A federal court of appeals sitting in Denver, Colorado (the Tenth Circuit Court of Appeals), ruled that a Securities and Exchange Commission administrative law judge that presided over an SEC administrative enforcement action against David Bandimere was not appointed in accordance with requirements of the so-called “Appointments Clause” of the US Constitution (click here to access Article II, Section 2, second paragraph of the US Constitution). As a result, the Court set aside an adverse decision against him. The Court held that SEC ALJs were so-called “inferior officers” under the Appointments Clause and thus could only be constitutionally appointed by the US president, courts of law or department heads. SEC ALJs are officers and not just mere employees, held the Court, because, among other reasons, they exercise “significant discretion” in performing their functions and have the authority to issue initial decisions that determine a respondent’s liability and impose sanctions – which may become final if a respondent does not timely seek SEC review – as well as enter default judgments. The Court’s decision in this matter conflicted with a recent decision by a federal court of appeals sitting in Washington, DC, that held that SEC ALJs were notofficers subject to the Appointment Clause. The DC Circuit Court of Appeals claimed that SEC ALJ decisions were not technically final decisions (click here to access the DC Circuit Court of Appeal’s decision).