Supreme Court may limit in-house enforcement by SEC

The Supreme Court’s conservative majority signaled interest in curbing the internal tribunal powers of the Securities and Exchange Commission (SEC) used to enforce securities fraud laws.

The court’s discussion happened in the case involving Texas-based hedge fund manager George Jarkesy, who is challenging the SEC’s in-house tribunal system.

Jarkesy feels his financial wrongdoing case should have had a trial with a jury rather than in front of the SEC, which slapped fines on him.

Concerns raised by several Chief Justices, including John Roberts and Brett Kavanaugh, centered on the lack of jury trials in SEC proceedings compared to federal court cases involving similar fraud allegations.

Anticipated impact
A ruling against the SEC could disrupt actions against brokers and investment advisers, and extend its effects across various federal agencies.

The court’s upcoming decisions, including the SEC case and a constitutional challenge to the Consumer Financial Protection Bureau’s funding structure, are anticipated by June’s end.