Experts predict Supreme Court's SEC case could have a major impact on the U.S.'s government

December 4, 2023
by
Robert Ayers

One expert is predicting that the outcome of the Securities and Exchange Commission (SEC) case before the U.S. Supreme Court could "upend government as we know it." 

The expert is New York University (NYU) Law Professor Melissa Murray.

She and fellow NYU professor Ali Velshi recently appeared on MSNBC to discuss the case.

The case is SEC v. Jarkesy.

Background

The Jarkesy in SEC v. Jarkesy is George R. Jarkesy. The Daily Caller reports that Jarkesy "has been caught in the SEC’s administrative proceedings since the agency charged him with fraud relating to his investment activities in 2013."

In response, Jarkesy challenged the powers that the Congres granted to the SEC via the Dodd-Frank Act. These powers include, among other things, the SEC's use of in-house administrative law judges (ALJs) to try the agency's enforcement cases, like Jarkesy's.

Jarkesy has already got the Fifth Circuit Court of Appeals to agree with him. The Wall Street Journal reports:

Mr. Jarkesy appealed to the Fifth Circuit Court of Appeals, arguing that SEC tribunals violate his Seventh Amendment right to trial by jury. He also contended that multiple layers of for-cause tenure protections for ALJs from presidential removal offend the constitutional separation of powers. The Fifth Circuit ruled for Mr. Jarkesy on all counts.

Now, the case is before the U.S. Supreme Court, and the justices are considering three issues.

The first issue is whether the use of ALJs violates the Seventh Amendment's right to a trial by jury. The second is whether Congress, via the Dodd-Frank Act, unconstitutionally granted powers to the SEC. And, the third is whether the removal restrictions referred to above are unconstitutional.

This case could "upend the government"

Murray, during her MSNBC appearance, discussed the effect that the Jarkesy case could have on the U.S. government going forward.

"[It has] the potential to completely upend the way government as we know it runs," Murray said.

Murrah went on to explain the Seventh Amendment right to a jury trial issue, noting, in a previous case, the Supreme Court held that whether or not someone has the right to a jury trial depends on whether it is a public or private right that is being enforced and that, if it is a public right, then ALJs could decide the case.

The big question is whether the current Supreme Court will uphold this ruling. There is a possibility that it might not.

Murray said, "There’s a lot riding on this," adding, "it does not just affect the SEC, it impacts a lot of administrative agencies. More importantly, it will have a huge effect on how the SEC enforces securities laws."

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