WASHINGTON – The Supreme Court on Thursday placed new limits on the Securities and Exchange Commission’s authority to enforce securities laws — the latest ruling in a series of cases targeting federal agencies.
The court ruled 6-3 that having the cases heard by domestic judges violates the right to a jury trial.
The case is one of them several on the docket includes conservative and business-led attacks on the power of federal agencies. The court’s 6-3 conservative majority is often sympathetic to such arguments.
The problem zeroed in on how the SEC enforces securities laws, including those that prohibit insider trading. The SEC has long used internal processes that it presides over by administrative law judges. The agency may also file a lawsuit in federal court. In both lawsuits, he can seek financial penalties.
Domestic court subjects complained, saying the process violated their rights and essentially gave the SEC too much power by creating home court advantage.
Hedge fund manager George Jarkesy is facing legal trouble after SEC allegations that he violated securities laws while overseeing two hedge funds, misrepresenting communications with investors and omitting relevant information.
Jarkesy and his firm were ordered to pay a $300,000 fine, and he was barred from certain roles in the securities industry after being subject to an internal investigation in 2014. The firm was also ordered to repay approximately $685,000 in what the SEC estimated was illegal gains”.
Jarkesy’s legal crusade has garnered the support of billionaires Elon Musk and Mark Cuban.
A three-judge panel of the 5th US Circuit Court of Appeals in New Orleans ruled against the agency, asking the SEC to intervene at the Supreme Court.