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Constitutionality of the SEC’s ALJ Appointment Process: After the SEC’s Reversal of Position, What Next?

Recorded on: Feb. 16, 2018
Running Time: 01:06:18

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Taken from the One-Hour Briefing Recorded February 2018 in New York

Constitutionality of the SEC’s ALJ Appointment Process: After the SEC’s Reversal of Position, and the Supreme Court’s Acceptance of Certiorari Review, What Next?

[Running Time: 01:06:18]

Since 2010, the SEC has increasingly used in-house administrative law judges to adjudicate its enforcement actions.  This practice has drawn criticism from the defense bar, who in a variety of ways have attacked the fairness and legitimacy of these proceedings.  One such attack – an argument that ALJs are ‘officers’ of the United States hired for their positions in a manner that violated the Constitution’s Appointment’s clause – split the Tenth and D.C. Circuits, and on January 12, 2018 was granted certiorari review.  The timing of the Supreme Court’s review is interesting; only recently, on November 29, 2017, the SEC stunningly reversed its previous position and publically conceded that its ALJs held office in violation of the Appointments clause.  The SEC also purported to re-appoint its ALJs in a manner consistent with the Constitution and specified steps that it would take in an effort to remedy any constitutional infirmity that may have affected its pending administrative actions.  The SEC nonetheless urged the Supreme Court to review the issue, arguing that it was not moot because of the importance of ALJs to other Government agencies.  The Supreme Court appears to have agreed.    

The Supreme Court’s review and the SEC’s reversal raise various questions for past, present and future defendants of SEC and other agency administrative actions.  In this briefing, Eugene Ingoglia, a partner at Allen & Overy LLP, will address some of those questions, including:  

  • Will past defendants be able to vacate SEC orders entered against them if the Supreme Court rules that ALJs were improperly appointed? If not, why not?
  • Are the SEC’s proposed steps to remedy defects to pending administrative actions satisfactory?
  • Do any other constitutional issues flow from the conclusion that ALJs are officers? If so, can these be fixed?
  • Will the Supreme Court’s decision affect ALJs at other agencies?
  • What practical guidance, if any, should practitioners navigating an ALJ proceeding heed in light of the SEC’s reversal and the upcoming Supreme Court decision?


Presentation Material

  • Constitutionality of the SEC’s Administrative Law Judges
    Eugene Ingoglia
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