The U.S. Court of Appeals for the 11th Circuit in Atlanta ruled earlier this month that the broad injunctive orders commonly sought by the Securities and Exchange Commission are “unenforceable,” reported The Wall Street Journal.

A defendant who violates an injunctive order, which the SEC employs to deter individuals and companies from committing future securities law violations, may be subject to civil contempt charges that can result in fines, criminal prosecution, and more-severe penalties, according to the Journal. Injunctions generally require that the defendant “cease and desist” from breaking certain statutes or regulations, but the appeals court ruled that injunctions must spell out the specific act, such as insider trading or accounting fraud, that has been prohibited, the newspaper reported.

The appeals court also reportedly found that broad injunctions can strip a defendant of due-process rights. A proceeding for contempt of the original injunction, noted the Journal, would require a lower burden of proof from the SEC than would an additional lawsuit on the new misconduct.

Former SEC chief of enforcement William McLucas, now a partner at the law firm Wilmer Hale, told the paper, “I would think they [the commission] have no option now but to present more-narrow and specifically tailored consent decrees to federal judges if they want the order signed.” Other securities lawyers reportedly agree that the ruling is likely to prompt the SEC to word its injunctions more conservatively.

The 11th Circuit’s jurisdiction is in Alabama, Florida, and Georgia; at least one other circuit court has reportedly ruled that injunctive orders citing a statute are specific enough. SEC officials are reviewing the ruling, according to the Journal.

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