The US Supreme Court on Thursday called into question the ability of the US financial markets regulator, the SEC, to sanction individuals or companies via its own administrative judges rather than going through ordinary civil justice.
It’s a major setback for the SEC, one that could have repercussions across government agencies and their litigation.
Many Republican elected officials want to restrict the authority of these public agencies and organizations, believing that they are overstepping their prerogatives, encroaching on those of Congress.
The case ruled on by the country’s highest court concerned financier George Jarkesy, prosecuted by the SEC (Securities and Exchange Commission) for lying to investors about the value of two funds and his investment strategy.
The stock market regulator had, as authorized by law, entrusted the case to an administrative judge who is only authorized to examine cases presented to him by the SEC.
The magistrate had sentenced George Jarkesy to a fine of $300,000 and to repay $685,000 in “illicit gains.”
The financier then appealed the judgment before the civil courts. A federal appeals court agreed with him and overturned the trial decision.
The appeals judges found that the ruling violated the Seventh Amendment to the U.S. Constitution, which guarantees litigants the right to a trial by jury of their peers in civil cases involving a minimum award.
The magistrates rejected the so-called “public rights” jurisprudence, established since the 19th century and which allows public agencies to rely on administrative justice for cases opposing the State to an individual or an organization.
The Supreme Court, seized by the government, took up this argument in its decision rendered on Thursday, by six votes to three, those of the conservative judges against the progressives, considering that this case did not fall within the scope of facts that could be handled by administrative judges.
“The authority the government seeks to exercise in this case is limitless,” Chief Justice John Roberts wrote on behalf of the six justices who chose to uphold the appellate decision.
By reaffirming the principle of the right to a jury trial, the Court believes it “does not deprive the SEC of any remedy or power.” “The agency can prosecute Mr. Jarkesy as it has always done” in the past, namely “before a judge, in the presence of a jury,” according to the decision.
The US Supreme Court on Thursday called into question the ability of the US financial markets watchdog, the SEC, to sanction individuals or companies via its own administrative judges rather than going through ordinary civil justice. This is a major setback for the SEC, likely to produce effects on all government agencies and their…
