On September 29, 2015, the D.C. Circuit, the second federal appellate court to recently weigh in on the ongoing debate over SEC administrative actions, ruled in favor of the SEC in Jarkesy v. SEC, holding that federal courts do not have subject matter jurisdiction over challenges to ongoing SEC administrative enforcement proceedings. Notably, and in accord with the Seventh Circuit’s recent decision in Bebo v. SEC, the D.C. Circuit’s decision was narrowly tailored – focusing only on the issue of subject-matter jurisdiction – but not the substantive viability of Jarkesy’s constitutional challenges. The three-judge panel unanimously held that a party to a pending administrative proceeding must first defend against that proceeding, and only once the SEC proceeding concludes may the party seek review by a federal court.
Jennifer has spent nearly a decade defending her clients in federal and state litigation alleging fraud, breach of contract, or securities law violations related to residential mortgage-backed securities (RMBS). She is a long-standing key member of an Orrick team that has shaped the legal landscape of RMBS litigation after the 2009 financial crisis, delivering out-of-the box arguments and innovative solutions for our clients, from initial receipt of pre-litigation demands through massive discovery, expert work, summary judgment and trial preparation. Jennifer also has significant mortgage servicing expertise, and represents a major mortgage servicer in a consumer class action in California.
Jennifer is dedicated to pro bono work. She currently works with the Tahirih Justice Center on asylum claims, a cause close to her heart as a child of immigrants. Prior to joining Orrick, she held a fellowship position in the Law Reform Unit at the Legal Aid Society of New York, litigating both individual cases as well as class actions.
Jennifer is a leader and advocate for diversity and inclusion initiatives in the legal profession. She leads Orrick's D&I Committee in San Francisco. She has served as a fellow for the Leadership Council on Legal Diversity, and is active in the California Minority Counsel Program.
Posts by: Jennifer Lee
On August 5, 2015, the Securities and Exchange Commission approved its final rule subjecting most public companies to the so-called “Pay Ratio Disclosure” mandated by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The SEC voted 3-2 to approve the measure, with the panel’s two Republican members opposing it. In the split vote, the SEC finally put into place one of the most controversial rules mandated by Dodd-Frank. In the years since the SEC began working on the rule, it has attracted an intense measure of both public scrutiny and advocacy, drawing more than 286,000 public comments.
The defense bar recently won a significant victory in the battle to challenge the SEC’s expanded use of administrative proceedings, following the 2010 enactment of the Dodd-Frank Act, to seek penalties against unregulated individuals and entities. As we previously wrote in SEC’s Administrative Proceedings: Where One Stands Appears to Depend on Where One Sits and There’s No Place Like Home: The Constitutionality of the SEC’s In-House Courts, SEC administrative proceedings have recently faced growing scrutiny, including skepticism about whether the administrative law judges (ALJs) presiding over these cases are inherently biased in favor of the SEC’s Division of Enforcement. The Wall Street Journal recently reported that ALJs rule in favor of the SEC 90% of the time in administrative proceedings. Administrative proceedings have also been criticized for the ways in which they differ from federal court actions, including that respondents are generally barred from taking depositions, counterclaims are not permissible, there is no equivalent of Rule 12(b) motions to test the allegations’ sufficiency, and there is no right to a jury trial.
On February 24, 2015, the SEC announced that it had reached an agreement with Goodyear Tire & Rubber Co. (“Goodyear”) for Goodyear to disgorge more than $16 million to settle FCPA charges stemming from its Kenyan and Angolan subsidiaries. This settlement is notable because it focuses on bribery involving private companies as opposed to official corruption, which is typically prosecuted by the SEC. While the FCPA’s anti-bribery provisions apply only to improper payments to foreign officials, the SEC charged Goodyear with violations of the FCPA’s books and records provisions, which have no such requirement and instead require a company to keep records that “accurately and fairly reflect the transactions and dispositions of the assets of the issuer” and to “devise and maintain a system of internal accounting controls” sufficient to ensure the integrity of the company’s financial records. This use of the books and records provisions is important because it signals the SEC’s intent and ability to use the FCPA to bring broad, far-reaching enforcement cases that have the potential to ensnare any public company.
In an interesting and uncommon intersection between securities law, curbing human rights abuses and freedom of speech under the First Amendment, the United States Court of Appeals for the District of Columbia recently agreed to re-consider whether the SEC can require companies to disclose whether their products contain “conflict minerals.” The term “Conflict Minerals” is defined in Section 1502(e)(4) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) and refers to certain minerals originating from the Democratic Republic of the Congo (“DRC”), or an adjoining country, that have been used by armed groups to help finance violent conflicts and human rights abuses in those countries. These minerals currently include gold, tin, tatalum, tungsten, and may include any other mineral the Secretary of State determines is being used to finance conflict in the DRC or an adjoining country.