The court distinguished the national banking regulatory regime from the SEC’s antifraud provision in Jarkesy and the FCC’s framework in AT&T.

The public rights exception applies to federal banking enforcement actions. Accordingly, former bank officers who challenged Office of the Comptroller of the Currency (OCC) enforcement authority had no Seventh Amendment right to a jury trial, held the United States Court of Appeals for the Fifth Circuit. The Fifth Circuit rejected the bank officer’s other challenges to the OCC proceedings, including timeliness. The Fifth Circuit denied the petition for review, leaving intact the OCC’s professional prohibition orders and the imposition of a civil monetary penalty of $250,000 on each petitioner (Ortega v. Office of the Comptroller of the Currency, No. 23-60617 (5th Cir. Sep. 8, 2025)).

Background. In January 2022, the OCC announced it would hold a public virtual hearing before an Administrative Law Judge to litigate enforcement actions against Saul Ortega and David Rogers, Jr., executives formerly associated with the closed First National Bank, Edinburg, Texas (see Banking and Finance Law Daily, Jan. 26, 2022). Ortega and Rogers had each served as a former Chairman of the Board. The OCC charged them with violations of law and OCC orders; unsafe or unsound banking practices; and breaches of fiduciary duty. More specifically, the OCC alleged they failed to review loan packages and issued loans to artificially inflate the Bank’s capital positions thereby causing bank losses that prompted OCC closure. The OCC sought prohibition orders to ban Ortega and Rogers from further participation in the conduct of the affairs of any insured depository institution. The OCC also sought the assessment of Civil Money Penalties in the amount of $250,000 against each.

After final orders prohibited Ortega and Rogers (petitioners) from working in the industry and assessed civil penalties of $250,000 on each of them, they appealed to the United States Court of Appeals for the Fifth Circuit by challenging the OCC’s authority to impose penalties and to issue other supervisory orders in a petition. The petitioners raised a total of six issues on appeal: (1) whether the Seventh Amendment right to a jury trial invalidated the exercise of OCC supervisory power per SEC v. Jarkesy, 603 U.S. 109 (2024); (2) whether the ALJ’s appointment was valid; (3) whether the limitations period barred OCC enforcement; (4) whether evidentiary determinations at trial were appropriate; (5) whether substantial evidence supported the Comptroller’s prohibition order; and (6) whether prohibition orders ought to involve a stricter evidentiary standard. The Constitutional Accountability Center (CAC), meanwhile, filed an amicus brief in support of OCC authority (see Banking and Finance Law Daily, Jan. 3, 2025). The Fifth Circuit applied de novo review to constitutional questions and to questions of statutory interpretation.

Seventh Amendment. The Fifth Circuit noted how the district court had distinguished that the claims in SEC v. Jarkesy involved private rights with a long history of adjudication in Article III courts. In contrast, the purpose of OCC enforcement action here, and the statutory scheme in general, was to regulate federally-insured and nationally-chartered banks to ensure proper stewardship of public funds in the federal deposit insurance program and to safeguard the national currency. Such prerogatives have been historically and exclusively the domain of non-Article III adjudicative branches.

A review of the statutory and legislative history of the major banking and regulatory laws supported this conclusion. The National Currency Act of 1863 and its replacement, the National Bank Act of 1864 (NBA), were enacted at a time of great financial stress and need for a national uniform currency and functioning bond market. The NBA established various requirements for national banks, like capital and debt limits, to get beyond the limitations of the state-chartered banks prevailing up to that point, as premised on Congressional authority to provide a national currency.

In 1966, Congress amended the banking regulatory framework by enacting the Financial Institutions Supervisory Act to provide agency adjudicative enforcement hearings consistent with the Administrative Procedure Act (APA). Civil penalties were “not yet in the toolbox,” but Congress provided for them in 1978 under the Financial Institutions Regulatory and Interest Rate Control Act of 1978. Further amendment in 1989 under the Financial Institutions Regulatory Reform and Enforcement Act (FIRREA) added federal court prohibition remedies and tiers of civil monetary penalties.

Essentially, the Fifth Circuit emphasized that federal chartering of banks and the corresponding federal regulatory framework came after the Seventh Amendment; therefore, the Seventh Amendment could not have “preserved” judicial suits for regulatory causes of action. When Congress created the industry and attendant safeguards, it assigned enforcement to the executive branch without any Article III court involvement except as expressly permitted.

