{"id":37330,"date":"2022-06-08T06:13:55","date_gmt":"2022-06-08T10:13:55","guid":{"rendered":"http:\/\/angry.net\/blog2\/?p=37330"},"modified":"2022-06-08T06:13:55","modified_gmt":"2022-06-08T10:13:55","slug":"court-rules-that-secs-judges-are-unconstitutional","status":"publish","type":"post","link":"https:\/\/angry.net\/blog2\/?p=37330","title":{"rendered":"Court rules that SEC\u2019s judges are unconstitutional"},"content":{"rendered":"

Good day all. This story has slipped under the radar. I saw it last week and put it into my to do list. The 5th<\/sup> Circuit Court of appeals ruled that the Security and Exchange\u2019s judges are unconstitutional and that their ruling regarding securities law are invalid.<\/p>\n

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I first saw this story on Vox<\/a>, but other then a quick glance, didn\u2019t have time to go through it. While reviewing it today, I recalled that Vox is to the left of Mao Tse Tung and it shows in their story. However, it was a good place to start and I landed on this version in The Hill<\/b><\/a>:<\/p>\n

The 5th Circuit Court of Appeals on Wednesday ruled the Securities and Exchange Commission (SEC) is denying defendants their constitutional right to a jury trial by putting them in front of its own internal judges. <\/b><\/p>\n

In a 2-1 ruling,<\/a> the court ruled for George Jarkesy and Patriot28 LLC, who sued the SEC in 2011 after the agency imposed a $300,000 fine and other punishments in a securities fraud case. <\/b><\/p>\n

Judge Jennifer Walker Elrod wrote in the majority opinion that the SEC violated the Seventh Amendment\u2019s right to a jury trial by bringing defendants before in-house judges and allowing the agency to \u201cact as both prosecutor and judge.\u201d <\/b><\/p>\n

Congress also unconstitutionally delegated power to the SEC to act as a legislative body, Elrod wrote. <\/b><\/p>\n

\u201c\u2018We the People\u2019 are the fountainhead of all government power. Through the Constitution, the people delegated some of that power to the federal government so that it would protect rights and promote the common good,\u201d Elrod said. \u201cBut that accountability evaporates if a person or entity other than Congress exercises legislative power.\u201d <\/b><\/p>\n

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To coin a phrase, WOW! Now I am no legal scholar and never played one on TV. If I make any mistakes, I will rely on people replying in the comments section. The decision was not unanimous, obviously. Judge Eugene Davis issued this dissent.<\/p>\n

In a dissenting opinion, Judge Eugene Davis disagreed, saying the right to a jury trial did not pertain to administrative proceedings and that the SEC was enforcing laws and statutes in the public interest. Davis also said Congress did not overreach in empowering the SEC to enforce action through its administrative proceedings. <\/b><\/p>\n

A few things. First, Judge Davis is, to put it bluntly, quite long in the tooth and should have retired 10 years ago. (He\u2019s 85) Second, while he was appointed to the bench initially by Gerald Ford, and then to the 5th<\/sup> Circuit by Ronald Reagan, his opinion shows that he doesn\u2019t understand the Constitution.<\/p>\n

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The SEC was founded by Franklin Delano Roosevelt, and while the idea wasn\u2019t bad, the execution has always been questionable. (FDR was not one who gave a damn about the Constitution) The judges are part of the administrative branch of the government, not the judicial. This looks like a violation of the separation of powers, and wide open to abuse. Without question, this is going to the United States Supreme Court. Oh wait, another case is already on it\u2019s way.<\/p>\n

The ruling comes two days after the U.S. Supreme Court agreed to a hear a separate but similar case involving the SEC\u2019s administrative powers and in-house judges in a suit brought by Texas accountant Michelle Cochran. <\/b><\/p>\n

I\u2019ve looked up that case and found some details on Reuters<\/b><\/a>:<\/p>\n

The U.S. Supreme Court on Monday agreed to hear the Securities and Exchange Commission’s bid to block a challenge to the constitutionality of its in-house tribunal brought by a Texas accountant who the agency punished after faulting her audits of publicly traded companies.<\/strong><\/p>\n

The justices took up the SEC’s appeal of a lower court ruling that revived certified public accountant Michelle Cochran’s challenge. The lower court rejected the agency’s argument that under a U.S. law called the Securities Exchange Act Cochran could not contest the constitutionality of the tribunal’s judges in federal court before the end of the SEC’s administrative enforcement proceeding against her. <\/b><\/p>\n

This case is rather convoluted, but basically states that Ms. Cochran had no chance of receiving a fair and impartial hearing. There are some details in the Reuters story<\/a> on what happened and how things proceeded.<\/p>\n

Cochran sued the SEC in 2019 to stop the enforcement action against her, arguing that its in-house judges, who enforce investor protection laws and regulations, have job protections that unlawfully insulate them from a president’s power to control executive branch officers under the U.S. Constitution’s Article II. <\/b><\/p>\n

