A Supreme Court case testing the limits of federal receivership power
When the Securities and Exchange Commission sued Texas real-estate developer Timothy Barton, the agency did not limit its action to freezing specific assets alleged to be connected to misconduct. Instead, it sought the appointment of a receiver with authority over almost the entire network of Barton’s companies and business interests.
Federal receiverships are traditionally described as temporary tools designed to preserve assets while litigation proceeds. In Barton’s case, however, the receivership expanded into long-term operational control, affecting ongoing businesses, real estate projects, and revenue streams.
At the center of Barton v. SEC is the SEC’s reliance on a provision of federal securities law allowing courts to grant “equitable relief.” Barton argues that this vague statutory language has been stretched beyond its historical limits.
According to Barton’s petition for certiorari, courts have interpreted equitable relief to permit the seizure and management of every company that allegedly benefited, even indirectly, from the defendant’s conduct, as described by the New Civil Liberties Alliance. Barton contends that this approach closely resembles civil asset forfeiture, where property is taken before guilt is established.
In October 2025, Barton filed a petition for a writ of certiorari asking the U.S. Supreme Court to review the Fifth Circuit’s decision upholding the receivership. Initially, the government waived its right to respond.
The Supreme Court then took the unusual step of requesting a response from the Solicitor General, as reflected on the Supreme Court’s docket. Court observers view such requests as a signal that at least some Justices believe the case raises serious constitutional or statutory questions.
Civil liberties organizations, policy groups, and elected officials — including the New Civil Liberties Alliance — have warned that expansive receiverships threaten due process and the right to counsel of choice. They argue that defendants cannot meaningfully defend themselves when the government controls all of their resources.
Others have raised separation-of-powers concerns, questioning whether courts should supervise long-term executive control of private businesses without clear authorization from Congress.
For all the legal arguments now before the Court, the stakes in Barton v. SEC are not abstract. When a receivership takes control of a person’s businesses, it does not just freeze balance sheets — it freezes lives. Employees wonder if their jobs will survive. Families live with years of uncertainty. Defendants are left trying to defend themselves without the very resources the system normally allows them to use.
The Supreme Court’s decision will not decide whether Timothy Barton is right or wrong. It will decide something more fundamental: whether, in America, the government may take everything first and leave the question of fairness for later, or whether limits still matter before a jury ever hears the case.
Timothy Barton Speaks with Ed Henry on Newsmax