Wing Chau, a money manager who’s been in hot water with the Securities and Exchange Commission since last year, now says the agency is violating his constitutional rights by using its administrative machinery—and not the federal courts—to press its case. Chau’s arguments echo those of another SEC target, Rajat Gupta, who persuaded a federal judge in New York three years ago that the SEC seemed guilty of forum-shopping. But with a trial just days away, Chau may have a tougher time derailing the SEC’s case.
Chau and his firm, Harding Advisory LLC, sued the SEC in U.S. district court in Manhattan on Friday, accusing the government of pursuing its case against him through an agency administrative proceeding rather than a federal lawsuit. Chau’s lawyers at Nixon Peabody want U.S. District Judge Lewis Kaplan to issue an emergency injunction halting the SEC action, in which the agency alleges that Chau defrauded investors in a $1.5 billion collateralized debt obligation known as Octans 1.
