The Supreme Court said yesterday that the in-house Securities and Exchange Commission judge who handled the case of investment advisor Raymond Lucia was a constitutional "officer," meaning he should have been directly appointed by the SEC, Bloomberg News reported. Lucia had been fined $300,000 by the SEC judge and barred from working as an investment adviser. Writing for six justices in the majority, Justice Elena Kagan said Lucia was entitled to a new hearing before a different judge or the commission itself. The ruling could affect about 100 cases currently at the SEC, along with a dozen that are on appeal in the federal courts. It also could affect hearing systems at other government agencies, including the Federal Deposit Insurance Corp. and the Consumer Financial Protection Bureau, which have similar systems for appointing what are known as administrative law judges. The Constitution requires that officers, as opposed to mere employees, be appointed by the president, a department head or a court. The SEC’s judges were selected by the chief judge and approved by the commission’s personnel office. The commission has five administrative law judges, including the chief judge. The Trump administration took the unusual step of backing Lucia at the high court and arguing that the SEC’s appointment process for judges was unconstitutional. That was a shift for the federal government, which had previously contended that agency judges lacked enough authority to be considered officers. The administration, however, disagreed with Lucia about the practical implications of the constitutional issue, saying the commission has retroactively fixed the problem by ratifying the judges’ appointments itself.
