Bass, Berry & Sims attorney Britt Latham was quoted by Reuters in an article discussing a ruling by the United States Court of Appeals for the Fifth Circuit that the U.S. Securities and Exchange Commission’s (SEC) in-house courts, led by administrative law judges (ALJs), violate the constitution. Specifically, Britt discussed the potential broader impact of this decision and what the SEC’s next course of action might be, agreeing that the SEC may appeal the matter straight to the Supreme Court of the United States.
In its 2-to-1 decision on May 18, 2022 in Jarkesy v. SEC, the appellate court held that defendants facing allegations of fraud have a right to a jury trial as opposed to administrative hearings conducted by the SEC. While the near-term effects of the decision and potential reach to other agencies remains to be seen, the issue of ALJ appointments and oversight remains an issue to watch. In fact, the U.S. Supreme Court announced on May 16 it would review a decision that allowed a challenge to the constitutionality of ALJs in SEC v. Cochran.
The full article, “Ruling on SEC Judges Could Have Broad Impact,” was published on May 20 by Reuters and is available online.