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SEC Loses Bid for Review of Ruling on Constitutionality of ALJs

Oct. 21, 2022, 10:39 PM

The US Court of Appeals for the Fifth Circuit on Friday declined to reconsider its ruling that the Securities and Exchange Commission’s administrative hearings are unconstitutional.

A divided Fifth Circuit panel in May vacated an SEC decision that hedge-fund manager George Jarkesy Jr. committed securities fraud. The panel found, in part, that restrictions on removing SEC administrative law judges only for cause violated the separation of powers.

“The majority’s decision thus leaves uncertain how the Commission can proceed on remand if it were to use an ALJ,” attorneys for the SEC said in their July petition for full court review. ...