Abe Rein and Carolyn Kendall Examine Constitutional Challenges to SEC's Administrative Law Judges for Bloomberg BNA
In a June 2015 article for Bloomberg BNA's Securities Regulation & Law Report Abraham J. Rein and Carolyn H.Kendall examine recent constitutional challenges to the Securities & Exchange Commission's (SEC) administrative proceedings and the administrative law judges (ALJ) that adjudicate them.
The authors explain:
"Facing the prospect of having to defend themselves in administrative proceedings with these odds and without the full procedural protections of federal court, parties have brought various constitutional challenges to the SEC’s administrative proceedings and the ALJs who adjudicate them. Among these is the claim that the manner in which SEC ALJs are appointed violates the Appointments Clause of Article II of the Constitution.
Recently, this claim, unlike other alleged constitutional infirmities, has gained traction in reviewing federal courts. Success on the merits would yield a determination that the appointments of the SEC’s five ALJs, which appear to have been made by administrative functionaries and not by any SEC Commissioner, are unconstitutional."
The article sets forth the Appointments Clause challenge to the SEC’s ALJs and discusses the potential ramifications for past, present, and future parties to SEC administrative enforcement proceedings, as well as potential arguments that the SEC might try to use to limit the impact of a successful Appointments Clause challenge.