The SEC often appoints in-house administrative law judges (ALJs) to decide civil enforcement actions rather than trying the matter in federal court. A provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 expanded the types of cases that can be decided by an SEC ALJ and increased the severity of the sanctions an ALJ may impose. For example, ALJs may now hear cases involving individuals who are not associated with regulated entities, such as brokerage firms or investment advisers. SEC ALJs have the authority to hear testimony, issue subpoenas, make determinations of fact, rule on motions, and impose penalties for violations of the securities laws and SEC regulations. SEC ALJ proceedings are unlike trials because of their "relative lack of discovery tools," the limited amount of time provided to prepare for the hearings, and the fact that the Federal Rules of Evidence do not apply. One study showed that the SEC prevailed in 90% of the matters decided by an ALJ during the period 2010 to 2015, versus a success rate of only 69% for matters heard in federal court. If the ALJ rules against the SEC Enforcement Division, the Enforcement Division can appeal the decision to the SEC"the very same people who authorized the issuance of the complaint in the first place."

Does the use of ALJs violate the due process rights of the defendants or the separation of powers?

Should ALJs be subject to approval by the Senate, as is the case with judges, cabinet members, and heads of administrative agencies (including commissioners of the Securities and Exchange Commission)?