Right after Christmas, the United States Court of Appeals for the Tenth Circuit delivered a lump of coal to the Securities and Exchange Commission in Bandimere v. U.S. SEC,1 ruling that the SEC’s administrative law judges (ALJs) who preside over SEC enforcement actions hold their positions in violation of the Appointments Clause of the United States Constitution. The Bandimere decision in its entirety may be found here. Concluding that SEC ALJs are inferior officers, rather than mere employees of the agency, the Tenth Circuit adopted the same arguments that plaintiffs such as Gray Financial Group, Inc. (Gray) and others successfully pressed in multiple district courts which ultimately enjoined unconstitutional administrative proceedings. SEC ALJs preside over many SEC enforcement actions, and the Bandimere holding potentially undermines the constitutionality of their proceedings, if not ultimate rulings, on a countless number of cases. And because ALJs are not used by only the SEC, but also by other administrative agencies as well, the Bandimere decision therefore may have broader implications beyond just the SEC. The Bandimere ruling creates a circuit split with the D.C. Circuit’s decision earlier this year in Lucia v. SEC,2 perhaps setting the stage for the United States Supreme Court to decide the issue of SEC ALJ constitutional officer status.

To read more, please view the GT Alert,The 10th Circuit Declares SEC’s Home Courts to be Unconstitutional and Creates Circuit Split.”


1 — F.3d —, No. 15-9586, 2016 WL 7439007 (10th Cir. Dec. 27, 2016).
2 832 F.3d 277 (D.C. Cir. 2016).