Current:Home > MarketsSupreme Court conservatives seem likely to axe SEC enforcement powers -EliteFunds
Supreme Court conservatives seem likely to axe SEC enforcement powers
View
Date:2025-04-26 17:21:48
The U.S. Supreme Court's conservative justices seemed highly skeptical Wednesday about the way the Securities and Exchange Commission conducts in-house enforcement proceedings to ensure the integrity of securities markets across the country. The case is one of several this term aimed at dismantling what some conservatives have derisively called, "the administrative state."
Wednesday's case was brought by George Jarkesy, a former conservative radio talk show host and hedge fund manager. After a fraud investigation by the SEC and an in-house evidentiary hearing conducted by an administrative law judge, the SEC fined Jarkesy $300,000, ordered him to pay back nearly $700,000 in illicit gains and barred him from various activities in the securities industry.
He challenged the SEC actions in court, contending that he was entitled to a trial in federal court before a jury of his peers, and that Congress didn't have the power to delegate such enforcement powers to an agency. Supporting his challenge is a virtual who's-who of conservative and business groups — plus some individuals like Elon Musk, who has repeatedly resisted the SEC's attempts to investigate stock manipulation charges in his companies.
Although Wednesday's case involved several different constitutional challenges to the SEC's enforcement actions, the justices focused almost exclusively on one: the contention that the agency's in-house fact finding process violated Jarkesy's Seventh Amendment right to a jury trial. All six of the conservative justices questioned the notion that an administrative agency can impose penalties without offering the option of a jury trial.
"It seems to me that undermines the whole point of the constitutional protection in the first place," Chief Justice John Roberts said.
Deputy Solicitor General Brian Fletcher repeatedly replied that Congress has, for some 80 years, delegated these core executive enforcement powers to agencies that are charged with applying the law and imposing consequences for violations. If the SEC's administrative enforcement powers are unconstitutional, he said, so too might be similar enforcement powers at some 34 federal agencies, from the Food and Drug Administration to the National Transportation Safety Board and the Social Security Administration, which issues a whopping half million hearing and appeals dispositions each year.
"The assessment and collection of taxes and penalties, customs and penalties, the immigration laws, the detention and removal of non-citizens — all of those things ... have long been done in the first instance by administrative officers," Fletcher said.
Making the counterargument, Michael McColloch — Jarkesy's lawyer --contended that only those functions that are analogous to laws at the time of the founding in 1791 are presumed to be legitimate.
"The dramatic change that you're proposing in our approach and jurisdiction is going to have consequences across the board," Justice Sonia Sotomayor observed, though McColloch insisted that his approach would not have a huge impact.
Justice Elena Kagan added that in recent decades there have been no challenges to these administrative enforcement functions because these powers have been considered "settled." That prompted McColloch to say, "it's settled only to the extent no one's brought it up." To which Kagan replied, "Nobody has had the chutzpah, to quote my people, to bring it up."
Kagan noted that there have been three major tranches of securities legislation to strengthen securities enforcement: First during the Great Depression in the 1930s when the agency was founded, then after the Savings and Loan Crisis in the 1980s and then after the 2008 Great Recession when huge investment banks failed, sending the economy spiraling downward and forcing a federal bailout to prevent even more bank failures.
Each time, observed Kagan, "Congress thought ... something is going terribly wrong here ... people are being harmed." And "Congress said 'we have to give the SEC ... greater authorities.' "
"I mean, is Congress' judgment ... entitled to no respect?" Kagan asked.
The conservative court's answer to that question may well be, "No."
veryGood! (576)
Related
- Megan Fox's ex Brian Austin Green tells Machine Gun Kelly to 'grow up'
- Today’s Climate: May 6, 2010
- Today’s Climate: April 29, 2010
- You'll Flip a Table Over These Real Housewives of New Jersey Season 13 Reunion Looks
- Hackers hit Rhode Island benefits system in major cyberattack. Personal data could be released soon
- Makeup That May Improve Your Skin? See What the Hype Is About and Save $30 on Bareminerals Products
- Today’s Climate: May 15-16, 2010
- Today’s Climate: May 4, 2010
- 'As foretold in the prophecy': Elon Musk and internet react as Tesla stock hits $420 all
- Get Your Mane Back on Track With the Best Hair Growth Products for Thinning Hair
Ranking
- Justice Department, Louisville reach deal after probe prompted by Breonna Taylor killing
- Queen Charlotte: A Bridgerton Story Costume Designers Reveal the Wardrobe's Hidden Easter Eggs
- Are Antarctica’s Ice Sheets Near a Climate Tipping Point?
- Democrat Charlie Crist to face Ron DeSantis in Florida race for governor
- At site of suspected mass killings, Syrians recall horrors, hope for answers
- Today’s Climate: May 20, 2010
- Look Back on King Charles III's Road to the Throne
- Military jets scrambled due to unresponsive small plane over Washington that then crashed in Virginia
Recommendation
This was the average Social Security benefit in 2004, and here's what it is now
Over-the-counter hearing aids will bring relief, but with some confusion
Rihanna's Makeup Artist Reveals the Most Useful Hack to Keep Red Lipstick From Smearing
Kid Cudi says he had a stroke at 32. Hailey Bieber was 25. How common are they?
Backstage at New York's Jingle Ball with Jimmy Fallon, 'Queer Eye' and Meghan Trainor
Antarctica’s Winds Increasing Risk of Sea Level Rise from Massive Totten Glacier
Look Back on King Charles III's Road to the Throne
Natural Gas Flaring: Critics and Industry Square Off Over Emissions