In a brief filed last week, the SEC urged the D.C. Circuit to give Chevron deference to the Commission’s unnecessary conclusion that Congress’s 180-day enforcement deadline doesn’t matter. The conclusion is consistent with case law, but the approach turns basic judicial tenets on their head in a sharp-elbowed approach to Commission authority.

The Commission barred investment-adviser Montford from the industry, and also required disgorgement and civil penalties, over undisclosed solicitor kickbacks and conflicts of interest. See Advisers Act Rel. No. 3829 (May 2, 2014). Montford had been an adviser to the Sea Island Company and Savannah Country Day School, among other non-profits and pension funds.

Montford argued in defense that the Commission’s administrative enforcement action was time-barred because it was instituted 187 days after his Wells Notice. A statutory provision added by Dodd-Frank directs the SEC’s Enforcement Director to decide within 180 days after a Wells Notice whether to commence an enforcement action:

“Not later than 180 days after the date on which Commission staff provide[s] a written Wells notification to any person, the Commission staff shall either file an action against such person or provide notice to the Director of the Division of Enforcement of its intent to not file an action.”

’34 Act § 4E, 15 U.S.C. § 78d-5(a).   The statute provides an exception where the Division Director certifies to the Commission that the matter is “complex” and requires extensions of one or more additional 180-day periods. Id., § 78d-5(a)(2). In Montford’s case, the Director exercised the discretionary extension.

It is a fundamental judicial tenet that cases should be decided on the narrowest ground possible and should avoid reaching – much less making purely “advisory” pronouncements on – other issues not necessary to resolve a given case. In Montford, the Enforcement Director exercised his discretionary authority under the statute to extend the 180-day period another 180 days; and thereafter, the Staff initiated the enforcement action within 7 days (leaving 173 days of un-used extension).

So that should do it, right? Instead, the Commission structured its Opinion and now urges the D.C. Circuit to go at it backwards, starting with the over-broad and unnecessary proposition that the Commission can ignore the statute and in doing so is entitled to Chevron deference. The Commission held the “provision is intended to operate as an internal-timing directive … and not as a statute of limitations.” Opinion at 18. It argues that treating the 180-day period as one of limitations would cause an incongruous result, “letting wrongdoers off the hook” and, had that been intended, then Congress “would not have given the Commission control of the clock” (because it runs from issuance of a Wells Notice, which is discretionary). The Commission also argues that the Division Director’s discretionary extension is presumptively unreviewable.

The Commission’s legal positions in the case are not unusual. Their presentation is striking in its display of “sharp elbows under the basket” — disregarding fundamental rules of judicial decision-making to block out the widest possible position of agency power. Although it could be an issue of first impression among Courts of Appeals, the D.C. Circuit should ignore the red-herring and rule on the narrower ground of the extension.

The case is Montford and Co., Inc. v. SEC, No. 14-1126 (D.C. Cir.); argument is scheduled for April 23, 2015