SCOTUS sides with conservative radio host Jarkesy in case fighting SEC ruling
By Simone Del Rosario (Business Correspondent), Brent Jabbour (Senior Producer), Emma Stoltzfus (Editor)
A conservative radio host took on the Securities and Exchange Commission (SEC) and won. The Supreme Court Thursday, June 27, ruled 6-3 in favor of George Jarkesy, who was charged with securities fraud and ordered by an SEC judge to pay a civil penalty of $300,000.
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Supreme court rules that the SEC’s in-house rulings violate US constitution
Click to see story on The GuardianThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Associated Press NewsThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on abc NewsSEC power: Supreme Court limits power of agency to unilaterally enforce financial fraud regulations
Click to see story on CNNIn conservative win, Supreme Court limits use of SEC in-house tribunals
Click to see story on The Washington PostSupreme Court strips SEC of key enforcement power to penalize fraud
Click to see story on CBS NewsSupreme Court makes it harder for SEC to punish fund managers accused of defrauding investors
Click to see story on Los Angeles TimesSupreme Court Curbs SEC’s Use of in-House Judges in Fraud Cases
Click to see story on BloombergLiberal Justice Sotomayor bemoans ‘dismantling’ of federal agency power as Supreme Court curbs SEC
Click to see story on NBC NewsThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on SooToday.comThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Barrie TodayThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Koco News5The Supreme Court strips the SEC of a critical enforcement tool in fraud cases – Boston News, Weather, Sports
Click to see story on WHDHThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on News & RecordSupreme Court strips Securities and Exchange Commission of key enforcement tool
Click to see story on PBS NewsHourThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on San Antonio Express-NewsThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on The Virginian PilotThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Orlando SentinelSupreme Court limits power of SEC to unilaterally enforce financial fraud regulations
Click to see story on KRDOThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on KVIAThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Winnipeg Free PressThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WPLGThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Pioneer PressThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WKMGThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on KCRA 3Supreme Court strips SEC of critical enforcement tool in fraud cases
Click to see story on Portland Press HeraldThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WCVBThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on The Billings GazetteThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WMURThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WLKYThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WESHThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Helena Independent RecordThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on KETVThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WDSUThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WTAEThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WYFFThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on KCCIThe Supreme Court strips the Securities and Exchange Commission of a critical enforcement tool in fraud cases
Click to see story on Denver PostThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on KMBCSupreme Court rules SEC’s in-house hearings for fraud cases violate right to trial
Click to see story on The OregonianThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on KOB 4The Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Wisconsin State JournalThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WISNThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WBAL-TVThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on MissoulianThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WPTZThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WMTWThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Montana StandardThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WVTMThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WAPTSupreme Court strips SEC of crucial enforcement tool in fraud cases
Click to see story on FortuneThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on KOATSupreme Court limits power of SEC to unilaterally enforce financial fraud regulations
Click to see story on KWWLSupreme Court strips SEC of critical enforcement tool in fraud cases
Click to see story on NY1The Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WGALThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WXIIThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Florida PoliticsThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on KSBWSupreme Court limits power of SEC to unilaterally enforce financial fraud regulations
Click to see story on KTVZThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WJCLThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on KHBSThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on The Times HeraldThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on The RepublicSupreme Court Rules Federal Agency’s In-House Judges Violate Americans’ Right To Jury Trial
Click to see story on The Daily CallerSupreme Court Rules Federal Agency’s In-House Judges Violate Constitution – The Florida Capital Star
Click to see story on Florida Capital StarSupreme Court rules federal agency’s in-house judges violate Constitution
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The Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on My Mother LodeThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Orillia MattersThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Newmarket TodayThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Midland TodayThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Collingwood TodayThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Thorold TodayThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Elora Fergus TodayThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases – The Morning Sun
Click to see story on Morning SunThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on MOR-TVThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Bradford TodayThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Timmins TodayBreaking: Supreme Court Limits SEC’s Use of In-House Trials in Fraud Cases
Click to see story on CoingapeJarkesy appealed, claiming the SEC violated his Seventh Amendment right to a jury trial by deciding his case using an in-house judge, known as an administrative law judge (ALJ). These are judges in the executive branch, not the judicial branch. They are employed by the agency bringing the charges.
