Compliance » Using In-House Judge at SEC ‘Likely Unconstitutional’

Using In-House Judge at SEC ‘Likely Unconstitutional’


June 11, 2015

The SEC’s use of an in-house judge to preside over an insider-trading case was “likely unconstitutional,” a federal judge ruled this week. The ruling comes as a blow to the SEC’s increasing use of its five administrative law judges to hear cases, rather than sending them to federal court. Several lawsuits filed against the agency claimed that the SEC’s administrative proceedings – which never ruled against the SEC between September 2013 and September 2014 – violate the Constitution because of the nature of the appointment process. One person close to the agency said that the SEC may change the way it appoints judges as a result of the ruling.

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