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An Administrative Court Scandal at the SEC

November 29, 2023

… “Without a doubt, the mass dismissal of these open cases is an evasion of the review promised by the Supreme Court,” says Peggy Little, senior counsel at the New Civil Liberties Alliance (NCLA). “Conveniently, it also seeks to extinguish discovery on the breadth, depth and extent of file-sharing” between the SEC’s courts and cops.

Little and the NCLA represented Michelle Cochran in her seven-year struggle against the SEC’s administrative law system, which culminated in a unanimous victory at the Supreme Court in April. Writing the majority opinion in SEC v. Cochran, Justice Elena Kagan said plaintiffs caught up in administrative legal systems had the right to challenge the constitutionality of those procedures in the regular legal system without first having to complete the often expensive and time-consuming administrative legal process.

“The challenges are fundamental, even existential,” wrote Kagan. “They maintain in essence that the agencies, as currently structured, are unconstitutional in much of their work.”

That ruling portends more robust judicial reviews of how administrative legal systems operate. By preemptively dismissing those 42 cases in June, Little says, the SEC has slammed the door on those plaintiffs trying to get their day in a proper court.

“The SEC’s use of its own misconduct as window dressing for this unprecedented mass dismissal of its open docket is an obvious and cynical ploy to evade imminent federal court review of agency administrative adjudication,” she tells Reason….

Originally Published in Reason