SCOTUS Hears Arguments Over Security and Exchange Commission's Powers

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Facts

  • On Wednesday, the US Supreme Court (SCOTUS) heard more than two hours of arguments in the case of Security and Exchange Commission (SEC) v. Jarkesy, which is an appeal by the Biden administration of a lower court’s ruling that prohibited the SEC from imposing financial penalties on hedge fund manager George R. Jarkesy.1
  • Jarkesy’s suit, which many conservative and business groups backed, challenged the legality of the SEC's punishments after it fined him and barred him from the industry after finding he committed securities fraud.2
  • The 5th US Circuit Court of Appeals ruled in favor of Jarkesy on three constitutional claims. It ruled that some SEC proceedings violate Seventh Amendment rights to a civil jury, that Congress improperly delegated legislative power to the SEC, and that rules related to the removal of SEC administrative law judges limited a president’s ability to replace them in violation of the separation of powers.3
  • Much of the arguments on Wednesday centered on the Seventh Amendment issue, with Principal Deputy Solicitor General Brian Fletcher arguing Congress had not violated the constitution because it is allowed to empower an agency to impose civil penalties to enforce federal law.3
  • However, Justice Samuel Alito was among the conservative justices who pushed against the administration’s case — arguing that the SEC's ability to decide which cases can go to court is a 'pretty patent evasion' of the Seventh Amendment.4
  • Justice Elena Kagan, who's part of the three-justice liberal minority, voiced sympathy for the administration's argument by pointing out Congress has had to bestow more powers on the SEC because of an increase in economic calamities and the defrauding of investors.5

Sources: 1Associated Press, 2Reuters, 3CNN, 4NBC and 5USA Today.

Narratives

  • Left narrative, as provided by Vox. Conservative judges have never seemed concerned about jury trials when it comes to workers seeking to avoid private arbitration with their corporate employers. This is just an attempt by conservatives to dismantle the agencies policing wealthy citizens who are committing misdeeds. Luckily for those who believe in equal justice, the right-leaning justices seemed unprepared to completely obliterate the agencies at this time.
  • Right narrative, as provided by The Wall Street Journal. Agencies like the SEC have grown too powerful, and agencies' in-house judges are nothing more than over-protected political cronies doing the left's bidding. It's time to right the wrong of denying would-be SEC violators a jury trial, and hopefully move on to reining in other overgrown government agencies after this case is decided.

Predictions