A federal judge ruled yesterday that the Securities and Exchange Commission’s use of an in-house judge to preside over an insider-trading case was “likely unconstitutional,” a potential blow to the agency’s controversial use of its internal tribunal, the Wall Street Journal reported today. The decision possibly creates a serious headache for the SEC, which is increasingly using its five administrative-law judges to hear its cases, rather than sending them to federal court, legal experts said. Although the ruling was preliminary, and won’t necessarily be duplicated in other federal courts, it could have ramifications for other SEC cases and potentially other federal agencies. In a ruling in Atlanta, U.S. District Judge Leigh Martin May agreed yesterday to temporarily halt an insider-trading administrative case against Charles Hill, pending her final decision on his argument that the SEC’s use of the forum is unconstitutional.
