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SEC denied administrative law judge process rehearing in appeals court

The Securities and Exchange Commission lost its bid Wednesday to have the 10th U.S. Circuit Court of Appeals in Denver reconsider a Dec. 29 decision that its administrative law judge hiring process violates the Constitution.

A majority on the judicial panel voted against a rehearing in the case brought by Colorado businessman David Bandimere against the SEC, but Judges Carlos Lucero and Nancy Moritz strongly disagreed in a dissenting opinion, saying that the matter “presents numerous questions of constitutional importance” that the Supreme Court may ultimately decide. “The impact of this opinion will be substantial, and it presents a threat of disruption throughout our government,” the dissenting judges wrote.

The December decision was the second by an appeals court to weigh in on the constitutional question, following an Aug. 9 decision by the District of Columbia Circuit, which upheld the SEC’s use of administrative law judges. That three-judge decision was vacated in February when the Washington appeals court granted a rehearing by a full 10-judge panel, scheduled for May 24.

Other challenges have been rebuffed before addressing the constitutional question, or are still awaiting rulings in other circuits.