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Supreme Court Considers Allowing Challenges to SEC and FTC

S.J. Steinhardt
Published Date:
Nov 8, 2022

iStock-922171778 SCOTUS United States US Supreme Court

The U.S. Supreme Court has hinted that it may consider giving companies and individuals the constitutional right to go straight to federal court when facing charges by the Securities and Exchange Commission (SEC) and the Federal Trade Commission (FTC), Bloomberg reported.

Currently, those fighting charges from either federal agency must go through their respective commission proceedings first before challenging the results in federal appeals court.

The question arose as the Court heard two cases yesterday: Axon v. Federal Trade Commission and Securities and Exchange Commission v. Cochran

The crux of both cases is the constitutionality of administrative law judges. These in-house judges possess what critics call an unfair advantage, as they are beyond reach of executive branch control.

Axon is fighting the FTC’s efforts to block its acquisition of what the company called an “essentially insolvent competitor.” The Commission challenged the acquisition on the grounds that it reduced competition. In its Supreme Court filing, Axon claimed that the law offers too much protection to administrative law judges, who are “insulated by unconstitutional double-for-cause removal restrictions and subject to review by an unaccountable Commission.”

Cochran, an accountant, was accused of engaging in improper professional conduct by the SEC in 2016. Her lawyer told the Court that “this case illustrates the crucial importance of this district court jurisdiction for everyday Americans who find themselves trapped before an unconstitutional agency decision maker.”

The SEC filed more than 700 enforcement actions in the last fiscal year, winning judgments and orders worth $6.4 billion, Bloomberg reported. The FTC returned $2.4 billion to consumers last year.

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