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Circuits Split on Constitutionality of SEC Administrative Law Judges

January 4, 2017, Covington Alert

One piece of the ongoing debate over the Securities and Exchange Commission’s use of Administrative Law Judges to adjudicate enforcement actions may be heading to the U.S. Supreme Court. On December 27, 2016, in Bandimere v. SEC, the U.S. Court of Appeals for the Tenth Circuit invalidated SEC sanctions against an individual on the ground that the ALJ who presided over the proceeding was hired in violation of the U.S. Constitution’s Appointments Clause. The decision directly conflicts with the D.C. Circuit’s August 2016 decision in Lucia v. SEC.

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