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On Monday, the Supreme Court will hear arguments in a SEC v. Cochran, a case in which the conservative majority could further erode the ability of the Securities and Exchange Commission to regulate financial markets — and, depending on how the justices decide the case, potentially deal a powerful blow to other agencies’ ability to carry out their regulatory and enforcement mandates as well.
At issue in the case is whether Michelle Cochran, a certified public accountant, can challenge the constitutionality of the administrative law judge who presided over a proceeding the SEC brought against her for allegedly violating accounting standards of the Public Company Accounting Oversight Board. Congress created the PCAOB in a 2002 law to protect investors by ensuring accurate audits of publicly traded companies.
That may sound like an in-the-weeds dispute of interest only to financial services professionals and the federal officials Congress has tasked with regulating them. But far from being an exercise in legal minutiae, the case exemplifies a right-wing push to destroy what conservatives derisively call “the administrative state,” or the federal government agencies that protect the environment, food safety, financial markets, public health, and much more.
A deeper look inside the Cochran litigation shows how right-wing ideologues are succeeding in shaping negative judicial — and, along the way, public — assessments of federal government agencies as unconstitutional perpetrators of infringements on civil liberties. They do this not only by bringing cases that challenge the agencies’ constitutionality, but by injecting those cases with extra-legal arguments intended to portray the federal bureaucracy in the worst possible light, as an anti-democratic, tyrannical behemoth bent on stripping Americans of their freedom. These arguments are getting a more receptive hearing as the federal bench is increasingly stacked with judges hand-picked by conservative activists during the Trump era, who are similarly steeped in this ideology.
The Cochran case represents just one line of attack on federal agencies, in particular the SEC’s authority to regulate financial services professionals. “Professionals getting in trouble with their licensing regulators for violating professional conduct rules — and then complaining about having professional licensing consequences for those violations — is what we’re talking about,” said James Tierney, a professor at the Nebraska College of Law who previously worked at the SEC. “That’s the consequence of being in a licensed profession,” Tierney said. But, he added, “There are judges and litigants who think professional occupational licensing is the most foul intervention into civil liberties that we’ve ever seen.”
