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SEC Shifts on ALJ Hiring as DOJ Joins Opponents; Vote for Commissioners May Face Delay

The SEC announced that it has ratified its prior appointment of its administrative law judges and issued an order which directs the ALJs, among other things, to review their actions in all open administrative proceedings. The Commissioners’ direct approval of the ALJs represents a shift away from a controversial hiring process being fought in the courts.  “By ratifying the appointment of its ALJs, the Commission has resolved any concerns that administrative proceedings presided over by its ALJs violate the Appointments Clause” of the Constitution, the SEC said. The announcement and order came after the Department of Justice filed a brief supporting a plaintiff’s challenge to the ALJs’ status. The DOJ briefasks the U.S. Supreme Court to decide whether the SEC’s judges are inferior officers who must be appointed consistent with the Appointments Clause of the Constitution. The DOJ wrote that in prior stages of the case, the government argued that the SEC’s ALJs are mere employees rather than “officers” within the meaning of the Constitution, however “the government is now of the view that such ALJs are officers because they exercise “significant authority pursuant to the laws of the United States.’” The DOJ’s brief may increase the chances that the Supreme Court will hear the case, according to the Wall Street Journal.

Meanwhile, a Democratic senator has sent letters to SEC Commissioner nominees Hester Peirce and Robert Jackson questioning their views on activist investors, stock buybacks and executive pay, according to a Wall Street Journal report. Senator Tammy Baldwin said she would not vote to confirm the two nominees until they clarify their views.  

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