Facts of the Case
George Jarkesy established two hedge funds, with Patriot28 as the investment adviser, managing $24 million in assets from over 100 investors. The SEC initiated an investigation in 2011, eventually bringing an in-house action alleging fraud under multiple acts. Jarkesy challenged the SEC’s proceedings in the U.S. District Court for the District of Columbia, citing constitutional infringements, but both the district court and the U.S. Court of Appeals for the D.C. Circuit denied the injunction, finding that the district court lacked jurisdiction.
After an evidentiary hearing by an Administrative Law Judge (ALJ), Jarkesy was found guilty of securities fraud. Jarkesy sought review by the Commission, and while that petition was pending, the U.S. Supreme Court decided Lucia v. SEC, holding that SEC ALJs were improperly appointed. Jarkesy, however, waived his right to a new hearing. The Commission affirmed the fraud findings, imposed penalties, and rejected several constitutional arguments. He then filed a petition for review in the U.S. Court of Appeals for the Fifth Circuit, which reversed and remanded, finding multiple constitutional violations.
Questions
Does the statutory scheme that empowers the Securities and Exchange Commission violate the Seventh Amendment, the nondelegation doctrine, or Article II of the U.S. Constitution?
SEC v. Jarkesy - Post-Argument SCOTUScast
Margaret A. Little
On November 29, 2023, the Supreme Court heard oral argument in Securities and Exchange Commission...
The Demise of the SEC’s Adjudication System
This post was originally published at Notice & Comment. Earlier this month on a Friday...
How Will the Supreme Court’s Admin Law Decisions Affect the FCC?
Last term, in Axon Enterprise v. FTC and SEC v. Cochran, the Supreme Court held...
Congress Must Decide How to Choose Between Courts and Agency Adjudication
For some time, the Securities and Exchange Commission has had a choice of prosecutorial forums:...
How Fifth Circuit Affirmed George Washington’s Vision of Fundamental Justice
The recent ruling by the U.S. Court of Appeals for the Fifth Circuit in Jarkesy v. SEC is...
Simple Rules for Jarkesy v. SEC in a Complex Administrative World
“Administrative law is not for sissies,” Justice Scalia famously quipped. It’s complex. And that’s no...
The Death of Deference: Supreme Court Overrules the Chevron Doctrine
In a move long anticipated by many court watchers, the Supreme Court on June 28,...