized
American society to the concept of a society organized for collective
action”); Hamburger, supra, at 371 n.e (noting that Wilson despised
democracy and described it as “a stage of development” that had to be left
behind).
During his early career—including his time at Johns Hopkins—
Wilson “complained bitterly about the ills of universal suffrage.”
Pestritto, supra, at 201. In his notes on English historian John Richard
Green, Wilson rhetorically questioned:
Is the principle of universal suffrage for instance consistent
with those principles of government which bear the sanction of
the wisest Englishmen of eight centuries and which have
secured personal freedom and political liberty to a great nation

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for more than eight hundred years? Is it necessary or even
compatible with the healthy operation of a free government?
Woodrow Wilson, Marginal Notes on John Richard Green, in 1 The Papers
of Woodrow Wilson 388 (Arthur S. Link ed., 1966). One entry in his
diary—which stated that “universal suffrage is at the foundation of every evil
in this country”—indicates that Wilson had answered his own questions:
“no” and “no.” Woodrow Wilson, Shorthand Diary, in 1 Papers, supra, at
143. And these views didn’t stay on the pages of his private papers. He also
included them in his seminal work on administration:

Even if we had clear insight into all the political past, and could
form out of perfectly instructed heads a few steady, infallible,
placidly wise maxims of government into which all sound
political doctrine would be ultimately resolvable, would the
country act on them? That is the question. The bulk of
mankind is rigidly unphilosophical, and nowadays the bulk of
mankind votes. A truth must become not only plain but also
commonplace before it will be seen by the people who go to
their work very early in the morning; and not to act upon it
must involve great and pinching inconveniences before these
same people will make up their minds to act upon it.
And where is this unphilosophical bulk of mankind more
multifarious in its composition than in the United States? To
know the public mind of this country, one must know the mind,
not of Americans of the older stocks only, but also of Irishmen,
of Germans, of negroes. In order to get a footing for new
doctrine, one must influence minds cast in every mould of race,
minds inheriting every bias of environment, warped by the
histories of a score of different nations, warmed or chilled,
closed or expanded by almost every climate of the globe.
Wilson, The Study of Administration, supra, at 209. And though Wilson
“dropped his overt opposition to universal suffrage as he matured,” even his

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post-presidency works remained steeped in racism. Pestritto, supra, at
202; see, e.g., Woodrow Wilson, The State 17, 20 (1918)
(contrasting “progressive races” and “stagnated nationalities”). 3

Wilson’s concern with democracy was that it “assume[s] a
discriminating judgment and a fullness of information on the part of the
people touching questions of public policy.” Wilson, The State, supra,
at 305. But because he believed people “do not often possess” such
judgment, ibid., Wilson concluded that “[t]he people should not govern; they
should elect the governors: and these governors should be elected for periods
long enough to give time for policies not too heedful of transient breezes of
public opinion,” Woodrow Wilson, Notes for “The Philosophy of Politics”, in
9 Papers, supra, at 132; but see Perez, 575 U.S. at 129 n.6 (Thomas, J.,
concurring in the judgment) (“In President Wilson’s view, public criticism
would be beneficial in the formation of overall policy, but ‘a clumsy nuisance’
in the daily life of Government—‘a rustic handling delicate machinery.’”
(quoting Wilson, The Study of Administration, supra, at 215)). And if a
government official must consult the public, he should have to hear only
“those who hit upon opinions fit to be made prevalent, and have the capacity
to make them so.” Woodrow Wilson, Democracy, in 7 Papers, supra, at 355.

3
Some believe Wilson’s views were based on his upbringing in the Confederate
South. See, e.g., Dan McLaughlin, The Confederate Roots of the Administrative State,
National Review (July 30, 2020) (“Bureaucratic, unelected, managerial government
in America had a surprising birthplace: the Confederate States of America. It would
ultimately be imported into the theory and practice of the federal government by a son of
the Confederacy: Woodrow Wilson.”). Others trace his opinions to German historicism.
See, e.g., Pestritto, supra, at 44 (“Wilson’s racism lies at a much more fundamental
level than mere prejudice. For him, some races are advanced historically and others are
backward; the best thing that can happen to the inferior races and peoples is to be defeated
and assimilated by their historical superiors.”); see also supra n.2 (recounting Hegel’s view
of slavery).

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In Wilson’s mind, most modern Americans didn’t meet that standard. See
Hamburger, supra, at 370–71 (describing Wilson’s classism and his view
that administration had the virtue of insulating elite power from popular
politics).
Wilson ran into an obvious problem: The Constitution affirmatively
prohibited the anti-democratic administrative system he wanted. Wilson saw
the separation of powers and the Founders’ system of checks and balances as
two of the Constitution’s chief defects. While at Johns Hopkins, Wilson
wrote:
It is . . . manifestly a radical defect in our federal system that it
parcels out power and confuses responsibility as it does. The
main purpose of the Convention of 1787 seems to have been to
accomplish this grievous mistake. The “literary theory” of
checks and balances is simply a consistent account of what our
constitution-makers tried to do; and those checks and balances
have proved mischievous just to the extent to which they have
succeeded in establishing themselves as realities. It is quite safe
to say that were it possible to call together again the members
of that wonderful Convention to view the work of their hands
in the light of the century that has tested it, they would be the
first to admit that the only fruit of dividing power had been to
make it irresponsible.
Woodrow Wilson, Congressional Government: A Study
in American Politics 187 (1885). Like democracy, Wilson thought
such structural limitations on power were unnecessary and even
incompatible with a functional government. In Wilson’s view: “No living
thing can have its organs offset against each other, as checks, and live.”
Woodrow Wilson, The New Freedom 47 (1913).