The argument for ALJs across government is that they’re specialized judges in that field. But remember the saying, “the house always wins.” A Wall Street Journal analysis from 2010 to 2015 showed the SEC won 90% of cases before its in-house judges and just 69% before federal court judges.
“I think it’s, honestly, a cheap default by the SEC,” said Stephen Best, an attorney at Brown Rudnick who successfully defended Mark Cuban against the SEC’s insider trading claims.
Straight Arrow News interviewed Best following the Supreme Court’s oral arguments in the Jarkesy case.
“I think that it was a ghost that nobody really focused on until after the Mark Cuban insider trading case,” Best said. “And when the SEC had incredible difficulties accommodating the requirements of the U.S. District Court’s rules on discovery and trial practice, they ran back to their home at the ALJ.”
The Jarkesy case had the potential to upend the court system. There are more than twice as many ALJs as federal judges. Had the Supreme Court ruled the use of ALJs as a whole is unconstitutional, this would have flooded the courts with cases.
“The floodgates are about to open up and that’s what the Supreme Court’s worried about,” Best said at the time. “And so they’re going to be very careful in tailoring their opinion, but nonetheless, however careful they’re going to be, it’s still going to leave room for interpretation.”
At last count by the U.S. Office of Personnel Management, there are more than 1,900 ALJs across federal agencies. Eighty-six percent of them deal in Social Security cases. Just five judges come from the SEC as of 2017. In Thursday’s decision, the Supreme Court was careful to keep its ruling specific to that house, and even more narrowly, to fraud cases.
“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 wrote in the majority opinion. “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.”
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“Beyond the majority’s legal errors, its ruling reveals a far more fundamental problem: This Court’s repeated failure to appreciate that its decisions can threaten the separation of powers,” Justice Sonia Sotomayor wrote for the dissent. “Here, that threat comes from the Court’s mistaken conclusion that Congress cannot assign a certain public-rights matter for initial adjudication to the Executive because it must come only to the Judiciary.”
This likely isn’t the last time the issue of ALJs will come up. Facebook parent company Meta sued the Federal Trade Commission last year challenging its use of the in-house justice system, also claiming it violates the company’s right to a trial jury.
Simone Del Rosario: A conservative radio host took on the Securities and Exchange Commission and won. The Supreme Court Thursday ruled 6-3 in favor of George Jarkesy, who was charged with securities fraud and ordered by an SEC judge to pay a civil penalty of $300,000.
Jarkesy appealed, claiming the SEC violated his Seventh Amendment right to a jury trial by deciding his case using an in-house judge, known as an administrative law judge, or ALJ.
These are judges in the executive branch, not the judicial branch. And they are employed by the agency bringing the charges.
The argument for these ALJs across government is that they’re specialized judges in that field. But you know the saying, the house always wins?
A Wall Street Journal analysis from 2010 to 2015 showed the SEC won 90% of cases before its own judges, and just 69% before federal court judges.
Stephen Best: I think it’s a, honestly, a cheap default by the SEC.
Simone Del Rosario: When this case first came before the Supreme Court, I interviewed Stephen Best, an attorney who successfully defended Mark Cuban against the SEC’s insider trading claims.
Stephen Best: I think that it was a ghost that nobody really focused on until after the Mark Cuban insider trading case. And when the SEC had incredible difficulties accommodating the requirements of the U.S. District Court’s rules on discovery and trial practice, they ran back to their home at the ALJ.
Simone Del Rosario: This case had the potential to upend the court system as we know it. There are more than twice as many ALJs as federal judges. And had SCOTUS ruled the use of ALJs as a whole is unconstitutional, this would have flooded the courts with cases.
Stephen Best: The floodgates are about to open up, and that’s what the Supreme Court’s worried about. And so they’re going to be very careful in tailoring their opinion, but nonetheless, however careful they’re going to be, it’s still going to leave room for interpretation.
Simone Del Rosario: At last count, there are more than 1,900 ALJs across federal agencies. Eighty-six percent of them deal in Social Security cases. Just five come from the SEC. And SCOTUS was careful to keep its ruling specific to that house, and even more narrowly, to fraud cases.
In the majority opinion, Chief Justice John Roberts writes: A defendant facing a fraud suit has the right to be tried by a jury of his peers before a neutral adjudicator. 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.
