In July, Justice Elena Kagan, writing for the majority in Lucia v. Securities and Exchange Commission, authored a narrow opinion that has potentially broad implications. The subject matter in Lucia was the constitutional appointment of administrative law judges (ALJ). Many agencies were potentially affected, but none as much as the Social Security Administration (SSA), which relies on over 1,600 ALJs to adjudicate hundreds of thousands of hearings every year, deciding whether some of the most vulnerable segments of our population, the physically and mentally impaired, meet the regulatory criteria to receive benefits that many of them need to live. Kagan may have answered the specific question posed to the court in Lucia (whether or not the SEC‘s ALJs were required to be appointed under the appointments clause of the Constitution or not), but in doing so she triggered many more questions, most of which still have no answer and may not for some time to come.

When Ray Lucia, a well-known radio personality and financial adviser, was found guilty by an ALJ of misleading investors and subsequently faced $300,000 in civil penalties and a lifetime ban from the investment community, he appealed the ALJ’s initial decision, focusing on the ALJ himself, arguing that he was unconstitutionally appointed. This argument did not find any traction with the U.S. Securities and Exchange Commission, and fared no better before the U.S. Court of Appeals for the Tenth Circuit. Lucia finally petitioned to the U.S. Supreme Court for relief.

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