SEC v. Jarkesy

SEC v. Jarkesy
Supreme Court of the United States
Argued November 29, 2023 Decided June 27, 2024
Full case name	Securities and Exchange Commission, Petitioner v. George R. Jarkesy, Jr., et al.
Docket no.	22-859
Argument	Oral argument
Questions presented
Whether statutory provisions that empower the Securities and Exchange Commission to initiate and adjudicate administrative enforcement proceedings seeking civil penalties violate the Seventh Amendment; Whether statutory provisions that authorize the SEC to choose to enforce the securities laws through an agency adjudication instead of filing a district court action violate the non-delegation doctrine; Whether Congress violated Article II by granting for-cause removal protection to administrative law judges in agencies whose heads enjoy for-cause removal protection.
Holding
When the SEC seeks civil penalties against a defendant for securities fraud, the Seventh Amendment entitles the defendant to a jury trial.
Court membership
Chief Justice John Roberts Associate Justices Clarence Thomas · Samuel Alito Sonia Sotomayor · Elena Kagan Neil Gorsuch · Brett Kavanaugh Amy Coney Barrett · Ketanji Brown Jackson
Case opinions
Majority	Roberts, joined by Thomas, Alito, Gorsuch, Kavanaugh, Barrett
Concurrence	Gorsuch, joined by Thomas
Dissent	Sotomayor, joined by Kagan, Jackson
Laws applied
U.S. Const. amend. VII

Securities and Exchange Commission v. Jarkesy (Docket No. 22-859)^[1] was a case before the Supreme Court of the United States. In May 2022, the Court of Appeals for the Fifth Circuit held, under certain statutory provisions, the Securities and Exchange Commission's administrative adjudication of fraud claims without jury trials in their administrative proceedings with their own administrative law judges (ALJs) rather than Article III judges violated three provisions of the Constitution. The justices ruled that the Securities and Exchange Commission violated the Seventh Amendment.^{[citation needed]}

First, the enforcement of Dodd Frank's civil penalties for securities fraud in the SEC's administrative proceedings violated the Seventh Amendment's guarantee of a jury trial because (a) the case involved traditional common law claims (fraud), (b) civil penalties are a legal remedy to which the Seventh Amendment attaches, thus (c) the claims are not a matter of public rights that can be adjudicated in administrative proceedings on the mere basis the government is the plaintiff;^[2][3] Second, under the first clause of Article I, where "All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives," Dodd Frank's broad grant of unfettered discretion to the SEC to choose between enforcing identical claims in either federal district court or its own administrative tribunal violated the nondelegation doctrine because (a) the assignment of claims to a non-Article III tribunal is an Article I power, and (b) Congress provided—as the SEC conceded^[4][3]—no intelligible principle to the SEC. Third, the two layers of for-cause removal protections of ALJs violated Article II's Take Care Clause.^[5][6][3]

The United States Supreme Court issued its decision in June 2024, and in a 6-3 opinion, ruled that those charged with civil penalties by the SEC have the right to a jury trial, under the Seventh Amendment, but did not consider the other questions raised.