Bandimere v. U.S. SEC, No. 15-9586 (10th Cir. 2016)Annotate this Case
In 2012, the Securities Exchange Commission (SEC) brought an administrative action against Colorado businessman David Bandimere, alleging he violated various securities laws. An SEC ALJ presided over a trial-like hearing. The ALJ's initial decision concluded petitioner Bandimere was liable, barred him from the securities industry, ordered him to cease and desist from violating securities laws, imposed civil penalties, and ordered disgorgement. The SEC reviewed the initial decision and reached a similar result in a separate opinion. In his petition to the Tenth Circuit, petitioner challenged the SEC's opinion as a whole, including both his securities fraud and registration liability, based on a constitutional argument, contending that the ALJ that presided over his hearing had been appointed in violation of Appointments Clause. The Tenth Circuit's decision with respect to this argument "relieves Mr. Bandimere of all liability." During the SEC's review, the agency addressed petitioner's argument that the ALJ was an "inferior officer," as was contemplated by the Federal Constitution. The SEC conceded the ALJ had not been constitutionally appointed, but rejected petitioner's argument because, in its view, the ALJ was not an inferior officer. The Tenth Circuit, after careful consideration, concluded that indeed, the ALJ was an inferior officer. "Nothing in this opinion should be read to answer any but the precise question before this court: whether SEC ALJs are employees or inferior officers. [. . .] Having answered the question before us, and thus resolved Mr. Bandimere's petition, we must leave for another day any other putative consequences of that conclusion." The SEC ALJ held his office unconstitutionally when he presided over petitioner's hearing.