Supreme Court’s Conservative Justices Critical of SEC’s Enforcement Power

The U.S. Supreme Court’s conservative justices seemed poised to rein in the power of the Securities and Exchange Commission (SEC) to bring enforcement action, in a case that could limit the reach of the administrative state. During Nov. 29 oral arguments in the case, SEC v. Jarkesy, which involves three big questions about constitutional boundaries for administrative law courts used by federal agencies for enforcement action, the justices’ questions seemed to focus overwhelmingly on how those courts tried individuals without a jury. SEC v. Jarkesy involves a hedge fund manager, George Jarkesy, whom the agency penalized for violating securities fraud law. More specifically, the SEC imposed a civil penalty of $300,000 on Mr. Jarkesy after bringing an administrative proceeding against him. The agency ultimately agreed with the administrative law judge’s conclusion that Mr. Jarkesy had violated securities law....