- Term
- 2023-2024
Securities and Exchange Commission v. Jarkesy
The Security and Exchange Commision (SEC) was created in 1934 to address the reckless Wall Street practices that had triggered the Great Depression. From its inception, one of the SEC’s central responsibilities has been protecting people from securities fraud. Since Congress authorized the SEC to hear claims under that law in 1946, thousands of disputes have been resolved by administrative law judges. But in SEC v. Jarkesy, the Supreme Court hand-picked a case to review the mechanism the SEC uses to protect investors from fraud, potentially endangering SEC authority that courts have respected for nearly 80 years. In addition to potentially weakening the SEC’s ability to protect the public, the case had potential to open the floodgates for a wave of future litigation that could wreak havoc on the federal government’s ability to function, including crucial processes like determining eligibility for Social Security benefits.
On June 27, 2024, in a 6-3 decision along partisan lines, the Supreme Court’s right-wing majority ruled against the constitutionality of the use of administrative hearings when the SEC seeks civil penalties in cases of securities fraud — a potential blow to many federal agencies.
