The US Supreme Court signaled it may open a new avenue for companies and people to fight off complaints by the Securities and Exchange Commission and Federal Trade Commission, hearing arguments in cases that could undercut the clout of two powerful market regulators.

The justices are considering whether those facing agency claims can go straight to federal court with constitutional challenges -- including attacks on the use of in-house judges to handle cases. Critics say the system gives agencies an unfair home-field advantage.

“What sense does it make for a claim that goes to the very structure of the agency having to go through the administrative process?” Justice Samuel Alito asked.

A ruling against the government could undercut two of the most powerful federal regulators. The SEC filed more than 700 enforcement actions in the last fiscal year and won judgments and orders worth $6.4 billion, including from investment banks. The FTC, which is seeking to break up Meta Platforms Inc. and is investigating Inc., among other initiatives under Chair Lina Khan’s aggressive antitrust enforcement agenda, returned $2.4 billion to consumers last year.

Agency critics are seeking to extend a line of Supreme Court decisions that are chipping away at the federal administrative state.

The challengers -- accountant Michelle Cochran in the SEC case and body-camera manufacturer Axon Enterprise Inc. in the FTC case -- say the agencies’ in-house systems violate the Constitution.

Cochran and Axon say the job protections afforded to agency administrative law judges, known as ALJs, insulate them too much from presidential control. The challengers point to a 2010 Supreme Court ruling that invalidated similar protections for members of the Public Company Accounting Oversight Board.

Most lower courts have said that type of challenge must wait for the administrative proceedings to finish, something that can take years.

Biden Stance
Several of the Supreme Court’s conservatives wondered Monday why delay made sense given the similarity to the 2010 ruling.

“This is a series of cases that are a constellation around some fairly basic propositions,” Chief Justice John Roberts said. “And to have it go over and over and over again, it does make the case about the need for direct resolution of a related claim pretty strong.”

The Biden administration says that under the system set out by Congress, Cochran and Axon can make their arguments -- but only after they go through commission proceedings and challenge the final decisions in a federal appeals court.

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