In this commentary: Oh, certainly not illegal, and if not, then see what has "changed".

 

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From: legal_reality@earthlink.net
To: legal_reality@earthlink.net
Sent: 6/12/2015 11:05:25 P.M. Eastern Daylight Time
Subj: Fwd: JUDGE RULES ADMINISTRATIVE COURT SYSTEM ILLEGAL AFTER 81 YEARS

13 June A.D. 2015

Armstrong, the author of the forwarded commentary (below), means well, and he has some really insightful analysis in several areas.  He's also a "constitution-ist" at heart, which simply means that the tint in his glasses is just a little different from the tint in this author's glasses.

The title of Armstrong's discussion is, shall we say, a bit overbroad.  This author finds it fair to say that Armstrong wants that entire "administrative" system done away with, and, of course, Armstrong is in good company.  However, that's simply not going to happen, and it might not happen even if we were back on a system of honest weights and measures.

The trial court's ruling is available, and this author can provide a .pdf file of a de-linked version made available through Lexis. What follows is a de-hornswagglesed rendition.

The plaintiff in that matter, HILL, traded some stock and made $744,000.  The SEC called it "insider trading" and wanted to bust him for it by processes conducted by the SEC's own administrative forum.  HILL objects to the SEC's selection of forum for resolution of that dispute.  That's pretty practical on HILL's side, for it surely can't be much different from being hauled before the "tax court" on a "tax" matter.  The results are fairly predictable on a good many issues.

He seeks a preliminary injunction, and he argues four "constitutional" points:

 

(1) the Dodd-Frank Act violates Article I of the Constitution because it gives the SEC unfettered discretion to select its forum;

 

(2) the SEC's decision to prosecute the claims against him in the administrative proceeding rather than the district court violates his Seventh Amendment right to a jury trial; and

 

(3) (A) the first of two claims under Article II of the Constitution, that the ALJ's appointment violates the Appointments Clause of Article II because he was not appointed by the President, a court of law, or a department head, and

 

(4) (B) the second of the two Art. II claims, that the ALJ's two-layer tenure protection violates the Constitution's separation of powers, specifically the President's ability to exercise Executive power over his inferior officers.

"Both of Plaintiff's arguments depend on this Court['s] finding that the ALJ is an inferior officer who would trigger these constitutional protections."  For which reason, the court analyzes whether the SEC's ALJ position is that of an inferior officer.


As for keeping the lid on, this trial court's ruling is superb!

As for review of this in terms of reality, the analysis isn't anything like as long. 

 

(1) For the first one, choice of forum for dispute resolution, since there is no "constitution," there's nothing about Art. I that's relevant.  What is relevant is whether HILL has somehow consented to arbitration in/by the SEC.  That's something that may very well be part and parcel of participating in that particular investment scheme/plan/game.  This author has no direct confirmation at the moment, either way, as to whether the mere act of trading stocks, etc., is an act of consent to SEC arbitration.

A point the trial court makes is that up until just a few years ago, the SEC was restricted to taking only those who were "registered" into their arbitration forum.  Of course, to be "registered" is to have consented to everything, including SEC's arbitration.  Presently, the SEC purports to have authority regarding "any person."  This author expects that should be read as "any person who consents to SEC arbitration," and that then begs the question as to when/how someone "may" so consent.

What Armstrong doesn't yet have in his wheelhouse for such matters is that all "agency" activity (all "administrative" activity) is arbitration.  No arbitration forum has authority without the consent of both (all) parties.  So, if HILL is, in fact, subject to SEC arbitration, and it appears that he is (whether that consent occurred while/because he was trading stocks or after the dispute arose is the $64 Question in the mind of this author), then Art. I is wholly and completely irrelevant.  Because why?  Because HILL consented to SEC arbitration. The SEC most assuredly does not have unfettered discretion in its choice of forum.  There'll be authority for the SEC's arbitration if and only if the HILLs of the world have consented to such arbitration. So, if that's where the SEC drags "any person," and if that party hasn't already consented to such alternate dispute resolution process, then the thing that makes all the difference in the world is that party's formal non-consent to arbitration. 

