My post the other day on the problems with the SEC's increasing use of administrative law judges prompted the great Henry Manne to send along this comment:
Steve, you might also have noted the other problem with administrative adjudication, and that is that it is often used as a way around the more taxing standards for explicit rule making. The most egregious case of this in history, I suspect, was Cady Roberts, an administrative adjudication (and in some respects also a case of double jeopardy) which displayed the chutzpa of inventing a new rule against insider trading. A reading today shows the total ignorance of economic effects and appears almost ludicrous in light of the ensuing scholarship on the subject. Certainly the most significant change in federal law of corporations and one of the most significant things the SEC ever did (ask them; they'll agree), deserved some kind of hearing with public comment, as rule making under the APA would require. None was allowed and the world has not been the same since.