The U.S. Supreme Court, in a 6-3 vote, declared unconstitutional the way the Securities and Exchange Commission imposes fines for fraudulent conduct and requires that wrongdoers give back their ill-gotten gains.
The court’s decision could have huge ripple effects on dozens of agencies that use ALJs to make factual and legal findings on everything from labor rights to mine safety and energy regulation. Federal courts, however, do not have some of the tools the agency has to protect the securities market—tools such as barring offenders from working in the securities and investment business. That can only be done by the agency, which must take extra steps to do that after it wins in court.
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