Another court has weighed in on the constitutionality of the SEC's use of administrative law judges.
The U.S. Court of Appeals for the 10th Circuit "set aside the SEC's opinion" and granted a petition for review by David Bandimere, whom the regulator had accused of securities violations in 2012. The court classified the SEC's in-house judges as "inferior officers" under the Constitution's Appointments Clause, presiding over cases such as Bandimere's in violation of said clause.
The SEC's increased use of its internal courts has been heavily criticized, with defendants pushing for their cases to be heard in what they expect to be a less-biased venue. To counter arguments of unconstitutionality, the SEC has pointed out that, because its judges' decisions are not considered final, they should count as employees, not officers. The agency also contends that Congress itself intended for administrative law judges to be classified as employees.
In addressing Bandimere's petition, the appeals court said the regulator "overstates its arguments," placing "undue weight on final decision-making authority" and failing to cite "legislative history" or "statutory language" in its interpretation of Congress' intentions.