To the top cop on Wall Street, it’s a powerful court of justice.

To the accused it can seem like something darker: a parallel American judiciary, separate and unequal, that strains the highest laws of the land.

After decades in the shadows, the in-house court system of the U.S. Securities and Exchange Commission––a crucial tool of securities law enforcement––is being thrust into an uncomfortable public spotlight.

For the first time, the SEC is confronting a multipronged attack on its use of what are known as administrative law judges, to whom it directs hundreds of cases a year.

The SEC says its system, in use since the Depression, is fair, cheap and efficient. But critics, former SEC lawyers and federal judges among them, question whether defendants get a lawful hearing.

At stake is a pillar of SEC enforcement and, with it, many of the victories the agency has won. Confronting a host of legal challenges, SEC Chair Mary Jo White has indicated the possibility of routing fewer cases to its five judges, according to a person familiar with the matter.

“This is a fight the SEC never anticipated,” said Peter Henning, who teaches law at Wayne State University in Detroit. “It’s a landmine that could blow sky-high.”

Broad Implications

The repercussions could be felt across Washington. Many federal agencies rely on similar in-house courts, so what happens at the SEC could have broad implications.

The issue gained new urgency last week when a federal judge in New York ruled against the SEC in a closely watched case. U.S. District Judge Richard Berman may now rule as early as Monday on whether the method for appointing the SEC judges ultimately violates the Constitution.