Supreme Court Decision Syllabus (SCOTUS Podcast)
Following what the Supreme Court is actually doing can be daunting. Reporting on the subject is often only done within the context of political narratives of the day -- and following the Court's decisions and reading every new case can be a non-starter. The purpose of this Podcast is to make it as easy as possible for members of the public to source information about what is happening at the Supreme Court. For that reason, we read every Opinion Syllabus without any commentary whatsoever. Further, there are no advertisements or sponsors. We call it "information sourcing," and we hope that the podcast is a useful resource for members of the public who want to understand the legal issues of the day, prospective law students who want to get to know legal language and understand good legal writing, and attorneys who can use the podcast to be better advocates for their clients.
*Note this podcast is for informational and educational purposes only.
Supreme Court Decision Syllabus (SCOTUS Podcast)
SEC v. Jarkesy (Jury Trial / Securities)
SEC v. Jarkesy
In the aftermath of the Wall Street Crash of 1929, Congress passed a suite of laws designed to combat securities fraud and increase market transparency. Three such statutes are relevant: The Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. These Acts respectively govern the registration of securities, the trading of securities, and the activities of investment advisers. Although each regulates different aspects of the securities markets, their pertinent provisions—collectively referred to by regulators as “the antifraud provisions,” App. to Pet. for Cert. 73a, 202a— target the same basic behavior: misrepresenting or concealing material facts. To enforce these Acts, Congress created the Securities and Exchange Commission. The SEC may bring an enforcement action in one of two forums. It can file suit in federal court, or it can adjudicate the matter itself. The forum the SEC selects dictates certain aspects of the litigation. In federal court, a jury finds the facts, an Article III judge presides, and the Federal Rules of Evidence and the ordinary rules of discovery govern the litigation. But when the SEC adjudicates the matter in-house, there are no juries. The Commission presides while its Division of Enforcement prosecutes the case. The Commission or its delegee—typically an Administrative Law Judge—also finds facts and decides discovery disputes, and the SEC’s Rules of Practice govern. One remedy for securities violations is civil penalties. Originally, the SEC could only obtain civil penalties from unregistered investment advisers in federal court. Then, in 2010, Congress passed the DoddFrank Wall Street Reform and Consumer Protection Act. The Act authorized the SEC to impose such penalties through its own in-house proceedings. Shortly after passage of the Dodd-Frank Act, the SEC initiated an enforcement action for civil penalties against investment adviser George Jarkesy, Jr., and his firm, Patriot28, LLC for alleged violations of the “antifraud provisions” contained in the federal securities laws. The SEC opted to adjudicate the matter in-house. As relevant, the final order determined that Jarkesy and Patriot28 had committed securities violations and levied a civil penalty of $300,000. Jarkesy and Patriot28 petitioned for judicial review. The Fifth Circuit vacated the order on the ground that adjudicating the matter in-house violated the defendants’ Seventh Amendment right to a jury trial.
Held: When the SEC seeks civil penalties against a defendant for securities fraud, the Seventh Amendment entitles the defendant to a jury trial.
