Lawsuits Challenge Legality of SEC Administrative Hearing Process

The SEC’s administrative proceedings – which never once ruled against the SEC between September 2013 and September 2014 – violate the U.S. Constitution because administrative law judges have excessive job protection, according to two lawsuits filed in the Southern District of New York. SEC ALJs may be fired only for good cause by the SEC, and members of the SEC themselves may be fired only for good cause, thereby creating two levels of tenure, in violation of the Constitution’s call for only a single level, the lawsuits claim.