A federal appeals court today will consider whether Wall Street’s top cop has vested too much power in its in-house courts, a system that regulators expanded several years ago as they sought to speed enforcement actions against firms and individuals accused of fraud and wrongdoing, the Wall Street Journal reported today. The U.S. Court of Appeals for the District of Columbia Circuit will provide the latest forum for lawyers arguing over the legitimacy of the Securities and Exchange Commission’s administrative courts. The forums are run by officers who have career appointments, such as U.S. district judges, but are employees of the agency. The SEC’s judges are expected to independently oversee enforcement hearings even though the agency’s commissioners can reverse their decisions. The SEC’s in-house courts generated little controversy for decades, but a decision in 2014 to lean more heavily on the tribunals sparked a backlash. Lawyers defending clients challenged how the judges are hired, arguing their sweeping powers mean that presidentially-appointed commissioners should appoint them, instead of human-resources officials.