Wilson’s primary criticism of the separation of powers was that it
made government inflexible and inefficient. See Pestritto, supra, at 5

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(“Each of these features, to Wilson’s mind, made American government
inflexible and incapable of adjustment to necessary historical change.”). And
a government that was inflexible and inefficient could only trudge—not
sprint—toward progress:
It was the separation of powers that, among all of the objects of
Wilson’s criticism in the founders’ Constitution, caused him
the greatest distress and occupied much of his attention. For
Wilson, the separation of powers, and all of the other
institutional remedies that the founders employed against the
danger of faction, stood in the way of government’s exercising
its power in accord with the dictates of progress.
Id. at 6. For Wilson, that simply would not do.
Wilson therefore set out his own anti-constitutional vision in The
Study of Administration. “Judging by the constitutional histories of the chief
nations of the modern world,” Wilson believed there were “three periods of
growth through which government has passed in all the most highly
developed of existing systems.” Wilson, The Study of Administration, supra,
at 204. Nations begin in the period of “absolute rulers, and of an
administrative system adapted to absolute rule.” Ibid. As they progress, they
reach the second period, “that in which constitutions are framed to do away
with absolute rulers and substitute popular control, in which administration
is neglected for these higher concerns.” Ibid. And finally, they reach a level
of sophistication “in which the sovereign people undertake to develop
administration under this new constitution which has brought them into
power.” Ibid. Wilson was ready to lead America past its own Constitution
and into the third period “under this new constitution.” Ibid.
Wilson’s “new constitution” would ditch the Founders’ tripartite
system and their checks and balances for a “more efficient separation of
politics and administration, which w[ould] enable the bureaucracy to tend to

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the details of administering progress without being encumbered by the
inefficiencies of politics.” Pestritto, supra, at 227. The “political” sector
would encompass the three constitutional branches, while the
“administration” sector would operate independently. Wilson’s goal was to
completely separate “the province of constitutional law” from “the province
of administrative function.” Hamburger, supra, at 464.
Within this new dichotomy, the emphasis in government would shift
to administration. This newly conceptualized government—with a new
administrative “branch”—would “see[] to the daily rulemaking and
regulation of public life.” Pestritto, supra, at 165 (citing Woodrow
Wilson, Constitutional Government in the United
States 82–85 (1908)). “Administration, after all, is properly the province
of scientific experts in the bureaucracy; the experts’ competence in the
specific technological means required to achieve those ends on which we are
all agreed gives them the authority to administer or regulate progress,
unhindered by the realm of politics.” Id. at 127–28.
That of course required concomitant changes to the three branches of
constitutional government. And rather than amend the Constitution to
accomplish his purposes, Wilson thought it would be far more efficient to
simply command the three branches to submit. In Wilson’s view, Congress
must “understand its appropriate role in modern times.” Id. at 136.
Specifically, it must “abandon its stubborn insistence on its constitutionally
defined duty to legislate” and “cede[] rulemaking authority to the
bureaucracy.” Ibid. Only then could Congress step into its new role in
“oversee[ing] this function, not . . . attempt[ing] to carry it out itself.” Id. at
165.
The same was true of the President. In Wilson’s view, a modern
President must “look beyond his role as it is defined in the Constitution.” Id.

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at 168. The modern president should be focused on connecting to the public
and coordinating the government’s activities to the end of progress.
So too with the courts. Wilson subscribed to Bagehot’s theory of a “living
constitution,” and he believed that judges should “reflect what it is that each
generation wants out of government, and not [remain] stuck on an outdated
understanding of the purpose and role of government.” Id. at 115–17. “[T]he
members of the courts are necessarily men of their own generation,” and
Wilson “would not wish to have them men from another.” Wilson,
Constitutional Government, supra, at 185, 193.
B.
In the 1930s, President Franklin D. Roosevelt, James Landis, and their
fellow progressives picked up where Wilson had left off. “Reflecting th[e]
belief that bureaucrats might more effectively govern the country than the
American people, the progressives ushered in significant expansions of the
administrative state, ultimately culminating in the New Deal.” Perez, 575
U.S. at 129 n.6 (Thomas, J., concurring in the judgment).
One of Roosevelt’s most pressing progressive projects was securities
reform—an issue of debate since the 1907 stock market crash, which came
back into the spotlight after the 1929 market crash and the Depression.
During his presidential campaign, Roosevelt’s platform “advocated
‘regulation to the full extent of federal power, of . . . exchanges in securities
and commodities.’” Steve Thel, The Original Conception of Section 10(b) of the
Securities Exchange Act, 42 Stan. L. Rev. 385, 414 (1990) (quoting 7
History of American Presidential Elections 2742–43 (A.
Schlesinger, Jr. ed. 1985)).
“The process of transforming Roosevelt’s securities policy into a bill
began within hours of Roosevelt’s election.” Joel Seligman, The
Transformation of Wall Street 50 (1982). Roosevelt’s advisor,

