The Second Circuit has affirmed dismissal of “diva of distressed” Lynn Tilton’s constitutional challenge to the SEC’s administrative forum, holding that issue isn’t reviewable by the courts until an appeal after two levels of SEC action.

The Court held the Congressional scheme of SEC’s administrative proceedings implicitly precludes prior review (though not expressly) and provides meaningful judicial review thereafter upon appeal. The opinion discussed at length the contours of the three controlling Supreme Court opinions: Elgin v. Dept. Treasury, 132 S. Ct. 2126 (2012); Free Enterprise Fund v. PCAOB, 561 U.S. 477 (2010); Thunder Basin Coal co. v. Reich, 510 U.S. 200 (1994).

Dissenting, Judge Droney criticized the majority for having collapsed the two “wholly collateral” and “outside the agency’s expertise” prongs of the Thunder Basin analysis into a single non-substantive inquiry satisfied if the agency proceedings have started.

The 2nd Circuit joins the 7th and D.C. Circuit’s holdings to establish a “majority view” among federal courts. See Bebo v. SEC, 799 F. 3d 765 (7th Cir. 2015), cert. denied, 136 S. Ct. 1500 (2016) and Jarkesy v. SEC, 803 F. 3d 9 (D.C. Cir. 2015).

The panel’s Tilton opinion seems to doom Duka and leaves the Hill, Gray and Ironridge cases pending in 11th Circuit as the last best hope of those asking Courts to rule on the constitutionality of the SEC’s administrative forum, before having endured both its levels.

The Opinion in Tilton v. SEC, No. 15-2103 (2nd Cir. June 1, 2016) is here.