Supreme Court questions federal agencies' ability to serve as judge and jury
The Republican-appointed majority on the Supreme Court appears skeptical of the Securities and Exchange Commission's powers to conduct in-house adjudications without juries in a case that could disrupt the administrative state.
Justices heard oral arguments on Wednesday involving hedge fund manager and conservative radio jockey George Jarkesy, whom the SEC fined and barred from the industry after determining he had committed securities fraud. In a bid to avoid commission-appointed administrative law judges deciding his case behind a bureaucratic curtain, Jarkesy appealed to the federal courts, arguing the agency's procedures infringed on his Seventh Amendment right to a jury trial.
Jarkesy achieved favor from the U.S. 5th Circuit Court of Appeals in a 2022 ruling when the court held that the SEC's in-house proceedings violated the constitutional right to a jury trial and tore through presidential and constitutional powers.
During oral arguments Wednesday, Chief Justice John Roberts, an appointee of former President George W. Bush, said it was "curious" that federal agencies such as the SEC appeared to exert more leverage on daily life than in the past, a position that a majority of the court appeared to agree with in some capacity.
“The government is much more likely to affect you or proceed against you in one of its own agencies than it is in court,” he said. “It does seem to me to be curious that, and unlike most constitutional rights, that you have that right [to a jury trial] until the government decides it doesn’t want you to have it. That doesn’t seem to me the way the Constitution traditionally works.”
Carrying a similar tune of skepticism, Justice Neil Gorsuch, a Trump-era jurist, contended this isn't "your grandfather's SEC."
“A right to trial by jury … is a check on all branches of government,” he said. "An ancient right, too."
Roughly 27 federal agencies have utilized administrative law judges, which stand apart from the federal judiciary, which includes district courts, appeals courts, and the Supreme Court. Administrative law judges are touted by proponents as a way to adjudicate claims at a much faster rate than in the federal court system, and their rulings do not set a precedent.
A Supreme Court ruling affirming the 5th Circuit's holding for Jarkesy could reduce or delay action against misconduct by brokers, investment advisers, and more, possibly gumming up enforcement mechanisms at other agencies as well.
But critics of the commission's powers, such as Jarkesy, argue the authority of administrative law judges creates an unfair advantage in favor of the SEC's position against people it targets for fines.
More at: https://www.washingtonexaminer.com/policy/courts/supreme-court-federal-agencies-ability-judge-jury