Supreme Court Rules 6-3 Against SEC's Use of In-House Judges in Securities Fraud Cases, Mandates Jury Trials

Jun 27, 2024, 02:33 PM

The Supreme Court has ruled in SEC v. Jarkesy that the Securities and Exchange Commission (SEC) cannot impose civil penalties for securities fraud through in-house adjudications, as it violates the Seventh Amendment right to a jury trial. The 6-3 decision, authored by Chief Justice Roberts, with liberals dissenting, marks a significant limitation on the SEC's enforcement powers. The ruling asserts that defendants are entitled to a jury trial when facing civil penalties, preventing the SEC from acting as prosecutor, judge, and jury. This decision is seen as a major victory for the Seventh Amendment and could signal further judicial scrutiny of administrative overreach by the SEC. The case originated from a hedge fund manager.