The Supreme Court ruled Thursday that people whom the Securities and Exchange Commission (SEC) would like to levy civil penalties against for alleged fraud violations are entitled to a trial by jury. That decision, though consequential in isolation, will likely have effects that extend far beyond that one agency.
At the heart of the ruling is George Jarkesy Jr., a hedge fund manager who oversaw the investment advising firm Patriot28, LLC. The SEC accused him and the company of "misrepresenting the investment strategies that Jarkesy and Patriot28 employed," "lying about the identity of the funds' auditor and prime broker," and "inflating the funds' claimed value." Yet whatever you think of those allegations, the SEC's approach to handling the matter, as Reason's Jacob Sullum highlighted earlier today, was unsavory, to put it mildly, which included evaluating its allegations in-house, confirming them, and then imposing $300,000 in penalties. That's not to say Jarkesy is innocent of wrongdoing. It is to say that the SEC assessing the SEC's accusations is not a picture of fairness.
