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Supreme Court Undermines SEC Enforcement

WASHINGTON, D.C. – The U.S. Supreme Court today decided Securities and Exchange Commission v. Jarkesy. The Court held 6-3 that when the SEC seeks civil penalties against a defendant for securities fraud, the Seventh Amendment entitles the defendant to a jury trial. Robert Weissman, president of Public Citizen, released the following statement:

“Today’s decision is another step in the long-term corporate project of neutering federal agencies’ ability to protect the public from fraudsters, rip-offs, dangerous products, carbon polluters, and more. The decision will have near-term consequences for the financial system, as it hinders the SEC’s ability to seek critical penalties.

“The rule adopted by the Court will impact other agencies that use administrative courts to impose civil penalties for violating regulatory protections. At least some agencies will need new authority from Congress, which is not doing much legislating, in order to be able to enforce the law. 

“The decision extols the Seventh Amendment, but shows little respect for the separation of powers that is at the heart of our constitutional system. 

“There’s also more than a little irony in this Court touting the right to access the court system, when it has broadly allowed companies to require consumers to use arbitration rather than protecting their right to access the courts.”