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Felix Frankfurter, “looked to assemble a team to assist the new
administration in crafting a plan to implement the goals on which Roosevelt
had campaigned.” Ronald J. Pestritto, The Progressive Origins of the
Administrative State, 24 Soc. Phil. & Pol’y 16, 26 (2007). Frankfurter’s
team included Landis—his junior colleague at Harvard Law School—and
several other up-and-comers in the field of administrative law. Ibid. “[T]he
bill that became the Securities Act of 1933 was drafted over a weekend by
James Landis, Benjamin Cohen, and Thomas Corcoran, who were perhaps
aided by an excess of Scotch.” Cynthia A. Williams, The Securities and
Exchange Commission and Corporate Social Transparency, 112 Harv. L.
Rev. 1197, 1227 (1999) (citing Larry D. Soderquist & Theresa A.
Gabaldon, Securities Law 12 (1998) (discussing the legend that the
rushed Act was drafted over a case of Scotch)). Congress vested enforcement
of the 1933 Act in the newly created Federal Trade Commission—and
confirmed Landis as one of its inaugural Commissioners.
The next year, in 1934, Roosevelt decided to go further. And whom
did Roosevelt tap to lead the effort? Landis, of course. See Karl Shumpei
Okamoto, Rereading Section 16(B) of the Securities Exchange Act, 27 Ga. L.
Rev. 183, 229 n.153 (1992) (describing Landis as “the principal architect of
the [1934] Exchange Act”). Landis’s first draft of the bill contained a judicial-
review provision that is virtually identical to the one Congress enacted in
1934 and that continues to exist in § 78y today. Section 23(a) of Landis’s draft
provided in full:
Any person aggrieved by an order of the Commission may
obtain a review of such order in the Circuit Court of Appeals of
the United States, with any circuit wherein such person resides
or has his principal place of business, or in the Court of Appeals
of the District of Columbia, by filing in such court, within sixty
days after the entry of such order, a written petition praying
that the order of the Commission be modified or be set aside in

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whole or in part. A copy of such petition shall be forthwith
served upon the Commission, and thereupon the Commission
shall certify and file in the court a transcript of the record upon
which the order complained of was entered. No objection to the
order of the Commission shall be considered by the court
unless such objection shall have been urged before the
Commission. The finding of the Commission as to the facts, if
supported by evidence, shall be conclusive. If either party shall
apply to the court for leave to adduce additional evidence, and
shall show to the satisfaction of the court that such additional
evidence is material and that there were reasonable grounds for
failure to adduce such evidence the hearing before the
Commission, the court may order such additional evidence to
be taken before the Commission and to be adduced upon the
hearing in such manner and upon such terms and conditions as
to the court may seem proper. The Commission may modify
its findings as to the facts, by reason of the additional evidence
so taken, and it shall file such modified or new findings, which,
if supported by evidence, shall be conclusive, and its
recommendation, if any, for the modification or setting aside of
the original order. The jurisdiction of the court shall be
exclusive and its judgment an decree, affirming, modifying, or
setting side, in whole or in part, any order of the Commission,
shall be final, subject to review by the Supreme Court of the
United States upon certiorari or certification as provided in
sections 23 and 240 of the Judicial Code as amended (U.S.C.
title 28, secs. 346 and 347).
H.R. 7852, 73d Cong. § 23(a) (1934).
Roosevelt reviewed Landis’s draft bill, and he recommended it go
straight to Congress. Thel, supra, at 424–25. When the bill reached the
House Committee on Interstate and Foreign Commerce, Landis was the first
witness to testify. Id. at 395 n.39. And Landis told Congress that, naturally,
he and his agency would be perfect for enforcing the new 1934 Act: “The
Federal Trade Commission, I think, can be credited with efficiency in

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operation, a tradition of true service, and one of integrity; all qualities
demanded by an act of this type, and for that reason, the Commission itself,
I think, feels that it would like to undertake an activity of this type.” Stock
Exchange Regulation: Hearing on H.R. 7852 and H.R. 8720 Before the H. Comm.
on Interstate and Foreign Commerce, 73d Cong. 23 (1934) (statement of James
M. Landis, Commissioner, Federal Trade Commission). Congress reached a
sort of compromise. It adopted Landis’s bill—including the provision that
today appears in § 78y; rejected his request to make the FTC responsible for
enforcing it; but then confirmed Landis to lead the new agency (the Securities
and Exchange Commission) it created to enforce the 1934 Act. See Securities
Exchange Act of 1934, Pub. L. No. 73-291, § 25(a), 48 Stat. 881, 901–02;
Erwin N. Griswold, James McCauley Landis—1899-1964, 78 Harv. L.
Rev. 313, 314 (1964).
II.
The dissent makes much of the purposes behind the 1934 Act—
including the so-called “investigation/enforcement distinction,” the
importance of agency expertise, and the SEC’s purported need to complete
its work without judicial oversight. Obviously, none of this is in the text of the
Act itself.
It’s true, however, that these purposivist concepts date back to
Landis. Landis was convinced that bureaucrats had a monopoly on
governmental wisdom and that their critics were simply too stupid to
understand it. For example, Landis thought it “[s]omewhat hysterical[]”
that some derogatorily labeled the administrative state as the “fourth
branch” of government. James M. Landis, The Administrative
Process 47 (1938). He viewed the condemnation of the fourth branch as
superstitious—based “upon the mystical hypothesis that the number ‘four’
bespeaks evil or waste as contrasted with some beneficence emanating from

