Monday, January 29, 2018

The SEC's Unconstitutional Hearing Process - Will the Supremes Fix It?

We have addressed the bizarre, and unconstitutional situation in SEC administrative proceedings, where the Commission files a complaint, appoints the "prosecutor" and the judge, and creates the rules under which the trial will be held. It is a process that is unfair on its face. The situation creates real-life kangeroo courts, where the rules of evidence are tossed out the window, the SEC staff can put in any "evidence" it wants, including double and triple hearsay - witnesses testifying that someone told them that someone else said that the broker said something. Bizarre, unconstitutional, and terrifying if you are the defendant.

The situation is made worse by the fact that the SEC appointed some of its in-house judges in violation of the United States Consitution, causing further constitutional issues, and causing many respondents to challenge the process, and seek to overturn the decisions of these judges.

The United States Supreme Court has agreed to address the appointment issue in Lucia v. SEC.  If the court should find in favor of  Lucia, the decision could affect more than 100 pending cases to appear before administrative law judges and those which have already been decided.

The SEC is clearly concerned about the case, and has attempted to "reappoint" its judges, and to order them to accept new evidence in the cases which have been started, or which are on appeal.

The fact that the Supreme Court sees an issue with how administrative law judges have been hired means the methods might not be constitutional and their rulings might not be valid.

In the interim, hundreds of cases are being reconsidered, and may be dismissed.

See, Supreme Court review will bolster fairness of SEC's in-house judges

Mark J. Astarita, Esq. represents a financial professional in one of these administrative proceedings, which is now on appeal, and being reconsidered. He is a partner in the national securities law firm of Sallah Astarita & Cox, LLC and can be reached by email at or by phone at 212-509-6544. 

Follow us on Twitter and Facebook