Anticorruption Developments -

The U.S. Court of Appeals for the 10th Circuit Rules That the SEC's Use of ALJs is Unconstitutional

- On December 27, 2016, the U.S. Court of Appeals for the 10th Circuit ruled 2-1 that the Securities and Exchange Commission’s (SEC) process for hiring administrative-law judges (ALJ) violates the Appointments Clause of the U.S. Constitution. The decision states that, in 2012, the SEC brought an administrative action against David Bandimere, a Colorado businessman, alleging violations of various securities laws. An SEC ALJ presided over a trial-like hearing and concluded that Mr. Bandimere was liable for the violations, barred him from the securities industry, ordered him to cease and desist from violating securities laws, imposed civil penalties and ordered disgorgement. Thereafter, the SEC reviewed and affirmed the ALJ’s initial decision in a separate opinion.