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the number ‘three.’” Ibid. And he chided these critics as being hindered by
“a too casual reading of constitutional history.” Ibid.
Landis took particular umbrage at criticisms from the judiciary. Judges
who failed to appreciate the SEC’s efforts were as ignorant as Americans
guided by numerology. And that’s why Landis did not trust courts to review
the SEC’s work. To the contrary, Landis wanted agencies to do the courts’
work.
A.
In The Administrative Process, Landis described the SEC’s process for
investigating potentially fraudulent statements included in a securities
registration form. See id. at 136–37. When a registrant filed a statement
including seemingly fraudulent statements, the SEC would begin “[a] quiet
investigation into the facts.” Id. at 137. If the investigation led the SEC to
believe there was in fact fraud, the agency would impose a stop order against
the registrant. Ibid. To avoid public attention and the pain of such
proceedings, registrants would often try to withdraw their registration
statements. Ibid. Landis did not think the SEC’s targets should get off so
easily, however. So the SEC promulgated a rule that disallowed registrants
from withdrawing their registration statements without the Commission’s
consent. Ibid. And pursuant to that rule, the SEC would deny its consent and
force registrants to defend themselves before the Commission—even after
the registrants stated that they did not want to defend themselves or their
statements. Ibid.
One such registrant challenged the rule and the SEC’s enforcement
practices. See Jones v. SEC, 298 U.S. 1 (1936). The petitioner asked the
Court: (1) whether the SEC could deny a request to withdraw a registration
statement, see id. at 18–25; and if so, (2) whether the SEC had the authority

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to interrogate the registrant about allegedly fraudulent propositions in his
registration statement after it had been withdrawn, see id. at 25–29.
In a stinging rebuke of the SEC, the Court answered each question
with an emphatic “no.” The Court concluded that “[t]he act contains no
provision upon the subject; and it may not be construed as attempting to
confer upon the commission an arbitrary power, under rule or otherwise, to
deny, without reason, a motion to dismiss.” Id. at 19. Not only was the Act
silent—the Court was also “unable to find any precedent for the assumption
of such power on the part of an administrative body.” Ibid. And, of course,
“at least in the absence of a statute to the contrary, the power of a
commission to refuse to dismiss a proceeding on motion of the one who
instituted it cannot be greater than the power which may be exercised by the
judicial tribunals of the land under similar circumstances.” Ibid. Given the
general rule for the federal courts—“that a plaintiff possesses the unqualified
right to dismiss his complaint at law or his bill in equity unless some plain
legal prejudice will result to the defendant other than the mere prospect of a
second litigation upon the subject matter”—the SEC would need to show
prejudice. Ibid. That it could not do. Id. at 22 (“We are unable to find
anything in the record, the arguments of the commission, or the decision of
the court below that suggests the possibility of any prejudice to the public or
investors beyond the assumption . . . that an unlimited privilege of withdrawal
would have the effect of allowing registrants whose statements are defective,
to withdraw before a stop order was issued and then to submit another
statement with slight changes.” (quotation omitted)).
The Court could have concluded there. But instead, it proceeded to
explain the danger of adopting the SEC’s argument to the contrary:
The action of the commission finds no support in right
principle or in law. It is wholly unreasonable and arbitrary. It
violates the cardinal precept upon which the constitutional

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safeguards of personal liberty ultimately rest—that this shall be
a government of laws—because to the precise extent that the
mere will of an official or an official body is permitted to take
the place of allowable official discretion or to supplant the
standing law as a rule of human conduct, the government
ceases to be one of laws and becomes an autocracy. Against the
threat of such a contingency the courts have always been
vigilant, and, if they are to perform their constitutional duties
in the future, must never cease to be vigilant, to detect and turn
aside the danger at its beginning.
Id. at 23–24. If administrative agencies “are permitted gradually to extend
their powers by encroachments—even petty encroachments—upon the
fundamental right, privileges and immunities of the people,” the Court
warned that “we shall in the end, while avoiding the fatal consequences of a
supreme autocracy, become submerged by a multitude of minor invasions of
personal rights, less destructive but no less violative of constitutional
guaranties.” Id. at 24–25.
Having determined that the registrant was entitled to withdraw his
registration statement, the Court continued to consider whether the SEC
may nevertheless interrogate him. See id. at 25. Given the reason for the stop
order had disappeared, the Court concluded that there was no longer any
basis to hail the registrant before the tribunal. Ibid. To require his presence
without reason, the Court stated, would lead to a mere “‘fishing expedition
. . . for the chance that something discreditable might turn up’—an
undertaking which uniformly has met with judicial condemnation.” Id. at 26
(alteration in original) (quoting Ellis v. Interstate Commerce Comm’n, 237 U.S.
434, 445 (1915)). And “[t]he fear that some malefactor may go unwhipped of
justice weighs as nothing against this just and strong condemnation of a
practice so odious.” Id. at 27.

