The 5th Circuit just dismantled the SEC's power to enforce securities law.

[mahatmakanejeeves]

11. The 5th Circuit's Ambush Against the SEC Is Unprecedented and Shocking

Mark Joseph Stern Retweeted

I think any hot-takes on what precedents SCOTUS is or is not eager to reconsider needs to take into account the 5th Circuit's role in forcing their hand, in flagrant disregard of the rule that courts' are supposed to let SCOTUS overturn its own decisions.

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A deeply frightening and important piece from
@BlakeProf
on the 5th Circuit's wild decision using a "false, fairy tale version" of history to strike at the heart of the administrative state and the federal civil service. https://slate.com/news-and-politics/2022/05/5th-circuit-sec-securities-fraud-civil-service.html
@Slate

slate.com
The 5th Circuit’s Ambush Against the SEC Is Unprecedented and Shocking
Our most radical court is threatening to turn the executive branch into an instrument of the president’s personal power.

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JURISPRUDENCE

The 5th Circuit’s Ambush Against the SEC Is Unprecedented and Shocking

Two conservative judges are threatening to turn the executive branch into an instrument of the president’s personal power.

BY BLAKE EMERSON
MAY 20, 2022 11:13 AM

On Wednesday, a panel of the 5th U.S. Circuit Court of Appeals issued a shocking opinion in Jarkesy v. Securities and Exchange Commission, which held that key powers and structures of the Securities and Exchange Commission are unconstitutional. The 5th Circuit has become something of a think-tank in the conservative legal movement’s effort to limit the federal government’s regulatory power. Wednesday’s ruling is no exception. If the Supreme Court adopted it in full, the decision would significantly decrease Congress’ authority to regulate the economy and combat private corruption, magnify the powers of the courts to thwart administrative agencies, and potentially increase political control over agency adjudicators and the civil service.

Jarkesy departs widely from precedent in some key respects. But this is not entirely a case of appellate judges going rogue. With its transformative, loosely reasoned rulings on issues like the constitutionality of the Consumer Financial Protection Bureau and the legality of COVID-19 vaccination and testing requirements, the Roberts court has opened its doors to novel arguments that strike at the heart of federal agencies’ operations.

Accepting this invitation, Judge Jennifer Walker Elrod, joined by Andrew Oldham, held that the Securities and Exchange Commission exercises unconstitutional power in no less than three respects. Each of Elrod’s conclusions is problematic, and one is simply outlandish. But before getting into the details, it’s worth taking a step back to understand what’s at stake.

The SEC is a paradigmatic administrative agency. Created during the New Deal, it has the power to enforce securities laws by issuing regulations, deciding cases, and bringing enforcement actions in federal court. Congress has extended its powers over the years, including in the Dodd-Frank Act of 2010. The Act authorized the agency to impose civil penalties through administrative adjudication. In the case at issue, the SEC relied on this power to impose $300,000 in civil penalties against George Jarkesy for securities fraud. The power to impose civil penalties through administrative adjudication is significant, but it’s hardly anomalous. Both the Environmental Protection Agency and the Occupational Safety and Health Review Commission, for instance, have the power to impose penalties in this way.

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