SEC v. Cochran
Issues
Whether a federal district court, under the Securities Exchange Act of 1934, has jurisdiction over a lawsuit to adjudicate structural constitutional claims challenging Securities and Exchange Commission administrative proceedings?
This case asks the Supreme Court to decide whether a federal district court has jurisdiction over a suit in which the respondent in an ongoing Securities and Exchange Commission (“SEC”) administrative proceeding seeks to enjoin that proceeding, on account of an alleged constitutional defect in the statutes governing the removal of the overseeing administrative law judge. The SEC claims that the Court’s decision in Free Enter. Fund v. Pub. Co. Oversight Bd. specifically allows double-tenure protection for administrative law judges, that decisions in Thunder Basin Coal Co. v. Reich and Elgin v. Dep’t of the Treasury do not require Congress to provide a clear statement in order to strip district courts of jurisdiction, and that constitutional challenges to its administrative adjudications are properly addressed through the Securities Exchange Act of 1934 (“Exchange Act”) and the Administrative Procedure Act (“APA”). Michelle Cochran counters that administrative law judges should not be granted double tenure from removal because it infringes on executive branch authority, that Thunder Basin requires a clear Congressional statement stripping district courts of jurisdiction, and that the SEC’s statutory authority is insufficient to address her constitutional challenge. The Court’s holding could significantly impact the SEC’s adjudicative activities and the nature, volume, and frequency of judicial review cases more broadly.
Questions as Framed for the Court by the Parties
Whether a federal district court has jurisdiction to hear a suit in which the respondent in an ongoing Securities and Exchange Commission administrative proceeding seeks to enjoin that proceeding, based on an alleged constitutional defect in the statutory provisions that govern the removal of the administrative law judge who will conduct the proceeding.
The Securities and Exchange Commission (“SEC”) initiated administrative proceedings against Michelle Cochran, a certified public accountant, in 2016. Cochran v.
The authors would like to thank Professor Jeffrey J. Rachlinksi for his guidance and insights into this case.
Additional Resources
- Jennifer Bennett, High Court Urged to Allow SEC Judge Challenges in District Court, Bloomberg Law (July 1, 2022).
- Priya Cherian Huskins, The SEC’s Administrative Law Judges Under Fire, JD Supra (Oct. 13, 2022).
- Dan Schweitzer, Supreme Court Report: Securities and Exchange Commission v. Cochran, 21-1239, National Association of Attorneys General (June 2, 2022).
- Cochran v. SEC, Harvard Law Review vol. 135, no. 7 (May 22, 2022).