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Originally from Alternatives to the High Cost of Litigation

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The U.S. Supreme Court decision in Securities & Exchange Comm’n v. Jarkesy, No. 22–859 (June 27, 2024) (available at https://bit.ly/431P4cx), that the SEC had to offer someone a jury trial before
fining them for fraud, created shockwaves among federal regulators.

The 6-3 majority deduced from the fact that the SEC was claiming penalties for fraud that this was a claim in law and not one engaging its caselaw public rights exemption from Seventh Amendment. By circumscribing tightly that exemption, the Court has thrown a string of U.S. public agencies into reconsidering their internal disciplinary arrangements, notwithstanding their federal legislative basis.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 allowed the SEC to claim civil penalties for breaches of the anti-fraud provisions of the Securities Act, the 1934 Securities Exchange Act and the Investment Advisers Act against non-registered entities, using its own in-house procedures alongside its powers to claim such remedies in the federal courts.