To throw the "constitution" at the matter is to be confused about "federal." Where one accepts what we've all been taught, namely that "federal" means either "national," or "constitutional," or both, then one is likely to throw the "constitution" at these purely commercial matters/issues. However, to break through that barrier and come to terms with the fact that "federal" means "by agreement," then this whole smoke and mirrors called "administrative law" comes crashing down.

There's not one word said, overtly, about HILL's consent.  It's suggested, though, in what is said, and what is said is that his "constitutional" objection to forum selection is overruled.


(2) For this second one, the trial court overrules HILL's objection that he's being denied a jury trial.  He's not being denied anything if he's consented to SEC-sponsored arbitration.  There is no Seventh Amendment, for there is nothing there to amend.  Beyond that, we don't have Juries; we have administrative advisory panels.  Those are a right smart better to have than nothing, to be sure, but they no more have the authority to determine the law than they have the ability to jump to the moon and back.


((3) A & (4) B of the Art. II claims) For this third one, the trial court sustained HILL's objection to the manner in which the SEC's ALJs come into their positions. These objections are raised under Art. II, which, of course, doesn't exist, but which provides a basis for reining in on the SEC.  The trial court finds that the SEC's ALJ are "inferior officers," and, as such, they may be appointed by a particularly limited means, i.e., whether by the president, by the heads of the department, or by the judiciary.  Since that's not how the ALJ assigned to HILL's matter obtained his position as an ALJ, the court has stopped the SEC from proceeding in their arbitration with HILL.


So, it approaches outrageous, and it's definitely irresponsible, to say, in a headline on a note commenting on this HILL v. SEC ruling, that the arbitration process, fully sustained and encouraged by the rulings on the first two "constitutional" points, has somehow been rendered "illegal."  No, it most certainly has not, and no, it most certainly will not be.

What has been changed, by this trial court's ruling, which has yet to be reviewed up the chain of command (next stop, 11th Cir.; then, the Supremes), is the manner in which the SEC's ALJs are appointed.  That's a major change, no doubt, but it's a "gadget defense," in that it's 100% fixable by the SEC.  So, it's a temporary thing.  Long term, it might or might not make one stinkin' bit of difference as to the determination of whether there's "insider trading" going on, here, or not.  HILL's arbitration matter will linger until there's a duly appointed ALJ, and then what's going to be different?  Nothing.  Why not?  Because it most certainly appears that he's consented to SEC arbitration.

It might not be possible to trade stocks (at least trade those stocks) and to avoid consenting to SEC arbitration.  That "gotcha agreement" has not yet been studied into by this author.  But, there's zero question that the SEC's own forum is a forum of binding arbitration, and there's only one way to get into that form of alternative decision-making: 100% voluntarily (whether we realized our voluntary act at the moment it happened or not).

So, once the SEC has properly appointed ALJs, they'll be right back doing their arbitration thing.

Harmon L. Taylor
Legal Reality
Dallas, Texas

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-------- Original Message --------

JUDGE RULES ADMINSTRATIVE COURT SYSTEM ILLEGAL AFTER 81 YEARS.  [People, this is important news and a must read.  Perhaps this will eliminate the IRS "Tax Court"  ???] http://armstrongeconomics.com/archives/33280

Posted on June 10, 2015 by Martin Armstrong

Judge Rules Administrative Court System Illegal After 81 Years

Well it has been a long time coming, but all along there have been discussions behind closed doors (never in public) that the Administrative Law Courts established with the New Deal were totally unfounded and unconstitutional. With the anniversary of Magna Carta and the right to a jury trial coming up on June 15, after 800 years, the era of Roosevelt’s big government is quietly unraveling.

