Federal court: SEC cannot use employees as judges

The Securities and Exchange Commission practice of trying many complaints before administrative law judges (ALJs) who are its own employees, rather than before federal courts, has grown increasingly controversial lately and now one defendant’s challenge to the practice has prevailed — at least for the moment. A federal judge in Atlanta has ruled that because ALJs are “inferior officers” under the constitution, they cannot be simply employed like other federal workers by an agency like the SEC. Writes Thaya Knight at Cato, “there is a fairly easy fix available to the SEC: the five commissioners can simply appoint the existing ALJs to their current positions…. [but] other agencies could face greater difficulties.” But Daniel Fisher quotes Prof. Philip Hamburger as saying the ruling could still prove “profoundly important,” leading to the unraveling of other aspects of administrative law arrangements within agencies. More: W$J (commission fighting off at least seven legal challenges; in one instance it “asked one of its own judges to submit a formal statement about whether he has ever felt pressure to favor the agency”), Adam Zimmerman/PrawfsBlawg.

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