Supreme Court Says “Yes” To Important Case

( The US Supreme Court agreed on Monday to hear the Securities and Exchange Commission’s attempt to block a challenge to the constitutionality of its in-house tribunal. The suit was filed by a Texas accountant who was disciplined by the agency after her audits of publicly traded companies were found to be deficient.

The Supreme Court heard the SEC’s appeal of a lower court verdict that reinstated CPA Michelle Cochran’s challenge. The lower court rejected the SEC’s argument that Cochran could not challenge the legality of the tribunal’s judges in federal court until the completion of the SEC’s administrative enforcement case against her under the Securities Exchange Act.

Cochran’s argument is comparable to that of Taser producer Axon Enterprise Inc, which is fighting an antitrust complaint brought against it by the Federal Trade Commission. In January, the Supreme Court agreed to hear Axon’s appeal of a lower court decision that dismissed its challenge to the FTC’s structure.

Cochran was fined $22,500 and barred from practicing accounting before the SEC for five years after an SEC court ruled she violated auditing standards in violation of the Securities Exchange Act in 2017. The Securities and Exchange Commission noted shortcomings in her audits of publicly listed corporations.

In 2019, Cochran filed a lawsuit against the SEC, claiming that its in-house judges, who enforce investor protection laws and regulations, have job protections that unlawfully shield them from the president’s power to control executive branch officers under Article II of the United States Constitution.

The SEC reversed its ruling against Cochran and assigned her case to a new, legally appointed judge after the Supreme Court determined in 2018 that the manner the SEC’s judges were selected violated the Constitution.

Cochran’s case was dismissed by a federal court in Texas, which found that the Securities Exchange Act deprives her of the authority to consider current SEC enforcement procedures challenges. The issue was revived after the 5th U.S. Circuit Court of Appeals in New Orleans disagreed, causing President Joe Biden’s administration to file an appeal with the Supreme Court.