June 28, 2018

SEC Administrative Proceedings After Lucia

Amid a busy and eventful end of term, the Supreme Court last week issued an important decision in Lucia v. Securities and Exchange Commission. The Court held that the SEC’s administrative law judges (ALJs) are not mere federal employees but “officers” covered by the Constitution’s Appointments Clause. That means that the ALJs have to be appointed directly by a “head of department” (here, the SEC’s five Commissioners) or, in theory, by the President or the courts. In the past the SEC’s ALJs had been installed purely through a merit-based civil service system without direct involvement from the Commissioners. Lucia is a significant development in administrative law, and in its aftermath, the SEC will probably have to re-do many of its pre-Lucia administrative proceedings.

Dan's analysis of the implications of Lucia for the SEC is available here.