Supreme Court Provides One Answer about SEC Administrative Law Judges, but Leaves Many Questions, INSIGHTS - The Corporate & Securities Law Advisor

July 2018

On June 21, in Lucia v. Securities and Exchange Commission, the US Supreme Court held that administrative law judges of the US Securities and Exchange Commission are not mere federal employees but qualify as “Officers of the United States” under the Appointments Clause of the US Constitution, which requires such officers to be appointed by the president, courts of law, or heads of departments. Lucia’s further implications for decisions issued by SEC ALJs (and by ALJs at other federal agencies) remain to be seen. 

The SEC—which confidently announced last November that it had “resolved any concerns that administrative proceedings presided over by its ALJs violate the Appointments Clause” by “ratifying” their prior appointments—appears to be baffled about what lies ahead for its administrative process. Immediately after receiving the Lucia decision, the Commission issued an order staying all pending administrative proceedings for thirty days or until further order of the Commission.

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