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What’s more, there was no reason for the agency to insist upon its own
adjudication in the first place. The Constitution anticipated violations such
as fraud, and it instituted both a tribunal and proper procedures to review
such allegations: “The federal courts are open to the government; and the
grand jury abides as the appropriate constitutional medium for the
preliminary investigation of crime and the presentment of the accused for
trial.” Id. at 27. An investigation that disregards Article III and the Fifth
Amendment “is unlawful in its inception and cannot be made lawful by what
it may bring, or by what it actually succeeds in bringing, to light.” Ibid.; see
also id. at 26–28 (citing In re Pac. Ry. Comm’n, 32 F. 241 (N.D. Cal. 1887)
(Field, J.) (prohibiting unlawful inquisitorial investigations); Boyd v. United
States, 116 U.S. 616 (1886) (prohibiting compulsory self-accusation); Entick
v. Carrington, 19 How. St. Tr. 1030 (1765) (prohibiting unlawful searches and
seizures)). Allowing such investigations would bring back “those intolerable
abuses of the Star Chamber, which brought that institution to an end at the
hands of the Long Parliament in 1640.” Id. at 28. Based on that brooding risk,
the Court concluded, “[e]ven the shortest step in the direction of curtailing
[individual] rights must be halted in limine, lest it serve as a precedent for
further advances in the same direction, or for wrongful invasions of the
others.” Ibid.
Landis stated that he was “startle[d]” by the Court’s stinging rebuke
of his brainchild. Landis, supra, at 138. Had the Court stopped after
concluding that the SEC should have allowed the registrant to withdraw his
registration statement, Landis said, “one might have regretted its conclusion
as weighting the scales in favor of fraudulent promoters, but that would have
been all.” Ibid. Instead, the Court went on to compare the SEC to the Star
Chamber:
Such an outburst indicates that one is in a field where calm
judicial temper has fled. Deep feelings underlie this unguarded

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language of Mr. Justice Sutherland. They underlie, too, the
suggestion by the Chief Justice that the administrative is prone
to abuse the powers intrusted it. . . . If it is fair to apply the legal
rule that one intends the natural and probable consequences of
his acts, certainly the effect if not the purpose was to breed
distrust of the administrative.
Id. at 139–40.

Landis was deeply frustrated by the Jones Court’s rhetoric. In
Landis’s view, the Court’s reaction to the SEC’s efforts could be explained
only by the judiciary’s inability to understand his wisdom. And that judicial
ignorance spilled over to the public, again to Landis’s chagrin. Following the
Court’s decision in Jones, “every effort [by the SEC] to deal with fraudulent
promoters was met by the accusation that Star Chamber tactics were being
employed.” Id. at 140. Thus Landis lamented that America’s profoundly
ignorant people, “who have neither time nor the ability to grasp the precise
issue involved by a particular case,” understood the SEC’s “administrative
action as arbitrary and violative of ancient rights and privileges.” Ibid. That
was the judiciary’s fault—not the SEC’s.

B.
Landis convinced himself that administrative agencies were superior
to courts in every relevant way. See id. at 95–97 (arguing the judiciary’s role
should be “committed to the administrative for protection”). Landis
presented several reasons for the supposed superiority. For one, agency
adjudications were more efficient than court cases. See id. at 19 (“The
decisions of those [administrative] authorities which exercise judicial powers
are said to be several times as numerous as the recorded decisions of all the
Federal judicial courts.” (quotation omitted)). As another, their standards
and procedures were more practical. See id. at 49–50 (“Its bending of judicial
doctrine and procedure to realistic curvatures tends sometimes to offend the

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courts that supervise its activities.”). And of course, they were much more
modern. See id. at 96–97 (“Judicial interpretation suffered not only from
inexpertness but more from the slowness of that process to attune itself to
the demands of the day.”).
But above all, Landis emphasized, administrative agencies were
staffed by experts—unlike the common lawyers who served in the Third
Branch. Judges were “jacks-of-all-trades and masters of none” due to their
“breadth of jurisdiction and freedom of disposition.” Id. at 31. And if there’s
anything worse than a judge who’s unaware of his own “inadequacies,” id.
at 123, it’s a judge who’s both inadequate and prideful. “We must
remember,” Landis told his readers, “until a comparatively short time ago
Anglo-American government was essentially government by judges.” Id. at
135. “That class . . . had pride in its handiwork,” he continued, “[b]ut the
claim to pride tends, especially in the hands of lesser men, to be a boast of
perfection.” Ibid. Secretly insecure about their “lesser vision,” the judges
“claim[ed] Delphic powers, and rest[ed] the learning of the law upon an
affinity with deep and mysterious principles of justice that none but itself can
grasp.” Ibid. Hearing “any criticism of its inadequacies, any suggestion as to
its biases,” the judiciary developed a “[d]eep resentment” toward the expert
administrators. Ibid. “To admit to the dispensation of justice other
individuals, no matter how wise, who are not bound by the older disciplines,
[wa]s regarded by horror.” Ibid.
Landis’s solution to this problem was the same as Wilson’s: eliminate
or at least minimize the role of courts in our constitutional system.
Obviously, it would be best to eliminate the courts altogether. Otherwise,
“lodg[ing] a great, interpretive power in the judiciary involved the risk that a
policy, which initially was given to the administrative to formulate, might be
thwarted at its most significant fulcrum by judgments antagonistic to its
own.” Id. at 97. It would be far better, in Landis’s view, that the SEC could