After the Supreme Court in 2018 ruled that the way the SEC’s judges were appointed violated the Constitution, the agency set aside the decision against Cochran and assigned her case to a new, properly appointed judge. <\/b><\/p>\n

I have a vague memory of that decision. I looked it u<\/a>p and apparently, the judges were appointed internally by the S.E.C. and not by the president and then confirmed by the Senate. I can see why people are challenging the authority of the Securities and Exchange Commission. Returning to the Hill story<\/a>, it details the charges against the plaintiffs and how the SEC judges ruled against him. The defendant in the case, George Jarkesy, went to a real court arguing that he had no chance and that this was, for all intents and purposes, a Star Chamber proceeding<\/a>.<\/p>\n

Before bringing the case to the 5th Circuit Court of Appeals, Jarkesy and Patriot28 had attempted to bring the case before the U.S. District Court in Washington, D.C., and the U.S. Court of Appeals for the D.C. Circuit but were denied and sent back to the SEC\u2019s administrative process. <\/b><\/p>\n

So much for your due process rights. The reason for all this can be laid directly at the feet of Congress.<\/p>\n

The Dodd-Frank Act, passed after the 2008 financial crisis, empowered the SEC to bring cases before its own internal judges and institute penalties against defendants. <\/b><\/p>\n

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Dodd-Frank is one of the worst laws passed by Congress in recent memory. It was a classic case of Congress trying to show people that they were \u201cDoing something\u201d after the 2008 financial mess. The fact that it stripped people of their right to appear before a judge and jury should have rendered it moot. Now we have one case going to the Supreme Court, and you can bet that this one may as well. Depending on how the court rules, it could blow a massive hole in the regulatory state\u2019s ability to punish people and provide them no recourse. Looking at the Vox posting<\/a>, (And recall they support big government and the suppression of individual rights, other then their own of course), they are saying that this could throw the regulatory agencies into chaos. (Like this is a bad thing?)<\/p>\n

If Jennifer Walker<\/b> <\/b>Elrod\u2019s decision stands, it could throw much of the federal government into chaos. <\/b>At least some of those 30 agencies that use ALJs would lose this adjudicative capacity if Elrod\u2019s opinion stands, though Elrod does place one significant limit on her third holding. <\/b><\/p>\n

An ALJ is shorthand for Administrative Law Judges.<\/p>\n

ALJs are civil servants, who can only be fired for limited reasons<\/a> by the SEC\u2019s commissioners, and only after they\u2019ve received a hearing from an agency known as the Merit Systems Protection Board. The SEC\u2019s commissioners, meanwhile, can only be fired by the president for cause. According to Elrod, the fact that \u201cSEC ALJs are insulated from the President by at least two layers of for-cause protection from removal\u201d renders them unconstitutional. <\/b><\/p>\n

I can see why Judge Elrod would say that the ALJ\u2019s are unconstitutional. Currently, a federal judge can only be removed by impeachment and conviction from the bench. They can be arrested if they commit a crime of course, but if that happens, they won\u2019t be sitting in court hearing cases. Firing a civil servant is basically impossible meaning that there would be no way to remove them short of jailing them for a crime, and possibly not even then.<\/p>\n

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Now why would this throw the government into chaos? The reason is that a number of agencies use these administrative law judges when lording it over the serfs.<\/p>\n

A similar structure exists in the Social Security Administration, which employs nearly 1,700 ALJs<\/a> to adjudicate disputes over who is entitled to benefits. Like SEC commissioners, the head of the Social Security Administration \u201cmay be removed from office only pursuant to a finding by the President of neglect of duty or malfeasance in office<\/a>.\u201d <\/b><\/p>\n

If Elrod\u2019s third attack on the SEC is correct, in other words, then it is likely that the Social Security Administration\u2019s small army of ALJs also are not allowed to hear benefits disputes because they would also be too hard for the president to fire. <\/b><\/p>\n

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Vox continues to flip out over the possibility that the Supreme Court might rule in favor of Jarkesy and render the regulatory state dead.<\/p>\n

Elrod and Oldham, in other words, have done the judicial equivalent of tossing a Molotov cocktail into the federal government. If federal law permitted such a thing, then maybe their decision would be justifiable. But their decision is not just an invitation to chaos, it is at odds with decades of established law. <\/b><\/p>\n

Oh yes, the old \u201cWell there is all this precedent and we must follow precedent no matter what!\u201d as long as that precedent gives us, (The left), what they want. If the precedent goes the other way, then it is invalid and overturning it is a good thing. (You can always tell a Liberal, you just can\u2019t tell them much) The simple fact is, if these regulatory agencies are exercising authority that is not permitted under the Constitution, and frankly most of them are, then they need to be shut down. Most of these agencies came into being under the Roosevelt Administration, (Both of them actually), and have been ruling like little Lords for decades. Forget the Molotovs, how about dropping the legal equivalent of a nuke?<\/p>\n

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Thatisall<\/p>\n\"1\"2\"3\"4\"5 (3<\/strong> votes, average: 5.00<\/strong> out of 5)
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