Supreme Court limits SEC's powers to impose fines
The U.S. Supreme Court, in a 6-3 vote, declared unconstitutional the way the Securities and Exchange Commission imposes fines for fraudulent conduct and requires that wrongdoers give back their ill-gotten gains.
Writing for the court majority, Chief Justice John Roberts said the use of administrative law judges to make factual findings and legal conclusions deprives accused wrongdoers of their Seventh Amendment right to a jury trial.
The court’s decision could have huge ripple effects on dozens of agencies that use ALJs to make factual and legal findings on everything from labor rights to mine safety and energy regulation.
Ironically, the agency is likely to suffer fewer consequences, largely because the Supreme Court, beginning in 2018, began eating away at the agency’s power to use administrative law judges, and the agency, in response, decreased the number of ALJ’s at the agency from six to two, choosing instead to bring its cases mainly in federal court.
Federal courts, however, do not have some of the tools the agency has to protect the securities market—tools such as barring offenders from working in the securities and investment business. That can only be done by the agency, which must take extra steps to do that after it wins in court.
As damaging as the court’s decision is for many federal agencies’ ability to enforce their mandate, the court majority did not go as far as it could have. At least for now, it excluded from its decision those agencies that deal with federal benefits. Indeed, the largest cadre of Administrative Law Judges—more than 1,500 ALJ’s— make decisions in over a half million hearings and appeals each year at the Social Security Administration.
Conversely, while the court’s conservatives