WASHINGTON, Sept 15 (Reuters) - Dallas Mavericks owner Mark Cuban took a swipe at the U.S. Securities and Exchange Commission on Tuesday after he filed a court brief which criticizes the agency’s in-house trials as being unconstitutional.
The amicus brief, filed in U.S. Court of Appeals for the Eleventh Circuit, backs the legal arguments of Charles Hill, a real estate developer who was accused by the SEC of insider-trading and is fighting to have his case moved from the agency’s in-house court to a federal court.
Cuban has been a vocal critic of the SEC, after a federal jury cleared him of insider-trading charges in 2013 following a years-long battle.
The flamboyant billionaire has become one of the most high-profile voices to wade into a brewing legal debate over the fundamental fairness of the SEC’s in-house trials - a venue that many say wrongfully deprives defendants of the protections they would get in a federal court.
“As a businessman who has faced down a misguided SEC enforcement litigation, Mr. Cuban offers a front-row perspective on the practical importance of the legal and constitutional issues at stake in this litigation,” says the brief, which was written by Cuban’s attorneys at Brown Rudnick LLP.
Many defendants over the past year have tried and failed to convince federal judges to move their trials to courts.
They have argued that the way the SEC’s administrative law judges are appointed violates the U.S. Constitution because they operate as “inferior officers,” but cannot be directly removed by the president.
So-called inferior officers are appointed by the president or other administration officials without the approval of the U.S. Senate.
But in June, Hill convinced a federal judge in Georgia to stay his in-house trial until she could review the case further. In her order, she said Hill had a “likelihood” to succeed on the merits of his case. [ID: nL1N0YU225] [ID: nL1N10G2II]
The SEC has since appealed the stay of the trial before the 11th Circuit.
Cuban, in his brief, argues that he benefited from protections that Hill would lose in an in-house trial, such as the ability to conduct discovery.
Had Cuban been in Hill’s position and faced a trial before an SEC administrative law judge, the brief adds, then “Mr. Cuban likely would have been found liable ... on an untested legal theory and based on incomplete and misleading facts.”
“The SEC’s growing practice of bringing these cases administratively increases risk to investors,” his lawyer wrote. (Reporting by Sarah N. Lynch; Editing by Alan Crosby)