SEC’s Use of In-House Administrative Law Judges Challenged
A private equity adviser questioned the practice, which could make other SEC enforcement actions eligible for a rehearing.
The SEC dropped charges against a private equity adviser, Timbervest LLC, after the firm challenged the SEC’s use of an in-house administrative law judge, or ALJ.
After it was determined the firm failed to adequately disclose details of a sale and repurchase of land between multiple funds advised by the firm, Timbervest challenged the SEC’s use of an ALJ.
The firm was one of several parties to object to the use of these in-house judges on the ground that they should have been appointed by the president or agency head, rather than treated as regular federal employees.
In June 2018, the U.S. Supreme Court sided with those challenging the use of ALJs, making many of the SEC’s prior enforcement actions eligible for a rehearing.
