— Editor’s note: This story originally appeared on our partner site Law.com.

A Washington federal appeals court on Tuesday rejected an investment advisor’s challenge to the constitutionality of the U.S. Securities and Exchange Commission’s administrative law judges, the first court ruling that directly confronted the merits of the agency’s in-house proceedings.

Raymond Lucia, barred for life by the agency, had argued the SEC’s in-house judges are “officers of the United States” who must be appointed by the commissioners rather than through a bureaucratic process.

Writing for a unanimous three-judge panel of the U.S. Court of Appeals for the D.C. Circuit, Judge Judith Rogers said the in-house judges cannot be considered officers because their decisions only become final after the SEC signs off with a formal order. Judges Cornelia Pillard and Robert Wilkins joined the ruling, which also upheld the lifetime sanction.

The SEC, Rogers wrote, “gives itself time to decide whether to order review and must always issue a finality order to indicate whether it has declined review. Petitioners offer neither reason to understand the finality order to be merely a rubber stamp, nor evidence that initial decisions of which the commission does not order full review receive no substantive consideration as part of this process.”

In the aftermath of the Dodd-Frank financial reform package, the SEC’s in-house judges have become a lightning rod for litigation as the agency has increasingly prosecuted cases through administrative proceedings. So far, the SEC has succeeded in fending off the challenges.

Before Tuesday, courts dismissed challenges on jurisdictional grounds. In early June, the U.S. Court of Appeals for the Second Circuit rebuffed financier Lynn Tilton’s challenge because her case was still pending before the SEC.

Gibson, Dunn & Crutcher litigation partner Mark Perry argued for Lucia in the D.C. Circuit in May. Perry was not immediately reached for comment Tuesday.

The D.C. Circuit panel’s decision centered on whether the agency’s administrative law judges can ever act independently and reach final decisions without the review of the SEC. “[T]he commission’s ALJs neither have been delegated sovereign authority to act independently of the commission nor, by other means established by Congress, do they have the power to bind third parties, or the government itself, for the public benefit,” Rogers wrote.

The commission, Rogers wrote, “could have chosen to adopt regulations whereby an ALJ’s initial decision would be deemed a final decision of the commission upon the expiration of a review period, without any additional commission action. But that is not what the commission has done.”

In an amicus brief, Bancroft’s Paul Clement argued that Lucia’s challenge presented a “straightforward case” under the Constitution’s appointments clause.

“Because SEC ALJs plainly exercise ‘significant authority pursuant to the laws of the United States,’ they are officers who must be selected in compliance with the Appointments Clause,” Bancroft wrote. “That is especially clear when the authority of SEC ALJs is compared to others found to be officers, including special trial judges in the Tax Court, district court clerks, magistrate judges, and all manner of other quasi-judicial officials.”

Lucia worked as an “investment advisor, registered representative of a broker-dealer, and public speaker, maintaining a spotless disciplinary record and sterling reputation,” his lawyers wrote in court papers in the D.C. Circuit.

“Because of these proceedings, Lucia is no longer registered as an investment advisor or licensed as a registered representative of a securities broker, effectively ending his career,”  Gibson Dunn’s Perry wrote in a brief. “Lucia’s reputation has been irretrievably damaged by the liability determinations, and the sanctions order renders him unemployable in his lifelong profession; as a result, he is now on the verge of bankruptcy.”