Bioelectronics Corp (BIEL)

[Det_Robert_Thorne]

One court, "Yea", another, "Nay". Call Supreme Court

In August, 2016, in the case of the SEC v. Lucia (which also involved SEC ALJ Elliot, the DC Court of Appeals ruled unanimously (3-0) that the SEC's use of ALJs did not violate the Appointments Clause of the Constitution because they can't issue final decisions.

Yesterday, the Court of Appeals for the 10th Circuit ruled 2-1 that the SEC's ALJs do violate the Appointments Clause because (I'm paraphrasing) the final decision is a formality.

Because of the two opposing views from different Courts of Appeal, this will likely go to the US Supreme Court.

http://www.newyorklawjournal.com/this-weeks-news/id=1202775675756/Ruling-May-TeeUp-Power-of-SEC-ALJs-for-High-Court-Review

Yes, this does mean that the Initial Decision against BIEL will be delayed, and that perhaps even the case will have to be retried under a judge who meets the provisions of the Appointments Clause, but for now, the action in Judge Elliot's court continues.

That's because according to an order filed yesterday (12/27) on the SEC site, on Dec 23, BIEL filed "... a motion to correct manifest errors of fact in the initial decision." Judge Elliot specified a Jan 3, 2017 due date for the Division's response, and stated that the motion must be resolved by Jan 23, 2017.

He then went on to explain that because of various things regarding the calendar, holidays and weekends not being allowed as due dates, the Division had requested until Jan 12, 2017 to respond to BIEL's motion, and BIEL didn't oppose, so Jan 12 it is.

And then Judge Elliot's response got interesting:

1) He said that no BIEL reply to the Division's response would be permitted, and that it is "... his intention to resolve the motion by Jan 23, 2017, nowithstanding the extension of time."

2) He also ordered that the Division didn't have to bother responding to FIVE of the issues present in BIEL's motion, because they were purely legal arguments, and "not properly presented in a motion ot correct manifest errors of fact".

IMO, he already sees BIEL's motion as a delaying tactic, but can't say so.

From the filing, here are the five things BIEL wanted to re-litigate, but Judge Elliot disposed of (I think numbers 2 and 4 are especially amusing):

It is further ORDERED that in responding to the motion the Division need not address the following issues: (1) whether the statute of limitations and the Commission’s positions in bankruptcy proceedings bar disgorgement for unlawful securities sales predating April 17, 2010 (motion at 3-15 ); (2) whether income tax payments may offset the ordered disgorgement (motion at 3-4 ); ( 3 ) whether accrued interest should be counted as ill-gotten gains (motion at 15); ( 4 ) whether sales proceeds reinvested in BioElectronics should be counted as ill-gotten gains (motion at 16-17); and ( 5 ) whether the civil penalty imposed against St. John’s was excessive (motion at 25-29). Such arguments are purely legal and are not properly presented in a motion to correct manifest errors of fact.

https://www.sec.gov/alj/aljorders/2016/ap-4484.pdf

Finally, trading has been really light this week. IMO, that's because the note converters quit early on Friday, Dec 23, and are taking time off between Christmas and the New Year's holiday on Jan 2.

I expect note conversion to begin again in earnest on Jan 3, 2017.

Though it's possible that some companies may take off next week as well, but I doubt it.