A federal judge’s ruling against the Securities and Exchange Commission for using its own judges in an insider-trading case might be looked at in hindsight as the beginning of the end of an alternative system of justice that took root in the New Deal but has raised serious constitutional questions ever since.
In a 45-page ruling yesterday, U.S. District Judge Leigh Martin May in Atlanta issued an injunction halting administrative law proceedings against Charles Hill, a businessman the SEC has accused of reaping an illegal $744,000 profit trading in Radian Systems stock. The judge ruled that the agency violated the Appointments Clause of the Constitution by subjecting Hill to proceedings before an administrative law judge who isn’t directly accountable to the President, officials in charge of the SEC or the courts.
While it’s just a single ruling by a single judge on a seemingly arcane point of administrative law, the decision echoes the deep concerns some judges and academics have about extrajudicial proceedings, said Philip Hamburger, a professor a Columbia Law School and author of “Is Administrative Law Unlawful?,” a book that compares the modern administrative state to the Star Chamber operated by King James I.
In her ruling, Judge May attacked an important element of the system of independent agencies first set up during the administration of President Franklin Delano Roosevelt, under which Congress delegates its authority to administer complex regulations to federal agencies overseen by supposedly independent boards. Those agencies also can use administrative law judges, operating outside the rules requiring life tenure and other protections under Article III of the Constitution, to decide civil complaints.
Full Story @ [Forbes]