On September 8, the U.S. Court of Appeals for the Fifth Circuit denied a petition for review brought by two former executives of a failed Texas bank, upholding industry bans and $250,000 in civil penalties imposed by the OCC. The petitioners argued the OCC’s in-house enforcement action deprived them of their constitutional right to a jury trial, relying on the U.S. Supreme Court’s decision in SEC v. Jarkesy (covered by InfoBytes here) that limited the SEC’s use of in-house courts.
The 5th Circuit rejected this argument, finding that Jarkesy was “distinguishable in important ways.” The panel explained that OCC enforcement actions fall within the “public-rights doctrine” because they were designed to protect the entire banking system, rather than regulate private transactions. The court emphasized the longstanding use of in-house proceedings in federal banking regulation and the Supreme Court’s “repeated confirmation” of the public-rights exception in this context.
The panel concluded that the public-rights exception applies to federal banking enforcement actions and that the petitioners had no right to a jury trial. The court also rejected the petitioners’ statute of limitations argument, holding that the limitations period did not begin until the OCC determined that their actions “would probably harm the bank.”
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