The U.S. Court of Appeals for the 11th Circuit in Atlanta is challenging one of the Securities and Exchange Commission's key legal tools, according to a report late last week from The Wall Street Journal, and it could lead to a restructuring of the regulator's use of what's commonly known as civil injunctions.

In a nutshell, the SEC uses its civil injunctions within an enforcement action, which are backed by a judge's signature, to prevent individuals from misconduct in the future. The civil injunctions are very broad statements and are meant to encompass any number of securities statutes and regulations. But the Atlanta court is calling the statements "unenforceable" and has said that they must be written so that a defendant can determine precisely what conduct has been prohibited.

The court's opinion is little more than a footnote, but experts told The Wall Street Journal that it would be hard for the SEC to ignore.

"The court is saying these injunctions are too 1/4vague," said William McLucas, a former SEC enforcement chief and now a partner in the Washington law firm of Wilmer Hale. "I would think they have no option now but to present more-narrow and specifically tailored consent decrees to federal judges if they want the orders signed."

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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