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Supreme Court conservatives seem likely to axe SEC enforcement powers


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Won't be long before they just put out a blanket ruling saying all federal regulations are inherently illegitimate.



The Supreme Court's conservative justices seemed highly skeptical of how the Securities and Exchange Commission conducts in-house enforcement proceedings to ensure the integrity of securities markets.


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I think that posting some of the article's substance is necessary to illustrate that the conservative justices zeroed in on one particular aspect of the SEC's enforcement power as opposed to its entirety:



Although Wednesday's case involved several different constitutional challenges to the SEC's enforcement actions, the justices focused almost exclusively on one: the contention that the agency's in-house fact finding process violated Jarkesy's Seventh Amendment right to a jury trial. All six of the conservative justices questioned the notion that an administrative agency can impose penalties without offering the option of a jury trial.


Vox picked up on this as well:




The Court seeks a middle path between following the law and blowing up the government.




The good news, if you care about functioning government and liberal democracy, is that the Supreme Court, which heard arguments in this case on Wednesday morning, appears unlikely to go anywhere near as far as the Fifth Circuit. Wednesday’s arguments in this case, known as SEC v. Jarkesy, focused entirely on a relatively narrow issue: whether defendants in enforcement proceedings brought by the SEC are entitled to a jury trial.


One of the Fifth Circuit’s most aggressive arguments, that a largely defunct legal doctrine known as “nondelegation” potentially strips federal agencies of much of their authority to make discretionary decisions, hardly came up. And another Fifth Circuit argument, the one which could have given a potential second Trump administration broad new authority to fill the government with his loyalists, was barely mentioned at all.


Which is not to say that the Court’s ultimate decision in Jarkesy will end well for the SEC. The Court appears likely to hand down a 6-3 decision, along party lines, that will weaken the SEC’s power to protect investors. And the Court’s decision is likely to diminish the government’s ability to try complex cases involving highly technical areas of the law — such as securities fraud cases — in specialized forums presided over by experts in those areas of the law.


But even the Court’s GOP-appointed majority appeared uninterested in the kind of sweeping, society-restructuring attack on US state capacity contemplated by the Fifth Circuit. The bottom line is that the federal government is likely to lose some of its ability to try certain cases before expert judges, but that Jarkesy is unlikely to end in catastrophe.





In any event, the bottom line is that Jarkesy appears likely to prevail. And the Court’s GOP-appointed majority appears likely to send his case to an Article III court where Jarkesy can receive a jury trial. The Seventh Amendment, it appears, protects hedge fund managers, but not workers.


But, while that result is unlikely to satisfy anyone who does not share Neil Gorsuch’s political views, it would also be a relatively minor attack on the federal government’s ability to enforce the law — and a much less severe attack on US state capacity than the Fifth Circuit’s decision.



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38 minutes ago, Commissar SFLUFAN said:

I think that posting some of the article's substance is necessary to illustrate that the conservative justices zeroed in on one particular aspect of the SEC's enforcement power as opposed to its entirety:


Making all enforcement actions go to a jury trial seems like way more than a minor tweak to federal regulatory power.

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Here's the SCOTUSblog piece about this:


Wednesday’s argument in Securities and Exchange Commission v. Jarkesy was oddly distant from the decision of the lower court and the briefs and arguments of the parties. The decision of the U.S. Court of Appeals for the 5th Circuit – vigorously defended by George Jarkesy, the target of long-running


It is reassuring that it seems unlikely that SCOTUS agrees with the fifth circuit on everything.


I think it is an interesting question as to how you draw the line when deciding what government actions require a jury trial. I found myself unexpectedly sympathetic to Gorsuch's argument that we have a crime that would typically involve the option of a jury trial, but because it was brought by the SEC that trial isn't an option. Then I read a bit more about the Atlas Roofing case that Kagan kept referring to and I feel like that question has been pretty well answered by separating out the ideas of public and private rights. So cases where public rights are at issue (typically with regulatory matters) Congress can assign adjudication to an administrative agency without a jury trial. In cases involving private rights, those are subject to the seventh amendment and therefore entitled to a jury trial.

  • Halal 2
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