The Supreme Court strips the SEC of a critical enforcement tool in fraud cases

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Federal Court,The SEC,Securities And Exchange Commission

WASHINGTON (AP) — The Supreme Court on Thursday stripped the Securities and Exchange Commission of a major tool in fighting securities fraud in a decision...

of a major tool in fighting securities fraud in a decision that also could have far-reaching effects on other regulatory agencies.in a 6-3 vote that people accused of fraud by the SEC, which regulates securities markets, have the right to a jury trial in federal court. The in-house proceedings the SEC has used in some civil fraud complaints violate the Constitution, the court said.

The justices ruled in the case of Houston hedge fund manager George R. Jarkesy. The SEC appealed to the Supreme Court after a divided panel of the New Orleans-based 5th U.S. Circuit Court of AppealsThe appeals court found that the SEC’s case against Jarkesy, resulting in a $300,000 civil fine and the repayment of $680,000 in allegedly ill-gotten gains, should have been heard in a federal court instead of before one of the SEC’s administrative law judges.

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