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In a recent case before the Supreme Court, the conservative justices indicated that they were skeptical about the constitutionality of the Securities and Exchange Commission’s (SEC) use of in-house tribunals. The case focused on whether the SEC violated a defendant’s right to a jury trial. The defendant was accused of making fraudulent stock trades.
The conservative justices expressed concerns that the tribunals are not impartial and lack procedural safeguards. It was noted that the agency has sole discretion to pick, staff, and oversee the tribunals along with the authority to review decisions, and that the SEC can change the decision without any outside review. The justices also questioned whether the in-house tribunals weaken financial industry accountability, undermine investor rights, and produce an unfair outcome for defendants. Justice Ginsburg noted that the SEC’s in-house courts not only lack “independence but also neutrality.”
The ruling in this case will have far-reaching implications for the use of in-house tribunals by other federal agencies. If the Court rules that the use of in-house tribunals is unconstitutional, it could result in a major shift in the way that federal agencies conduct their affairs. The final ruling has yet to be made, but if the Court rules against the SEC, it could drastically reduce their ability to handle certain cases.