Tag: ALJs

SEC Defends Administrative Judges in Initial Supreme Court Brief

Administrative law judges should be able to adjudicate enforcement proceedings in which the government seeks civil penalties for securities violations, the Securities and Exchange Commission said in its opening brief before the US Supreme Court. The Fifth Circuit’s ruling against the use of ALJs rests on a misunderstanding of legislative power, and Congress didn’t violate the constitution by allowing the…

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SEC Calls In-House Judge Challenge Moot After It Dropped Case

An investment adviser’s second lawsuit challenging the SEC’s in-house judges on constitutional grounds should be dismissed as moot, the agency said Monday, citing a mix-up that led it to toss dozens of internal cases. The Securities and Exchange Commission’s enforcement case against Christopher Gibson was among those affected by a database issue that failed to protect adjudication staff memos from…

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Supreme Court to Decide Fund Manager’s 10-Year SEC Fight — SEC Roundup | ThinkAdvisor

Jarkesy contends, and a federal appellate court agrees, that the SEC’s administrative proceedings are unconstitutional and deny IAs and others their right to a jury. “It’s a very broken system,” McColloch said. The SEC sets up “these fake courts, I call them fake, inside the agency, administrative law judges … and they put on trials, just like a federal court…

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U.S. Supreme Court Takes Up Case Concerning the SEC’s Use of In-House Court | The D&O Diary

The Supreme Court’s decision to take up the case sets up the court’s consideration of a host of interesting legal issues. From my perspective, the Seventh Amendment question – that is, whether the agency’s use of the administrative tribunals violates the constitutional right to a jury trial – is particularly interesting. The other issues, about delegated authority and separation of…

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The Spectacular Implosion of the SEC’s Adjudication System | Russ Ryan

Last Friday afternoon, the Securities and Exchange Commission quietly issued what is arguably its most humiliating administrative order ever. In one fell swoop, the SEC unconditionally gave up against more than 40 enforcement targets the agency had previously spent untold staff resources prosecuting over the past decade. In essence, what I’ve previously called the SEC’s “Hotel California” adjudication system just imploded and…

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Supreme Court decision could see SEC facing logjams in enforcement cases | Pensions & Investments

The Supreme Court’s unanimous decision on April 14 granting companies and people facing SEC charges the ability to challenge the agency’s constitutional authority in U.S. District Court before the SEC resolves the matter in-house could cause “headaches” for at least some of the SEC’s enforcement efforts, said Christian D. H. Schultz, a Washington-based partner at Arnold & Porter Kaye Scholer…

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Federal Agencies Face Constitutional Fights After High Court Loss

The US Supreme Court’s decision allowing the FTC and SEC’s in-house litigation defendants to sue the regulators is the latest dent in the continued attenuation of federal agencies’ enforcement powers. The unanimous ruling Friday in a pair of combined cases, Axon Enterprise v. FTC and SEC v. Cochran, allows the Federal Trade Commission and Securities and Exchange Commission’s enforcement targets…

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Victory! U.S. Supreme Court Holds that Federal District

In an historic ruling, the U.S. Supreme Court this morning held that Texas Accountant Michelle Cochran has the right to challenge the constitutionality of her Administrative Law Judge’s (ALJ) removal protections in federal court before undergoing an administrative adjudication. Writing unanimously for the Court, Justice Kagan’s opinion stated, “The statutory review schemes set out in the Securities Exchange Act and…

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SEC Asks High Court to Address Agency Judges’ Constitutionality

The Fifth Circuit ruled incorrectly in finding the SEC’s use of executive-branch judges unconstitutional, the agency said in a petition asking the US Supreme Court for review. At issue is a challenge by investment adviser George Jarkesy to the Securities and Exchange Commission’s determination that he couldn’t participate in certain securities activities and had to pay civil penalties. A divided…

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