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simply interrogate its targets ad infinitum—without the Jones Court ever
getting the right to interfere.
But if courts simply must be part of our constitutional order, Landis
said, their role must be minimized as far as possible. Landis disputed the idea
that all administrative action must be judicially reviewable. Id. at 124. Rather,
courts should be confined to determining little things—like “the regularity
of the procedure employed by the administrative” agency. Ibid. And Landis
was heartened by the Interwar Congresses, which tended “to decrease rather
than to increase the power of judges to impose checks upon the exercise of
administrative power.” Id. at 100.
III.
While it’s clear that Landis wanted to fully insulate his brainchild agency
against judicial oversight, it’s equally clear that the text passed by Congress
and signed by the President did not accomplish that purpose. As the Supreme
Court recently reminded us:
Efforts to ascribe unenacted purposes and objectives to a
federal statute face many of the same challenges as inquiries
into state legislative intent. Trying to discern what motivates
legislators individually and collectively invites speculation and
risks overlooking the reality that individual Members of
Congress often pursue multiple and competing purposes, many
of which are compromised to secure a law’s passage and few of
which are fully realized in the final product.
Va. Uranium, Inc. v. Warren, 139 S. Ct. 1894, 1907–08 (2019); see also
Rodriguez v. United States, 480 U.S. 522, 525–26 (1987) (per curiam) (“[N]o
legislation pursues its purposes at all costs.”).
In this case, however, both the dissent and the SEC would have us
read § 78y to accomplish Landis’s wildest dreams. The SEC’s litigation
position is a combination of “trust us, we’re the experts” and “there will be

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time for judicial review when we’re good and ready, thank you.” And the
dissent insists that our rejection of that position will “inject[] federal courts
into sensitive interbranch disputes.” Post, at 95 (Costa, J., dissenting). I
respectfully disagree with the SEC and the dissent, for all the reasons given
in the majority opinion. Here I merely respond to the dissent’s three principal
arguments to underscore our conclusion that the words in § 78y enacted by
Congress—as opposed to the unenacted purposes that motivated Landis—
do not strip jurisdiction over Cochran’s removal claim. 4
A.
The dissent breaks from the majority most sharply by distinguishing
this case from the Supreme Court’s materially identical case, Free Enterprise.
Though both cases involve plaintiffs challenging the removability of the SEC
adjudicators overseeing their respective administrative proceedings, the

4
Remarkably, Cochran’s removal claim is also connected to Wilson and Landis.
President Wilson and Louis Brandeis became friends during Wilson’s 1912 presidential
campaign. See G. Edward White, Allocating Power Between Agencies and Courts: The Legacy
of Justice Brandeis, 1974 Duke L.J. 195, 205 (1974). Brandeis then participated in drafting
the FTC’s organic statute. Ibid. Then, during the Supreme Court’s 1925–26 Term,
Brandeis’s law clerk was none other than—you guessed it, Landis. And in that Term, the
Court heard Myers v. United States, 272 U.S. 52 (1926)—the canonical removal-power
decision by Chief Justice Taft, which held that the President has the exclusive power to
remove executive officers. Brandeis, of course, dissented. “Both Landis and Brandeis
recognized the threat that this ruling posed to the development of a modern administrative
apparatus with significant discretionary powers and independence from the realm of
politics, and thus Landis worked closely on his Myers dissent.” Pestritto, Progressive
Origins, supra, at 30–31. Then, ironically, it was Landis who convinced Roosevelt that he
had constitutional power to remove William E. Humphrey from his position at the FTC—
thus giving rise to the landmark decision in Humphrey’s Executor v. United States, 295 U.S.
602 (1935), which limited Myers and largely vindicated the Brandeis dissent. Although
Roosevelt followed Landis’s advice and lost Humphrey’s Executor, Landis was “quite
pleased” with the result. Pestritto, Progressive Origins, supra, at 31. “[T]he defeat for the
president was meaningless in comparison with the great independence for administrators
that the Humphrey’s decision helped to secure.” Ibid.