In the dissent, Justice Sonia Sotomayor writes: Beyond the majority’s legal errors, its ruling reveals a far more fundamental problem: This Court’s repeated failure to appreciate that its decisions can threaten the separation of powers. Here, that threat comes from the Court’s mistaken conclusion that Congress cannot assign a certain public-rights matter for initial adjudication to the Executive because it must come only to the Judiciary.
This isn’t the last we’ll hear of ALJs. Facebook parent company Meta sued the Federal Trade Commission last year challenging its use of the in-house justice system, also claiming it violates the company’s right to a trial jury.
Download the Straight Arrow News app and enable notifications so you get alerts for the next Supreme Court ruling.
Media Landscape
See who else is reporting on this story and which side of the political spectrum they lean. To read other sources, click on the plus signs below. Learn more about this dataBias Distribution
Left
Supreme court rules that the SEC’s in-house rulings violate US constitution
Click to see story on The GuardianThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Associated Press NewsThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on abc NewsSEC power: Supreme Court limits power of agency to unilaterally enforce financial fraud regulations
Click to see story on CNNIn conservative win, Supreme Court limits use of SEC in-house tribunals
Click to see story on The Washington PostSupreme Court strips SEC of key enforcement power to penalize fraud
Click to see story on CBS NewsSupreme Court makes it harder for SEC to punish fund managers accused of defrauding investors
Click to see story on Los Angeles TimesSupreme Court Curbs SEC’s Use of in-House Judges in Fraud Cases
Click to see story on BloombergLiberal Justice Sotomayor bemoans ‘dismantling’ of federal agency power as Supreme Court curbs SEC
Click to see story on NBC NewsThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on SooToday.comThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Barrie TodayThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Koco News5The Supreme Court strips the SEC of a critical enforcement tool in fraud cases – Boston News, Weather, Sports
Click to see story on WHDHThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on News & RecordSupreme Court strips Securities and Exchange Commission of key enforcement tool
Click to see story on PBS NewsHourThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on San Antonio Express-NewsThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on The Virginian PilotThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Orlando SentinelSupreme Court limits power of SEC to unilaterally enforce financial fraud regulations
Click to see story on KRDOThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on KVIAThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Winnipeg Free PressThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WPLGThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Pioneer PressThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WKMGThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on KCRA 3Supreme Court strips SEC of critical enforcement tool in fraud cases
Click to see story on Portland Press HeraldThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WCVBThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on The Billings GazetteThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WMURThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WLKYThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WESHThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Helena Independent RecordThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on KETVThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WDSUThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WTAEThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WYFFThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on KCCIThe Supreme Court strips the Securities and Exchange Commission of a critical enforcement tool in fraud cases
Click to see story on Denver PostThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on KMBCSupreme Court rules SEC’s in-house hearings for fraud cases violate right to trial
Click to see story on The OregonianThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on KOB 4The Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Wisconsin State JournalThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WISNThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WBAL-TVThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on MissoulianThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WPTZThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WMTWThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Montana StandardThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WVTMThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WAPTSupreme Court strips SEC of crucial enforcement tool in fraud cases
Click to see story on FortuneThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on KOATSupreme Court limits power of SEC to unilaterally enforce financial fraud regulations
Click to see story on KWWLSupreme Court strips SEC of critical enforcement tool in fraud cases
Click to see story on NY1The Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WGALThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WXIIThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Florida PoliticsThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on KSBWSupreme Court limits power of SEC to unilaterally enforce financial fraud regulations
Click to see story on KTVZThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on WJCLThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on KHBSThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on The Times HeraldThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on The RepublicSupreme Court Rules Federal Agency’s In-House Judges Violate Americans’ Right To Jury Trial
Click to see story on The Daily CallerSupreme Court Rules Federal Agency’s In-House Judges Violate Constitution – The Florida Capital Star
Click to see story on Florida Capital StarSupreme Court rules federal agency’s in-house judges violate Constitution
Click to see story on Conservative News TodayRight
Untracked Bias
The Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on My Mother LodeThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Orillia MattersThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Newmarket TodayThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Midland TodayThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Collingwood TodayThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Thorold TodayThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Elora Fergus TodayThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases – The Morning Sun
Click to see story on Morning SunThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on MOR-TVThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Bradford TodayThe Supreme Court strips the SEC of a critical enforcement tool in fraud cases
Click to see story on Timmins TodayBreaking: Supreme Court Limits SEC’s Use of In-House Trials in Fraud Cases
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