Justices at the United States Supreme Court appear divided over the Securities and Exchange Commission’s (SEC) power to impose fines via administrative proceedings. The contentious issue arises from the argument in Securities and Exchange Commission v. Jarkesy, in which George Jarkesy vigorously defended the decision made in favor by the U.S. Court of Appeals for the 5th Circuit.
The appellate court judgment can be summarised as follows: the court accepted three separate constitutional challenges to the SEC’s apparatus. First, it held that the Seventh Amendment right to a jury trial does not tolerate the imposition of civil penalties in an SEC administrative proceeding; second, that Congress cannot properly delegate to the SEC the decision of whether to use administrative action, or a civil action in court, to redress alleged misconduct; and third, that the statutory procedures for the appointment of the SEC’s administrative law judges violate the Constitution’s clauses for appointments.
The justices were notably silent about the second challenge and barely mentioned the third. Instead, most of the argument was devoted to the first point. Significantly, this was about whether the Seventh Amendment right to a jury trial rejects the imposition of civil penalties in an SEC administrative proceeding.
Cases like the longstanding Atlas Roofing Co. v. Occupational Health and Safety Review Commission were referenced to provide context on the extent to which Congress can call for such adjudications where a jury is not available. A pool of justices including Justice Kagan, Justice Sotomayor, and Justice Jackson referenced the Atlas Roofing case to argue that the SEC proceedings should be validated, while others including Justice Gorsuch and Justice Thomas argued against it.
The opinions of the justices not only reflect their thoughts on the specific case but also have broader implications for the SEC’s authority and powers. Regardless of the outcome, the broad range of views suggest that a unanimous decision is unlikely. The final decision will depend on the stance taken by the remaining justices, including Chief Justice John Roberts, Justice Amy Coney Barrett, and Justice Brett Kavanaugh, who thus far have seemed open to accepting the statutory apparatus.
The full account of the proceedings can be found in this SCOTUSblog article.