The SEC’s decision not to appeal the ruling of a three-judge panel in the Stanford Ponzi scheme to the full DC Circuit sitting en banc or the Supreme Court brings into stark relief the fact that in the federal judicial system the ruling of a three-judge panel of a US Circuit Court of Appeals is the final word over 99 percent of the time. In this case, the panel ruled that investors in the Stanford Ponzi scheme were not customers of the broker-dealer within the meaning of the Securities Investor Protection Act and that the SEC could not compel SIPC liquidation. Three US Senators, David Vitter (R-LA), Roger Wicker (R-MS) and Thad Cochran (R-MS) had urged the SEC to appeal the DC Circuit panel ruling.
An en banc rehearing by a full US Circuit Court of Appeals is becoming as rare or even rarer than the US Supreme Court granting certiorari in a case. A Wall Street Journal editorial recently noted that, since the 1990s the full D.C. Circuit has chosen to rehear merely one or two—and sometimes zero—of the 500 or so cases heard every year. I have read that the US Supreme Court grants certiorari in less than one percent of the petitions it gets. This leaves a three-judge panel as effectively the final arbiters of constitutional and federal regulatory cases of vast and sometimes momentous importance, cases that sometimes have billions of dollars at stake.