Ice Skating up Hill : Constitutional Challenges to SEC Administrative Proceedings

Since the inception of the Dodd-Frank Act the Securities and Exchange Commission has come under fire for its increased use of administrative proceedings in adjudicating the agency’s enforcement actions. That criticism has come to several suits in federal court claiming constitutional challenges to the system generally and most recently, the Administrative Law Judges themselves. Until June of 2015, when Hill v. the SEC took place in federal court, the Government was unbeaten in when arguing against these constitutional challenges. Hill, however found that it was likely the SEC had hired their Administrative Law Judges unconstitutionally. The SEC Administrative Law Judges have progressively been given more power through Congressional legislation and the question became whether these judges were mere employees, or inferior officers under the executive branch. While I think it is likely that an appellate court would uphold such an interpretation, I do not think it will lead to less SEC administrative proceedings and could potentially cause financial harm to those with cases currently in such a proceeding.