It seems the SEC has been issuing rulings in criminal trials by tribunal rather than by a jury of one’s peers. SCOTUS ruled today that that’s no longer allowed.

The case itself involves a hedge fund manager named George Jarkesy who was accused of misleading investors. The SEC brought a civil suit against him and the judge overseeing the case ruled in the SEC’s favor and fined Jarkesy a $300,000 civil penalty and to pay investors a total of $685,000 in supposed illicit gains. The judge in question is an administrative law judge whom the SEC employs. 

Lawyers for the agency said juries were not required in administrative proceedings because they were not private lawsuits but part of an effort to protect the rights of the public generally. They added that agency adjudications without juries are commonplace, with two dozen agencies having the authority to impose penalties in administrative proceedings.

So a trial by jury would only happen if it is a private lawsuit? Interesting argument by the SEC. Especially since the SEC used the passage of Dodd/Frank in 2010 to set up administrative judge tribunals and the Jarksey case was one of the first on the docket. In other words, the judges ruling on these cases were APPOINTED and HIRED by the SEC. In my opinion that would render it a tiny bit difficult to maintain legal impartiality. 

In a 6-3 decision, SCOTUS has informed the SEC that they’ve overstepped. 

What’s instructive about this case is as follows: the dissenting justices whine that this would make it MORE difficult to enforce regulatory laws. 

Dissenting, Justice Sonia Sotomayor said the ruling will make it much harder to enforce regulatory laws.

Congress has “enacted more than 200 statutes authorizing dozens of agencies to impose civil penalties for violations of statutory obligations. Congress had no reason to anticipate the chaos today’s majority would unleash after all these years,” she said. Justices Elena Kagan and Ketanji Brown Jackson agreed.

In other words, those three don’t believe that a Constitutional right to a trial by a jury of your peers is necessary when the power of the federal government is in play. Via HotAir, we see Justices Thomas and Gorsuch point out some of the fallacies of Sotomayor’s dissent.

But where in Article III, the Seventh Amendment, and due process can the dissent find this new rule? What about founding-era practice or original meaning? And why would a Constitution drawn up to protect against arbitrary government action make it easier for the government than for private parties to escape its dictates? The dissent offers no answers. …

People like Mr. Jarkesy may be unpopular. Perhaps even rightly so: The acts he allegedly committed may warrant serious sanctions. But that should not obscure what is at stake in his case or others like it. While incursions on old rights may begin in cases against the unpopular, they rarely end there. The authority the government seeks (and the dissent would award) in this case—to penalize citizens without a jury, without an independent judge, and under procedures foreign to our courts—certainly contains no such limits. That is why the Constitution built “high walls and clear distinctions” to safeguard individual liberty. Plaut v. Spendthrift Farm, Inc., 514 U. S. 211, 239 (1995). Ones that ensure even the least popular among us has an independent judge and a jury of his peers resolve his case under procedures designed to ensure a fair trial in a fair forum. In reaffirming all this today, the Court hardly leaves the SEC without ample powers and recourse. The agency is free to pursue all of its charges against Mr. Jarkesy. And it is free to pursue them exactly as it had always done until 2010: In a court, before a judge, and with a jury. [Emphasis Added]

And, as Roberts argues in his opinion, we also have a right for the case to be brought in front of a NEUTRAL adjudicator, not someone employed by the agency itself. 

Furthermore, this ruling could, and IMO SHOULD cause heartburn across all federal agencies who engage in the same practices.  

The Seventh Amendment to our Constitution provides that cases brought to federal courts must have a jury involved. Supposedly, according to Sotomayor this threatens government power. 

“Beyond the majority’s legal errors, its ruling reveals a far more fundamental problem: This Court’s repeated failure to appreciate that its decisions can threaten the separation of powers,” Sotomayor wrote. “Here, that threat comes from the Court’s mistaken conclusion that Congress cannot assign a certain public-rights matter for initial adjudication to the Executive because it must come only to the Judiciary.”

One can only presume that Sotomayor, Kagan, and Brown are all in on letting the Executive Branch have free rein. Americans right to a trial by jury in federal courts? HOW DARE THEY??!! 

SCOTUS' decision is Jarkesy may well hobble many federal agencies' ability to bring meaningful enforcement actions against wrongdoers. Not just the SEC. Neither the executive branch nor the judiciary have the time or resources to try all these cases before a jury. Nowhere close.

— Mark Joseph Stern (@mjs_DC) June 27, 2024

Evidently a trial by a jury of one’s peers isn’t Constitutionally necessary because of time or resources. Good grief. 

Basically to impose civil penalties (essentially, fines) the agencies now have to invite everybody to a full trial.

— Elie Mystal (@ElieNYC) June 27, 2024

Maybe, just maybe, that means the SEC and other agencies will step back from cases that don’t have merit because they know the case won’t stand up to a trial! I don’t see how that’s a bad thing. 

The Constitution looks to have been put first in this case which is a good thing for all of us whether the media and Democrats like it or not. 

Feature Photo Credit: Bill of Rights via iStock, cropped and modified