SEC v. Sloan

Supreme Court of the United States · 1978 · Corporations

436 U.S. 103 (1978)

Updated August 22, 2026

CorporationsSecurities regulationAdministrative lawMootnessSECSecurities Exchange Act§ 12(k)summary suspension

Facts

The SEC issued a series of consecutive 10-day orders suspending trading in Canadian Javelin, Ltd. stock, first from November 29, 1973, to January 26, 1975, and then through a second series of 37 orders from April 29, 1975, to May 2, 1976. The second series was based on evidence relating to alleged manipulation of the stock and related concerns, but the Court treated the case as one involving a single set of circumstances rather than distinct new events justifying each order. Sloan owned 13 shares of Canadian Javelin stock and had also engaged in substantial purchases and short sales of that stock. During the second series, he challenged the SEC's authority to "tack" 10-day summary suspensions together beyond the statute's stated 10-day limit.

Issue

Does § 12(k) of the Securities Exchange Act authorize the SEC, after periodic redeterminations of necessity, to issue successive summary 10-day suspension orders based on a single set of circumstances so as to suspend trading beyond the initial 10-day period? Also, was the case moot once the challenged suspension orders had expired?

Rule

Under § 12(k), the SEC may summarily suspend trading in a security for a period not exceeding 10 days, but it may not, based on a single set of circumstances, extend that summary suspension beyond the initial 10-day period by issuing successive orders. A case challenging such orders is not moot if the challenged action is too short in duration to be fully litigated before expiration and there is a reasonable expectation that the same complaining party will be subjected to the same action again.

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In New York, the federal securities regulator learns that North Harbor Minerals, Inc. may have inflated reserve estimates in a single set of promotional statements. It issues a 10-day summary trading suspension, and at the end of each 10-day period it issues another identical suspension after internally redetermining that the public interest still requires trading to remain halted.

Is the regulator acting within its statutory authority?

Explanation. The majority held that the statutory phrase authorizing summary suspension 'for a period not exceeding ten days' sets the maximum period for a summary suspension based on a single set of circumstances. Periodic redeterminations of necessity do not authorize rolling over 10-day orders to create a longer suspension.