The Supreme Court today ruled that the Securities and Exchange Commission (SEC) may not impose civil penalties for fraud without filing suit in federal court. Because "the SEC's antifraud provisions replicate common law fraud," Chief Justice John Roberts writes for the majority in SEC v. Jarkesy, alleged violators are entitled to a jury trial under the Seventh Amendment.
"Jury trials were the norm for most of the country's history, but since the 1970s scores of federal agencies have claimed the power to impose fines through in-house administrative courts, where judge and prosecutor are employed by the same agency," said Institute for Justice senior attorney Rob Johnson. "Today, the Court made clear that post-1970s adventure is a historical anomaly without any grounding in the Constitution. And while the Court's decision addressed just one federal agency, the principles that it relied on sweep beyond the SEC."