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dissent says Free Enterprise (which involved a pending SEC investigative
proceeding) doesn’t apply in a case like Cochran’s (which involves a pending
SEC enforcement proceeding). See post, at 83–88 (Costa, J., dissenting). Our
sister circuits have made the same distinction. See, e.g., Hill v. SEC, 825 F.3d
1236, 1248 (11th Cir. 2016) (finding the district court lacked jurisdiction
because “[u]nlike the petitioners in Free Enterprise Fund,” Hill was the
subject of an SEC enforcement proceeding); Bennett v. SEC, 844 F.3d 174,
182 (4th Cir. 2016) (distinguishing between an SEC “inspection or
investigation” and an SEC “disciplinary proceeding”). But the
investigation-enforcement dichotomy is a distinction without a textual or
practical difference.
1.
Let’s start with the text. The current version of § 78y is almost
identical to the provision Landis wrote in 1934. See supra, at 12 (quoting
§ 23(a) as proposed and as enacted by Congress without material change in
§ 25(a) of the 1934 Act). Today the provision reads:
A person aggrieved by a final order of the Commission entered
pursuant to this chapter may obtain review of the order in the
United States Court of Appeals for the circuit in which he
resides or has his principal place of business, or for the District
of Columbia Circuit, by filing in such court, within sixty days
after the entry of the order, a written petition requesting that
the order be modified or set aside in whole or in part.
15 U.S.C. § 78y(a)(1). 5 Though Landis surely intended to filter (and
succeeded in filtering) as much litigation as possible through the SEC’s own

5
Under the 1934 Act as Landis wrote it, “[a]ny person aggrieved by an order issued
by the Commission” could seek judicial review, § 25(a), 48 Stat. at 901 (emphasis added),
whereas the current version of § 78y applies to “[a] person aggrieved by a final order of the
Commission,” 15 U.S.C. § 78y(a)(1) (emphasis added). Congress did not add the word

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“final” to § 78y until 1975. See Securities Acts Amendments of 1975, Pub. L. No. 94-29,
§ 20, 89 Stat. 97, 158. Two points about these texts bear emphasis.
First, Landis’s version of the statute precluded even more judicial review than the
current version of § 78y. That’s because Landis also included an exhaustion requirement,
and under the common law that existed at the time, such exhaustion requirements
disallowed judicial review of non-final agency action. See § 25(a), 48 Stat. at 902 (“No
objection to the order of the Commission shall be considered by the court unless such
objection shall have been urged before the Commission.”). As the Supreme Court once
emphasized, such exhaustion requirements—not the “any person aggrieved by an order”
language—operated to deny or delay judicial review:
[T]he long-settled rule of judicial administration [is] that no one is entitled
to judicial relief for a supposed or threatened injury until the prescribed
administrative remedy has been exhausted. That rule has been repeatedly
acted on in cases where, as here, the contention is made that the
administrative body lacked power over the subject matter. Obviously, the
rules requiring exhaustion of the administrative remedy cannot be
circumvented by asserting that the charge on which the complaint rests is
groundless and that the mere holding of the prescribed administrative
hearing would result in irreparable damage.
Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50–51 (1938). And it cannot be
contended that Congress added the word “final” to import this exhaustion-based denial of
judicial review into § 78y because the same 1975 amendment that added the word “final”
also retained the exhaustion requirement. See § 20, 89 Stat. at 159. Thus, whatever work
the word “final” does after 1975, it cannot be read to duplicate the work done by the
exhaustion requirement in Landis’s bill. See Antonin Scalia & Bryan A. Garner,
Reading Law: The Interpretation of Legal Texts 174 (2012) (describing
the canon against surplusage). (Nor can § 78y(c)(1)’s current exhaustion requirement do
the work it did back in Landis’s day without destroying multiple modern doctrines—
including Thunder Basin and pre-enforcement review under Abbott Laboratories v. Gardner,
387 U.S. 136 (1967)—that authorize judicial review before the conclusion of an agency
proceeding.)
Second, when Landis wrote the 1934 Act, Congress had not yet enacted the
Administrative Procedure Act (“APA”). It enacted the latter in 1946. Thus, when Landis
wrote the 1934 Act, its review provision provided the only statutory mechanism to seek
judicial view of “an order issued by the Commission,” whereas today targets like Cochran
can ignore § 78y and rely instead on the APA for a cause of action, see Cochran v. SEC, No.
19-cv-66-A, Doc. 1, at 20–21 (N.D. Tex. Jan. 18, 2019) (APA claims in Cochran’s
complaint). So Landis could limit judicial review of the SEC’s work simply by failing to
authorize it in the 1934 Act, whereas today the SEC must make the much harder showing

