Securities and Exchange Commission v. Sloan (1977)
- Docket
- 76-1607
- Decided
- 1977-01-01
Summary
Question: Is a challenge to the Securities and Exchange Commission (SEC) over its exercise of the authority to suspend the trading of stock of a particular company moot if the SEC asserts it has no plans to consider further orders against that company? Does § 12(k) of the Securities Exchange Act of 1934 permit the Commission to issue consecutive orders for the suspension of trading of a particular company's stock? Conclusion: The issue presented is not moot because the source of the injury "is capable of repetition, yet evading review." On the merits, § 12(k) of the Securities Exchange Act of 1934 does not grant the Commission authority to issue a series of summary orders that would suspend trading in a stock beyond the initial 10-day period, absent additional circumstances warranting such action. Justice William Rehnquist delivered the opinion that was unanimous as to the judgment. As to the question of mootness, the Court's precedent provides that a case is not moot when "(1) the challenged action was in its duration too short to be fully litigated prior to its cessation or expiration, and (2) there was a reasonable expectation that the same complaining party would be subjected to the same action again." Because of the historic practices of CJL, of which Sloan still owns stock, it remains likely that the SEC will again suspend trading of its shares, creating a "reasonable expectation of recurring injury" to Sloan. As to the merits, the Court first looked to the language of § 12(k), which provides that the SEC may "summarily to suspend trading in any security . . . for a period not exceeding ten days." The Court found that the SEC's interpretation of this provision as permitting redetermination every 10 days under a single set of circumstances was "not the most logical or logical one." Moreover, the power to suspend, effectively indefinitely, the trading of a company's stock is "an awesome power, with a potentially devastating impact on the issuer, its shareholders, and other investors." Such power may only arise from a "clear mandate from Congress," which § 12(k) does not provide. The Court concluded that "Congress did not intend the Commission to have the power to extend the length of suspensions under § 12(k) at all, much less to repeatedly extend such suspensions without any hearing." Justice William Brennan filed a concurring opinion, in which Justice Thurgood Marshall joined. Justice Harry Blackmun filed an opinion concurring in the judgment.