The U.S. Supreme Court on June 27 affirmed a decision by the U.S. Court of Appeals for the Fifth Circuit holding that when the U.S. Securities and Exchange Commission (SEC) seeks civil monetary penalties in an action to enforce the anti-fraud provisions of the federal securities laws, the Seventh Amendment entitles the defendant to a jury trial in federal district court.1 In a 6-3 decision in SEC v. Jarkesy, Chief Justice John Roberts wrote the opinion for the majority finding that Congress, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), cannot eliminate the constitutional right to a jury trial by allowing common law claims to be pursued in an executive branch agency’s administrative tribunal.
Legal and Procedural Background
In the wake of the financial crisis, Congress passed the Dodd-Frank Act in 2010, which granted the SEC the authority to seek civil monetary penalties in either the federal courts or through its own internal proceedings. In doing so, Congress codified a home field advantage for the SEC.2
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1 SEC v. Jarkesy, No. 22-859 (U.S. June 27, 2024).
2 One report found that during its study period, the SEC won 90% of its actions adjudicated in-house versus 69% of the cases decided by a court. (See Jarkesy, slip op. at 3 (Gorsuch, J., concurring).)
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