This will probably be a greater inconvenience to other federal agencies than to the SEC.
The original case against George Jarkesy was brought in 2013, based on what Jarkesy had done years earlier. Jarkesy is a conservative talk show host who has also run hedge funds. Since that time there've been a number of other challenges to the ALJs, of which there are now only two. Of those challenges, the one brought by Raymond Lucia was perhaps the most important and most closely followed:
In the middle of the last decade, the agency sent many of its enforcement litigation to the ALJs rather than filing them in federal district court. It wasn't wildly unreasonable for defendants to object to having their cases heard by SEC employees. All of the litigation sought to determine the meaning and correct application of the constitution's Appointments Clause.
So the SEC was prepared for this. It may present greater problems for other federal agencies.
The federal government employed nearly 2,000 administrative law judges and more than 10,000 administrative judges and other non-ALJ adjudicators as of 2017, the most recent year for which comprehensive data was available at the time of this article's last update in March 2024. Unlike administrative law judges, who are officers of the United States and must be appointed by the president, the courts, or agency heads, administrative judges are hired directly by agencies. As such, administrative judges do not share in the statutory protections from removal, discipline, and performance reviews that ALJs receive under the Administrative Procedure Act. According to Paul Verkuil, former chairman of the Administrative Conference of the United States, administrative judges generally have less independence than administrative law judges, are compensated at a lower rate, and have less job security.[11][12][1][13]
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