U.S. District Judge Richard Berman in Manhattan yesterday ruled (Duka v SEC) that the U.S. Securities and Exchange Commission’s method for appointing in-house judges is “likely unconstitutional.”
This is a major setback for the SEC which, as Bloomberg‘s Ellen Rosen points out, greatly expanded its use of administrative law judges after enactment of the Dodd-Frank law.
“Berman held that because of the power they wield in overseeing internal cases, administrative judges probably should be appointed by the president or SEC commissioners,” reports Rosen.
Last week, Berman said the agency could adopt an “easy fix” and change its appointment process, but the SEC has so far refused to do so.
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