In the ongoing legal fray around the powers of the Securities and Exchange Commission (SEC), significant development has taken place recently. On August 28, the SEC filed a petition for writ of certiorari with the U.S. Supreme Court, seeking to overturn a previous decision by the U.S. Court of Appeals for the Fifth Circuit that ruled against the Commission’s use of its in-house adjudication powers.
The petition follows the Fifth Circuit’s 2022 ruling that declared the SEC’s in-house adjudication of a petitioner’s case as unconstitutional. The court asserted that the process violated the Seventh Amendment’s provision of the right to a jury trial and took issue with dependence on unconstitutionally delegated legislative power. JD Supra provides a deep dive into the matter.
The SEC’s brief addressed these concerns by arguing for the lawfulness and constitutionality of their regulatory and adjudicatory approach. The Commission responded to the claim about violation of Seventh Amendment rights by pointing out the nature of the claims handled in-house, noting that these are primarily public rights claims, not primarily focused on individual, civil disputes.
This case is a significant juncture in the ongoing debates around the SEC’s powers to govern and regulate legal matters internally, highlighting the need for the larger legal community to stay tuned to its outcomes. The Supreme Court’s response to the SEC’s request for a review of the Fifth Circuit’s decision can shape future regulatory and enforcement practices at the commission.
The unfolding proceedings in the U.S. Supreme Court are yet another strand in the broader narrative about oversight powers and their constitutional boundaries in the legal space, particularly relevant to anyone involved in or following securities regulation.