Breaking: SEC Powers Weakened By Supreme Court, Stripped Of In-House Fraud Legal Proceedings
The United States Supreme Court dealt the Securities and Exchange Commission (SEC) a massive blow regarding securities law enforcement Thursday in a new ruling that sees the federal regulator stripped of its controversial appointment of in-house judges during fraud proceedings.
In a 6-3 vote, the nation’s highest court voted in agreement with hedge fund manager George Jarkesy after the SEC claimed he defrauded investors in 2013.
Jarkesy was ordered to pay $300,000 worth in fines while his investment advisory firm Patriot28 had to repay over $680,000 in fraudulent gains after the SEC’s case against him was decided by an administrative law judge (ALJ).
The ruling significantly cripples the SEC’s enforcement powers when it comes to securities law as fraud defendants will now be granted a trial by jury in federal court in lieu of the SEC’s internal judicial process.
Should the SEC want to impose a fine in a case, the regulating agency would have to seek approval through federal court.
In Associate Justice Neil Gorsuch’s concurring opinion , the former appeals judge noted that even “the least popular among us” should be able to “resolve his case under procedures designed to ensure a fair trial in a fair forum.”
“A defendant facing a fraud suit has the right to be tried by a jury of his peers before a neutral adjudicator,” Chief Justice John Roberts concluded. “Rather than recognize that right, the dissent would permit Congress to concentrate the roles of prosecutor, judge, and jury in the hands of the Executive Branch. That is the very opposite of the separation of powers that the Constitution demands.”
The ruling could have a sweeping impact on several federal agencies’ internal enforcement proceedings, including the Federal
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