SEC in-house judges violate right to jury trial, appeals court rules

[muriel_volestrangler]

Source: Reuters

The Securities and Exchange Commission's in-house judges violate the U.S. Constitution by denying fraud defendants their right to a jury trial and acting without necessary guidance from Congress, the 5th U.S. Circuit Court of Appeals ruled on Wednesday.

The court ruled 2-1 in favor of hedge fund manager George Jarkesy Jr and investment advisor Patriot28 LLC, overturning an SEC administrative law judge's determination that they committed securities fraud.
...
The Dodd-Frank Act, which Congress passed after the 2008 financial crisis, expanded the SEC's ability to seek penalties in its administrative proceedings.
...
The majority also found that SEC judges, known as administrative law judges, lack authority under the Constitution because Congress did not provide guidance on when the SEC should bring cases in-house instead of in a court.



Read more: https://www.reuters.com/legal/government/sec-in-house-judges-violate-right-jury-trial-appeals-court-rules-2022-05-18/

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Slate's law editor is just a little worried by this:

Link to tweet

Link to tweet

The 5th Circuit just dismantled the SEC's power to enforce securities law. This decision is beyond radical. It is nihilistic.

Jennifer Walker Elrod's majority opinion approvingly cites Ronald Reagan's "Nine Most Terrifying Words in the English Language" (I'm from the government, and I'm here to help).

I ask again: What is going on in the 5th Circuit?!

Anyway, the implication of this decision is that most (all?) agency enforcement power is unconstitutional. Which, in plain English, means that the federal government can't enforce a huge swath of regulations. I mean, this is basically striking down the administrative state.

[TheRealNorth]

1. Because 2008 wasn't bad enough.....

Let's let Wall Street committ enough fraud to repeat the 1930's. That should stop all the Republicans whining about 1970's inflation.

[elleng]

2. Could be VERY serious.

'basically striking down the administrative state.'

NOTE, authority of agencies to exercise rights has been a contentious one for MANY years.

First, and major decision on the issue:

'Chevron is one of the most influential administrative law cases decided by the Supreme Court in the past half-century. It provides principles to determine the extent to which a court reviewing agency action should give deference to the agency's construction of a statute that the agency has been delegated to administer.'

https://en.wikipedia.org/wiki/Chevron_U.S.A.,_Inc._v._Natural_Resources_Defense_Council,_Inc.

Chevron is probably the most frequently cited case in American administrative law,[8] but some scholars suggest that the decision has had little impact on the Supreme Court's jurisprudence and merely clarified the Court's existing approach.[9] The ruling that the judiciary should defer to a federal agency's interpretation of ambiguous language from Congressional legislation relevant to the agency is often referred to as the Chevron deference. Several of the EPA's rulings for emissions regulations, as well as the Federal Communications Commission's stance on net neutrality have been based on cases decided on the Chevron deference.[10]

[Marthe48]

3. r judges?

Here is a Wikipedia article showing current judges. https://en.wikipedia.org/wiki/United_States_Court_of_Appeals_for_the_Fifth_Circuit

[muriel_volestrangler]

4. Elrod, majority opinion writer, appointed by Dubya

https://www.lawyersgunsmoneyblog.com/2022/05/5ca-panel-administrative-law-is-unconstitutional

"Elrod is a W. Bush nominee, reminding is that Trump was just the culmination of a long march to make the Gilded Age great again through the federal judiciary. Republicans are preemptively leaping to defend the Legitimacy and Integrity of the federal courts because they plan to spend decades inflicting these crackpot doctrines on the country and in so doing completely cripple the ability of the federal government to function."

[not fooled]

5. Endgame for the 666koch666 network

back to the frontier days! Oops, crackpottery--the nation is much larger and more complex now. Won't work except to allow the wealthy to further loot the nation and pass the costs along to everyone else.

This country is dead man walking.

[ripcord]

6. Its the right call

If someone is going to be convicted of a crime they deserve the right to a jury trail.

[TheRealNorth]

7. It will be fun times for the food epidemiologists....

When restaurants find out that they don't really need to follow food codes because public health has zero capacity to take to court and prosecute every violation that normally would warrant a fine wouldn't even be worth taking someone to court for. At least until an outbreak happens- then the lawyers that chase outbreaks will be all over that restaurant.

[ripcord]

8. Those are all regualtory issues

The SEC judges can find people guilty of securities fraud which is a felony, if you are facing a felony you have the right to a jury trial.