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.

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