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Everyone Deserves Their Day in Court.

SEC Hires Administrative Law Judges to Hear Their Case Against You. NCLA is fighting for Michelle Cochran to have her case heard before a federal judge, not an SEC appointed bureaucrat.


Her Story.

Cochran v. SEC

Texas accountant Michelle Cochran has fought hard for this moment. On November 7th, 2022, Michelle will ask the U.S. Supreme Court to determine if she has the right to present her case against the U.S. Securities and Exchange Commission before a real federal judge. It might sound like an odd request. Don’t we all have the right to be heard before a “real judge”? Well, not if you are going up against the SEC. This agency employs administrative law judges to preside over their case against you.

Michelle has been down this road before. In 2017, an SEC ALJ ruled against her, imposing a $22,000 fine and banning her from practicing as an accountant for five years. But in June 2018, the U.S. Supreme Court ruled in Lucia v. SEC that SEC ALJs were not properly appointed under the Constitution.

Ray and Jeanne Lucia outside of the U.S. Supreme Court after their win, June 2018

ALJs, the Court held, are “officers of the United States” and must be appointed by the president rather than hired by the agency.

— Lucia v. SEC, 585 U. S. ___ (2018)

The SEC had the choice to proceed before a federal district court, but instead, it assigned Michelle’s case to a new ALJ for a do-over. SEC employees play judge, jury, and prosecutor in agency proceedings, so unsurprisingly, the agency wins the vast majority of the cases it brings in-house. In fact, Cameron Elliot, the ALJ assigned to Michelle’s case, often warned defendants that he never ruled against SEC in enforcement proceedings.

Problem is, SEC ALJs are not appointed by the president. They are hired by the SEC like any other civil servant. To faithfully execute the laws under the Constitution, the president must not only be able to appoint all federal officers but remove them as well. If the president cannot remove officers such as ALJs, then the president can’t control the administrative agencies they are charged with overseeing.

The consequence for Ms. Cochran is that her second enforcement proceeding is just as unconstitutional as her first—which means that after being prosecuted yet a second time, she will ultimately have to run the SEC enforcement gauntlet all over again.

SEC’s administrative proceedings can take such a crushing personal, financial, and reputational toll that most targets are forced to settle, even if they protest their innocence profusely. Michelle deserves to have her case heard before a federal court that is competent to decide the constitutional claims at issue before the unconstitutional ALJ proceeding takes place.

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