By: Allison Wong ‘27
Volume X – Issue I – Fall 2024
I. INTRODUCTION
On June 27th, 2024, the U.S. Supreme Court decided Securities and Exchange Commission (SEC) v. Jarkesy et al. in a 6-3 ruling in favor of the respondents. [1] George Jarkesy Jr. created hedge funds in 2007 and 2009 with the financial backing of Patriot28 LLC. [2] On March 22, 2017, SEC pursued legal action against Jarkesy et al. for alleged overvaluation and other fraudulent claims. [3] Based on guidelines set by the federal antifraud provisions as well as the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC proceeded with an in-house adjudication process. [4] In response to the Administrative Law Judge’s decision to impose civil penalties, Jarkesy et al. petitioned the U.S. Fifth Circuit District Court of Appeals, where the decision was reversed and remanded. [5] The case brought up key issues regarding the Seventh Amendment right to trial by jury, the difference between public and private rights, the boundaries of common law, separation of powers, and the nondelegation doctrine. In turn, the SEC appealed to the U.S. Supreme Court, which focused specifically on the Seventh Amendment in the majority opinion. [6] SEC v. Jarkesy matters because it examines the ability of government agencies to uphold regulations as well as Congress’s ability to delegate that responsibility. In combination, the Fifth Circuit and SCOTUS decisions in this case broaden both the depth and scope of its impact. Although the SCOTUS decision in SEC v. Jarkesy appropriately categorizes securities law as a private rights and common law concern, it fails to consider the potentially devastating impacts of its precedent. Based on the practical limitations of governmental institutions, this case develops a legal fantasy that works towards not only dissecting but also dismantling the current regulatory state.