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channels, he didn’t capture everything. To the contrary, § 78y draws a bright
line between pre-final order and post-final order review: Those who are
“aggrieved by a final order” and seek “review of the order” fall within
§ 78y’s purview. Ibid. Those who aren’t and don’t, don’t.
The Supreme Court’s analysis in Free Enterprise tracks the distinction
in § 78y’s text. Some parties are aggrieved by a final order, and “[o]nce the
Commission has acted, aggrieved parties may challenge ‘a final order of the
Commission’ or ‘a rule of the Commission’ in a court of appeals under
§ 78y.” Free Enterprise, 561 U.S. at 489. But some parties have claims outside
the scope of § 78y, because the SEC and PCAOB can take actions that are not
“encapsulated in a final Commission order or rule.” Id. at 490. “[T]he text
[of § 78y] does not expressly limit the jurisdiction that other statutes confer
on district courts. Nor does it do so implicitly.” Id. at 489 (citation omitted).
Thus, parties with claims not covered by § 78y—that is, parties aggrieved by
SEC action other than a final order or rule—are free to invoke other
jurisdictional statutes to get their claims into federal court.
The SEC and the dissent attempt to redraw the line created by § 78y
and Free Enterprise. They would prefer an implicit dotted line precariously
positioned between investigation and enforcement. Attempting to justify this
line textually, the dissent invokes the principle that “[s]pecification of the
one implies exclusion of the other,” and argues that “section 78y’s grant of
jurisdiction to the aggrieved party’s local circuit or the D.C. Circuit only after
issuance of a final agency order” implies that other courts lack jurisdiction.

that a provision originally enacted to provide judicial review (however modestly in Landis’s
day) now operates as an implicit strip of jurisdiction over a cause of action that Congress
provided elsewhere. But cf. Abbott Lab’ys, 387 U.S. at 141 (“The mere fact that some acts
are made reviewable should not suffice to support an implication of exclusion as to others.
The right to review is too important to be excluded on such slender and indeterminate
evidence of legislative intent.”).

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Post, at 72–73 (Costa, J., dissenting) (quotation omitted). But the dissent begs
the key question in applying its principle to §78y: Precisely what jurisdiction
does that statute “specify” as allocated to the courts of appeals, such that
other courts are implicitly precluded from exercising it? As just discussed,
the statute draws the line at the point when a “final order of the Commission
[is] entered” and specifies that a court of appeals has jurisdiction over
challenges to that final order. 15 U.S.C. § 78y(a)(1). So, following the
principle that “specification of the one implies exclusion of the other,”
district court jurisdiction over such a challenge to the final order is precluded.
And that is the majority’s position in this case. The dissent claims it is merely
applying a venerable interpretive principle, but its argument really hinges on
its unjustified decision to draw a line between investigation and enforcement.
That line, unlike the majority’s final/non-final line, is unsupported by the
statute’s text.
2.
One might think that if the investigation-enforcement distinction
lacks a textual basis, perhaps it’s nonetheless a practical tool that neatly
tracks two dichotomous sets of on-the-ground SEC activities. Again, wrong.
Investigation and enforcement are two stages of the same administrative
process, conducted by the same division of the SEC. And it makes little
practical sense to draw a neat legal line between them, because the SEC
blends the two activities in a variety of ways, and even conducts both
simultaneously.
Investigation and enforcement are both carried out by the SEC’s
“Enforcement Division,” which is the division that “[1] recommend[s] the
commencement of investigations of securities laws violations,
[2] recommend[s] that the Commission bring civil actions in federal court or
before an administrative law judge, and [3] prosecut[es] these cases on behalf

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of the Commission.” Sec. & Exch. Comm’n, How Investigations Work (Jan.
27, 2017), https://perma.cc/VX42-USC3 (emphasis added). The process
begins when the SEC’s “official curiosity” is aroused, perhaps after a review
of periodic filings or a complaint by a competitor or whistleblower. Marc J.
Fagel et al., SEC Investigations and Enforcement Actions, in Securities
Litigation: A Practitioner’s Guide 14-4 (Robert F. Serio et al.
eds., 2018). Enforcement Division staff might open a “Matter Under
Inquiry” (“MUI”) and ask the target or other witnesses to provide
documents or give testimony voluntarily. From the SEC’s perspective,
“[t]he threshold determination for opening a new MUI is low” because of
the SEC’s incomplete information and desire for additional facts. Sec. &
Exch. Comm’n Div. of Enf’t, Enforcement Manual 13
(2017), https://perma.cc/WQ7R-QPYK.
If the SEC is not satisfied with the information it can procure
voluntarily, it might turn to more formal and coercive investigative tools. The
Director of the Enforcement Division can issue a “Formal Order of
Investigation,” delegating the SEC’s statutory authority to subpoena
documents and testimony, see 15 U.S.C. §§ 77s(c), 78u(b), to specific staff.
See 17 C.F.R. § 200.30–4(a)(1); Enforcement Manual, supra, at 17.
These staff are then “empowered to administer oaths and affirmations,
subp[o]ena witnesses, compel their attendance, take evidence, and require
the production of any books, papers, correspondence, memoranda,
contracts, agreements, or other records” deemed “relevant or material to the
inquiry.” 15 U.S.C. § 78u(b). After issuance of the formal order, staff may
begin to subpoena documents and testimony from the target and third
parties. This process “often last[s] months or even years.” Sec. & Exch.
Comm’n, Investor Bulletin: SEC Investigations (Oct. 22, 2014),
https://perma.cc/9688-Q3XY. And none of it is public unless the SEC
orders otherwise. 17 C.F.R. § 203.5.

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At some point during the investigation, if staff decide that an
administrative proceeding should be brought against the target, the “Wells
Process” begins. 6 At this point, the matter looks a lot like litigation, even
though it has not yet reached the “e

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/5134547. Public record. Not legal advice.