Law \ Legal

Supreme Court Poised To Let Accused Fraudsters Bring Challenges To SEC In-House Courts’ Constitutionality Earlier Rather Than Simply Ruling On SEC In-House Courts’ Constitutionality

Four years ago, having successfully skirted the issue for years, the U.S. Supreme Court finally weighed in on the issue of the constitutionality of the Securities and Exchange Commission’s very handy in-house judicial system. In Lucia v. SEC, the court ruled 7-2 that the Lucia in question—an investment adviser the SEC believed had a habit of stretching the truth a bit about how thoroughly back-tested his strategies were—had a bone to pick with the agency, since the administrative law judge who found against him hadn’t been appointed by the Commission itself but by its staff, and was therefore improperly appointed. Crucially, it did not find that the SEC’s whole administrative law system, and by extension those of every other federal agency, unconstitutional.

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