The SEC – and its Administrative Law Judges – Win Again



In a major victory for the Securities and Exchange Commission, the D.C. Circuit yesterday ruled that the agency’s in-house tribunals are constitutional.

Judge Judith W. Rogers issued the ruling in the leading case challenging the constitutionality of the appointment of the SEC’s administrative law judges. Rogers said that because ALJs don't issue “final” decisions on behalf of the agency, they can't be considered officers subject to Appointments Clause restrictions on their employment.

The SEC has previously fought constitutional claims in several venues, but those cases have been ruled to be premature because the respondents had not yet received an adverse ruling from both an SEC administrative law judge and the full commission.

That makes this case all the more important—the D.C. Circuit is now the first federal appeals court to address the merits of whether the SEC's ALJs are hired constitutionally. The decision is a major win for the SEC, which will no doubt use the ruling to help it clear the federal dockets of similar challenges.

Read more about the case here.

For more information on Administrative Law Judge actions, see Bloomberg Law’s SEC ALJ Enforcement Analytics and SEC ALJ Enforcement Tracker.