Uncertainty Remains For SEC Administrative Suits

Uncertainty Remains For SEC Administrative Suits

Apr 04, 2017


Co-author, Law360, April 4, 2017

"On March 28, 2017, a Kansas federal judge refused to halt an ongoing U.S. Securities and Exchange Commission administrative proceeding despite the U.S. Court of Appeals for the Tenth Circuit’s decision last December in Bandimere v. SEC,[1] which raised serious doubt regarding the constitutionality of such proceedings. In Bandimere, the Tenth Circuit held that SEC administrative law judges are inferior officers subject to the appointments clause of Article II of the U.S. Constitution.[2] The appointments clause provides that inferior officers must be appointed by the president with Senate approval, or by the president, the courts, or department heads pursuant to congressional conferral. Since the inception of the SEC’s administrative program, the agency’s administrative law judges have been hired merely as employees and have not been appointed in accordance with the strictures of the appointments clause. Thus, according to the Tenth Circuit, the administrative law judge in Bandimere presided over the hearing in violation of the Constitution, and as a result, the circuit court set aside the SEC’s opinion affirming the administrative law judge’s initial decision." 

To read the full article from Law360, please click the PDF above. 

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