Copyright 2024 Associated Press. All rights reservedof 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 agency had already reduced the number of cases it brings in administrative proceedings pending the Supreme Court's resolution of the case.in which conservative and business interests are urging the nine-member court to constrict federal regulators.
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.
Jarkesy’s lawyers noted that the SEC wins almost all the cases it brings in front of the administrative law judges but only about 60% of cases tried in federal court. The appeals court also said Congress unconstitutionally granted the SEC “unfettered authority” to decide whether the case should be tried in a court of law or handled within the executive branch agency. And it said laws shielding the commission’s administrative law judges from being fired by the president are unconstitutional.Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
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