A federal judge’s ruling against the Securities and Exchange Commission for using its own Administrative Law judges in an insider trading case is perhaps the beginning of the end of an alternative system of justice that took root in the New Deal. Constitutionally, the socialists tore everything about the idea of a Democracy apart. It was more than taxing one party to the cheers of another in denial of equal protection. It was about creating administrative agencies (1) delegating them to create rules with the force of law as if passed by Congress sanctioned by the people; (2) the creation of administrative courts that defeated the Tripartite government structure usurping all power into the hand of the executive branch, as if this were a dictatorship run by the great hoard of unelected officials.

Not discussed in the coverage of this story is that the Administrative Law Courts are a fiefdom, to put it mildly. They have long been corrupt and traditionally rule in favor of their agencies, making it very costly for anyone to even try to defend themselves. If someone were to attempt this feat, first they have to wear the costs of an Administration proceeding and appeal to an Article III court judge, then they must appeal to the Court of Appeals, and finally plea to the Supreme Court. The cost of such adventures is well into the millions, and good luck on actually getting justice.

Furthermore, Administrative Law Courts cannot sentence you to prison, but they can fine you into bankruptcy. So the lack of a criminal prosecution meant the judges did not have to be lawyers. They could be anyone’s brother-in-law looking for a job where he just rules in favor of the agency not to be bothered with law. Unless the victim has a pile of money, there is no real chance that he or she can afford to defend themselves. This is why the agencies cut deals with the big houses and prosecute the small upstarts who lack the funds to defend themselves.

In a 45-page ruling, U.S. District Judge Leigh Martin May in Atlanta issued an injunction halting Administrative Law proceedings against Charles Hill, a businessman who the SEC accused of reaping an illegal $744,000 profit trading in Radian Systems stock. This is typical. The legal fees involved will exceed the amount of money he is alleged to have made, the typical result is to just pay the fine and they go away, it is cheaper.

The judge ruled that the SEC agency violated the Appointments Clause of the Constitution by subjecting Hill to proceedings before an Administrative Law judge, who isn’t directly accountable to the president, officials in charge of the SEC, or the courts under Article III. The ruling is 81 years overdue. The entire structure of administrative agencies blackmailing people has been outrageous. Then you take the banks who just entered a plea of CRIMINALLY guilty to manipulating markets. They are now formally FELONS who engaged in violating SEC rules and thus under the SEC rules, they are no longer eligible for a banking license. The banks are “too big to jail” and the SEC has waived their own rules, of course, to exempt the banks. So they can engage in fraud and manipulation, get caught, pay billions in fines, and the SEC exempts them from losing their licenses. This is how corrupt the administrative agencies really are.

This new decision calling the Administrative Law Courts what they really are is reminiscent of the notorious extra judicial proceedings of the Star Chamber operated by King James I. The court of Chancery set up outside of the King’s Bench, so there were no trials by jury. It had the same purpose, to circumvent the law. This is where our Fifth Amendment privilege came into being. That came about following the trial of John Lilburne (1615-1657) for handing out a pamphlet the government did not like.

The Miranda v Arizona 384 U.S. 436 (1966) decision of the Supreme Court came only after decades of abuse by American police against citizens, not unlike what we are watching today. The Miranda decision is hated by police, prosecutors, right-wing judges, politicians, and citizens. The decision is based upon the history of the right not to be coerced that began with the famous trial of John Lilburn before the English court of the Star Chamber in 1637 where he stood tall and objected to the King’s torture. Lilburn’s crime was handing out pamphlets against the king. John Lilburne (1615–1657) was a leader in the Leveller Movement of the 1640s and was a prolific pamphleteer who defended religious and individual liberty of the people. He was imprisoned many times for his views and was active in the army of the New Parliament rising to the rank of Lieutenant Colonel. In October 1649, he was arrested and tried for High Treason for printing and circulating books and pamphlets critical of the government but was acquitted of all charges by a jury of his peers.

This entry was posted in America's Current Economy, America's Economic History, Current Events and tagged Administrative Law Courts, John Lilburne, King James I, Mary Jo White, Miranda Law, SEC, U.S. Constitution by Martin Armstrong. Bookmark the permalink.