The petitioners nevertheless asserted that Congress enacted portions of 12 U.S.C. § 1818 to combat fraud and abuse and that the unsafe banking practices at issue sounded in professional negligence. The petitioners pointed to a House Report in connection with the 1989 FIRREA amendments as impetus for the enhanced enforcement penalties for misconduct, fraud, and abuse.

The Fifth Circuit disagreed, analyzing instead that Atlas Roofing was more analogous to the instant matter than Jarkesy. See Atlas Roofing Co. v. Occupational Safety and Health Review Commission, 430 U.S. 442, 444–45 (1977). Atlas Roofing held OSHA enforcement actions seeking civil monetary penalties were public rights, and Congress had permissibly assigned their adjudication to OSHA instead of Article III courts. The FIRREA amendments likewise assigned adjudication to an administrative agency. One House Report was not enough to overcome the overwhelming history of federal banking regulation and enforcement determined exclusively by the legislative and executive branches.

The Fifth Circuit continued that none of the recent AT&T reasoning about the Seventh Amendment was applicable here. See AT&T, Inc. v. FCC, No. 24-60223, 2025 WL 2426855, at *1, — F.4th — (5th Cir. Aug. 22, 2025). In AT&T, the common carrier doctrine was deeply rooted in common law, but the OCC’s instant position relied on the history of exclusive determination of banking enforcement by the legislative and executive branches.

Appointments clause. The Fifth Circuit found the OCC complied with Lucia as it was decided during the pendency of this enforcement action. See Lucia v. SEC, 585 U.S. 237, 244–45 (2018). Then Treasury Secretary Steve Mnuchin appointed ALJ Whang. Challenges to her appointment were therefore meritless, and any denial of discovery in connection thereto was likewise meritless. The record indicated all discovery relating to her appointment was available in the OCC proceeding below.

Limitations period. The OCC claims were not time-barred. The OCC asserted its claims first accrued the moment all elements were satisfied. Accordingly, even if the officers wrongfully disbursed a loan in 2009, the OCC said that was not time-barred as long as the effect element occurred within the five-year window.

The Fifth Circuit disagreed with the petitioners that this case involved the “continuing violations” doctrine. The misconduct the OCC identified was the serial filing of materially inaccurate information with each successive Call Report. Inaccuracies compounded one another with each new filing. OCC failure to bring the action earlier did not make the claims it brought untimely. See Blanton v. OCC, 909 F.3d 1162, 1172 (D.C. Cir. 2018) (citation omitted).

Trial errors. The petitioners said three trial errors required reversal. First, the Fifth Circuit held the regulations permitted the Comptroller to do anything the ALJ could have done, including refusal to admit repetitive and cumulative evidence. Second, the Comptroller reviewed the petitioners’ disputed proffers of evidence neutralizing any ALJ failure to do so. Last, substantial evidence supported the agency’s actions and findings undercutting putative hearsay and evidentiary violations.

Prohibition order. The Fifth Circuit found the Comptroller sufficiently articulated reasons for rejecting the ALJ’s findings or conclusions on the prohibition orders. The OCC prohibition orders stemmed from misconduct related to the “Capital Raise Strategy.” The ALJ found OCC enforcement counsel failed to prove this element, but the Comptroller agreed with the OCC’s objection and explained its decision for diverging from the ALJ opinion.

Prohibition standard. The Fifth Circuit said it had already determined that the preponderance standard is the appropriate standard, under 5 U.S.C. 556(d), for a banking regulator to order prohibition pursuant to 12 U.S.C. 1818(e)(1). See Lewis v. FDIC, No. 99-60412, 2001 WL 184841, at *2 (5th Cir. Feb. 2, 2001) (citation omitted). The Fifth Circuit cited that the Supreme Court has also instructed the preponderance standard for civil administrative proceedings, including when sanctions prohibit an individual from practicing a profession. See Herman & MacLean v. Huddleston, 459 U.S. 375, 389–90 (1983).

The case is No. 23-60617.

Judge: Wiener, J.

Attorneys: Thomas S. Leatherbury (Thomas S. Leatherbury Law, P.L.L.C.) for Saul Ortega and David Rogers, Jr. Hannah Hicks, Office of the Comptroller of the Currency, for the Office of the Comptroller of the Currency.

Companies: Office of the Comptroller of the Currency